Question 1

The concept of a "welfare program" is most closely associated with which particular federal government program?

Accepted Answer

A)  spending on medical research 
B)  Temporary Assistance for Needy Families (TANF) 
C)  Medicare 
D)  Social Security 
A)  spending on medical research 
B)  Temporary Assistance for Needy Families (TANF) 
C)  Medicare 
D)  Social Security

Question 2

Table 12-3
  
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)  $75 
B)  $105 
C)  $185 
D)  $215 
A)  $75 
B)  $105 
C)  $185 
D)  $215

Question 3

Economists define a business's "value added" as

Accepted Answer

A)  the amount the firm pays for goods and services less the revenue from the sale of goods and services. 
B)  the revenue from the sale of goods and services less the amount the firm pays for goods and services. 
C)  the total value of the goods and services created by the firm. 
D)  the value that consumers place on the goods and services created by the firm. 
A)  the amount the firm pays for goods and services less the revenue from the sale of goods and services. 
B)  the revenue from the sale of goods and services less the amount the firm pays for goods and services. 
C)  the total value of the goods and services created by the firm. 
D)  the value that consumers place on the goods and services created by the firm.

Question 4

In the United States,all families pay the same proportion of their income in taxes.

Accepted Answer

A) True 
 B)False

Question 5

Some states do not have a state income tax.

Accepted Answer

A) True 
 B)False

Question 6

Rank the following state and local government expenditure categories from smallest to largest.

Accepted Answer

A)  education, public welfare, highways 
B)  education, highways, public welfare 
C)  highways, public welfare, education 
D)  public welfare, education, highways. 
A)  education, public welfare, highways 
B)  education, highways, public welfare 
C)  highways, public welfare, education 
D)  public welfare, education, highways.

Question 7

As of 2007,the largest source of receipts for state and local governments was corporate income taxes.

Accepted Answer

A) True 
 B)False

Question 8

A lump-sum tax

Accepted Answer

A)  is most frequently used to tax real property. 
B)  does not distort incentives. 
C)  distorts incentives more than any other type of tax. 
D)  is the most fair tax. 
A)  is most frequently used to tax real property. 
B)  does not distort incentives. 
C)  distorts incentives more than any other type of tax. 
D)  is the most fair tax.

Question 9

Taxes create deadweight losses because they

Accepted Answer

A)  reduce costs for firms. 
B)  distort incentives. 
C)  cause prices to decrease. 
D)  create revenue for the government. 
A)  reduce costs for firms. 
B)  distort incentives. 
C)  cause prices to decrease. 
D)  create revenue for the government.

Question 10

Which of the following is not a cost of taxes to taxpayers?

Accepted Answer

A)  the tax payment itself 
B)  deadweight losses 
C)  administrative burdens 
D)  goods and services provided by the government 
A)  the tax payment itself 
B)  deadweight losses 
C)  administrative burdens 
D)  goods and services provided by the government

Question 11

Table 12-14
  
-Refer to Table 12-14.A regressive tax is illustrated by tax

Accepted Answer

A)  A only. 
B)  B or D. 
C)  C only. 
D)  A or D. 
A)  A only. 
B)  B or D. 
C)  C only. 
D)  A or D.

Question 12

The two taxes that together provide the U.S.federal government with approximately 85 percent of its revenue are

Accepted Answer

A)  individual income taxes and property taxes. 
B)  individual income taxes and corporate income taxes. 
C)  individual income taxes and payroll taxes. 
D)  sales taxes and payroll taxes. 
A)  individual income taxes and property taxes. 
B)  individual income taxes and corporate income taxes. 
C)  individual income taxes and payroll taxes. 
D)  sales taxes and payroll taxes.

Question 13

Scenario 12-2
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-2.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9.What is the deadweight loss of the tax?

Accepted Answer

A)  $3 
B)  $6 
C)  $8 
D)  $9 
A)  $3 
B)  $6 
C)  $8 
D)  $9

Question 14

The government finances the budget deficit by

Accepted Answer

A)  borrowing from the public. 
B)  borrowing solely from the Federal Reserve Bank. 
C)  printing currency in the amount of the budget deficit. 
D)  requiring that budget surpluses occur every other year to pay off the deficits. 
A)  borrowing from the public. 
B)  borrowing solely from the Federal Reserve Bank. 
C)  printing currency in the amount of the budget deficit. 
D)  requiring that budget surpluses occur every other year to pay off the deficits.

Question 15

In 1789,the average American paid approximately what percent of income in taxes?

Accepted Answer

A)  5% 
B)  15% 
C)  33% 
D)  50% 
A)  5% 
B)  15% 
C)  33% 
D)  50%

Question 16

Table 12-1
  
-Refer to Table 12-1.If Betina has $170,000 in taxable income,her marginal tax rate is

Accepted Answer

A)  25%. 
B)  28%. 
C)  33%. 
D)  35%. 
A)  25%. 
B)  28%. 
C)  33%. 
D)  35%.

Question 17

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Accepted Answer

A)  tax evasion 
B)  a political payoff 
C)  a tax loophole 
D)  compensation for the benefit of society 
A)  tax evasion 
B)  a political payoff 
C)  a tax loophole 
D)  compensation for the benefit of society

Question 18

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in.This charge is most like

Accepted Answer

A)  an excise tax which conforms to the benefits principle. 
B)  an excise tax which violates the benefits principle. 
C)  a lump-sum tax which conforms to the benefits principle. 
D)  a lump-sum tax which violates the benefits principle. 
A)  an excise tax which conforms to the benefits principle. 
B)  an excise tax which violates the benefits principle. 
C)  a lump-sum tax which conforms to the benefits principle. 
D)  a lump-sum tax which violates the benefits principle.

Question 19

The U.S.federal government spends its revenues in a number of ways.Rank the following spending categories from largest to smallest.

Accepted Answer

A)  Social Security, national defense, income security, net interest 
B)  health care, national defense, net interest, income security 
C)  Social Security, health care, national defense, Medicare 
D)  national defense, Social Security, net interest, income security 
A)  Social Security, national defense, income security, net interest 
B)  health care, national defense, net interest, income security 
C)  Social Security, health care, national defense, Medicare 
D)  national defense, Social Security, net interest, income security

Question 20

The marginal tax rates on the richest Americans when Ronald Reagan was elected and left office were

Accepted Answer

A)  28 percent and 50 percent, respectively. 
B)  70 percent and 40 percent, respectively. 
C)  40 percent and 70 percent, respectively. 
D)  50 percent and 28 percent, respectively. 
A)  28 percent and 50 percent, respectively. 
B)  70 percent and 40 percent, respectively. 
C)  40 percent and 70 percent, respectively. 
D)  50 percent and 28 percent, respectively.

Exam 12: The Design of the Tax System.

The concept of a "welfare program" is most closely associated with which particular federal government program?

Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Economists define a business's "value added" as

In the United States,all families pay the same proportion of their income in taxes.

Some states do not have a state income tax.

Rank the following state and local government expenditure categories from smallest to largest.

As of 2007,the largest source of receipts for state and local governments was corporate income taxes.

A lump-sum tax

Taxes create deadweight losses because they

Which of the following is not a cost of taxes to taxpayers?

Table 12-14 -Refer to Table 12-14.A regressive tax is illustrated by tax

The two taxes that together provide the U.S.federal government with approximately 85 percent of its revenue are

The government finances the budget deficit by

In 1789,the average American paid approximately what percent of income in taxes?

Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her marginal tax rate is

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in.This charge is most like

The U.S.federal government spends its revenues in a number of ways.Rank the following spending categories from largest to smallest.

The marginal tax rates on the richest Americans when Ronald Reagan was elected and left office were

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters