Question 1

The U.S.income tax

Accepted Answer

A)  discourages saving. 
B)  encourages saving. 
C)  has no effect on saving. 
D)  will reduce the administrative burden of taxation. 
A)  discourages saving. 
B)  encourages saving. 
C)  has no effect on saving. 
D)  will reduce the administrative burden of taxation.

Question 2

Horizontal equity in taxation refers to the idea that people

Accepted Answer

A)  in unequal conditions should be treated differently. 
B)  in equal conditions should pay equal taxes. 
C)  should be taxed according to their ability to pay. 
D)  should receive government benefits according to how much they have been taxed. 
A)  in unequal conditions should be treated differently. 
B)  in equal conditions should pay equal taxes. 
C)  should be taxed according to their ability to pay. 
D)  should receive government benefits according to how much they have been taxed.

Question 3

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
  
-Refer to Table 12-12.What type of tax structure did the United States have in 2009 for single individuals?

Accepted Answer

A)  A proportional tax structure 
B)  A regressive tax structure 
C)  A progressive tax structure 
D)  A lump-sum tax structure 
A)  A proportional tax structure 
B)  A regressive tax structure 
C)  A progressive tax structure 
D)  A lump-sum tax structure

Question 4

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Accepted Answer

A) True 
 B)False

Question 5

Table 12-1
  
-Refer to Table 12-1.If Betina has $170,000 in taxable income,her tax liability will be

Accepted Answer

A)  $16,781. 
B)  $41,309. 
C)  $41,827. 
D)  $47,600. 
A)  $16,781. 
B)  $41,309. 
C)  $41,827. 
D)  $47,600.

Question 6

Table 12-9
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income.
  
-Refer to Table 12-9.For this tax schedule,what is the total tax liability for an individual with $280,000 in taxable income?

Accepted Answer

A)  $105,700 
B)  $108,900 
C)  $111,600 
D)  $117,300 
A)  $105,700 
B)  $108,900 
C)  $111,600 
D)  $117,300

Question 7

In 2009 the largest percentage of federal government spending was on

Accepted Answer

A)  national defense. The largest source of federal revenues was from corporate income taxes. 
B)  national defense. The largest source of federal revenues was from individual income taxes. 
C)  Social Security. The largest source of federal revenues was from corporate income taxes. 
D)  Social Security. The largest source of federal revenues was from individual income taxes. 
A)  national defense. The largest source of federal revenues was from corporate income taxes. 
B)  national defense. The largest source of federal revenues was from individual income taxes. 
C)  Social Security. The largest source of federal revenues was from corporate income taxes. 
D)  Social Security. The largest source of federal revenues was from individual income taxes.

Question 8

High marginal income tax rates

Accepted Answer

A)  distort incentives to work. 
B)  are used to encourage saving behavior. 
C)  will invariably lead to lower average tax rates. 
D)  are not associated with deadweight losses. 
A)  distort incentives to work. 
B)  are used to encourage saving behavior. 
C)  will invariably lead to lower average tax rates. 
D)  are not associated with deadweight losses.

Question 9

An efficient tax system is one that imposes small

Accepted Answer

A)  deadweight losses and administrative burdens. 
B)  marginal rates and deadweight losses. 
C)  administrative burdens and transfers of money. 
D)  marginal rates and transfers of money. 
A)  deadweight losses and administrative burdens. 
B)  marginal rates and deadweight losses. 
C)  administrative burdens and transfers of money. 
D)  marginal rates and transfers of money.

Question 10

As the economy's income has grown,the government has

Accepted Answer

A)  grown at about the same pace. 
B)  grown at a faster pace. 
C)  grown at a slower pace. 
D)  shrunk. 
A)  grown at about the same pace. 
B)  grown at a faster pace. 
C)  grown at a slower pace. 
D)  shrunk.

Question 11

If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate must be 50 percent.

Accepted Answer

A) True 
 B)False

Question 12

A budget deficit

Accepted Answer

A)  occurs when government receipts are less than spending. 
B)  occurs when government spending is less than receipts. 
C)  occurs when government receipts are equal to spending. 
D)  is the accumulation of years of government overspending. 
A)  occurs when government receipts are less than spending. 
B)  occurs when government spending is less than receipts. 
C)  occurs when government receipts are equal to spending. 
D)  is the accumulation of years of government overspending.

Question 13

If your income is $40,000 and your income tax liability is $5,000,your marginal tax rate is

Accepted Answer

A)  8 percent. 
B)  12.5 percent. 
C)  20 percent. 
D)  unknown. We do not have enough information to answer this question. 
A)  8 percent. 
B)  12.5 percent. 
C)  20 percent. 
D)  unknown. We do not have enough information to answer this question.

Question 14

Scenario 12-3
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-3.Suppose the government levies a tax of $1 on a movie ticket and that,as a result,the price of a movie ticket increases to $6.If Bob and Lisa both purchase a movie ticket,what is the deadweight loss from the tax?

Accepted Answer

A)  $0 
B)  $1 
C)  $2 
D)  $3 
A)  $0 
B)  $1 
C)  $2 
D)  $3

Question 15

Table 12-7
  
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $120,000?

Accepted Answer

A)  25% 
B)  35% 
C)  45% 
D)  60% 
A)  25% 
B)  35% 
C)  45% 
D)  60%

Question 16

Table 12-5
  
-Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

Accepted Answer

A)  20% 
B)  30% 
C)  40% 
D)  50% 
A)  20% 
B)  30% 
C)  40% 
D)  50%

Question 17

Most people agree that the tax system

Accepted Answer

A)  should be both efficient and equitable. 
B)  cannot raise enough revenue to cover government expenditures. 
C)  would raise more revenue if tax rates were lowered. 
D)  should be rewritten to require everyone to pay the same percentage of income in taxes. 
A)  should be both efficient and equitable. 
B)  cannot raise enough revenue to cover government expenditures. 
C)  would raise more revenue if tax rates were lowered. 
D)  should be rewritten to require everyone to pay the same percentage of income in taxes.

Question 18

Who pays a corporate income tax?

Accepted Answer

A)  owners of the corporation 
B)  customers of the corporation 
C)  workers of the corporation 
D)  All of the above are correct. 
A)  owners of the corporation 
B)  customers of the corporation 
C)  workers of the corporation 
D)  All of the above are correct.

Question 19

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 20

If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

Accepted Answer

A)  the poor family should pay more in taxes to pay for public education than the rich family. 
B)  the rich family should pay more in taxes to pay for public education than the poor family. 
C)  the benefits of private school exceed those of public school. 
D)  public schools should be financed by property taxes. 
A)  the poor family should pay more in taxes to pay for public education than the rich family. 
B)  the rich family should pay more in taxes to pay for public education than the poor family. 
C)  the benefits of private school exceed those of public school. 
D)  public schools should be financed by property taxes.

Exam 12: The Design of the Tax System.

The U.S.income tax

Horizontal equity in taxation refers to the idea that people

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.What type of tax structure did the United States have in 2009 for single individuals?

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her tax liability will be

Table 12-9 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-9.For this tax schedule,what is the total tax liability for an individual with $280,000 in taxable income?

In 2009 the largest percentage of federal government spending was on

High marginal income tax rates

An efficient tax system is one that imposes small

As the economy's income has grown,the government has

If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate must be 50 percent.

A budget deficit

If your income is $40,000 and your income tax liability is $5,000,your marginal tax rate is

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $120,000?

Table 12-5 -Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

Most people agree that the tax system

Who pays a corporate income tax?

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

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.

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