Question 1

The most efficient tax possible is a

Accepted Answer

A)  marginal income tax. 
B)  lump-sum tax. 
C)  consumption tax. 
D)  corporate profit tax. 
A)  marginal income tax. 
B)  lump-sum tax. 
C)  consumption tax. 
D)  corporate profit tax.

Question 2

The federal healthcare spending program that specifically targets the poor is called

Accepted Answer

A)  Medicaid. 
B)  Medicare. 
C)  National Institutes of Health. 
D)  Blue Cross/Blue Shield. 
A)  Medicaid. 
B)  Medicare. 
C)  National Institutes of Health. 
D)  Blue Cross/Blue Shield.

Question 3

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $50,000?

Accepted Answer

A)  12 percent and 20 percent, respectively 
B)  12 percent and $50,000, respectively 
C)  $6,000 and 12 percent, respectively 
D)  $6,000 and 20 percent, respectively 
A)  12 percent and 20 percent, respectively 
B)  12 percent and $50,000, respectively 
C)  $6,000 and 12 percent, respectively 
D)  $6,000 and 20 percent, respectively

Question 4

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 $2 tax on each slice of cheesecake and that the new equilibrium price is $7.What is the deadweight loss of the tax?

Accepted Answer

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

Question 5

Table 12-11
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown.
  
-Refer to Table 12-11.Which tax schedules are regressive?

Accepted Answer

A)  Tax Schedule A and Tax Schedule B 
B)  Tax Schedule B and Tax Schedule C 
C)  Tax Schedule C and Tax Schedule D 
D)  None of the Tax Schedules are regressive. 
A)  Tax Schedule A and Tax Schedule B 
B)  Tax Schedule B and Tax Schedule C 
C)  Tax Schedule C and Tax Schedule D 
D)  None of the Tax Schedules are regressive.

Question 6

A budget deficit occurs when government receipts fall short of government spending.

Accepted Answer

A) True 
 B)False

Question 7

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $1 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $16.How much tax revenue is collected?

Accepted Answer

A)  $0 
B)  $1 
C)  $2 
D)  $4 
A)  $0 
B)  $1 
C)  $2 
D)  $4

Question 9

Table 12-6
  
-Refer to Table 12-6.What is the marginal tax rate for a person who makes $35,000?

Accepted Answer

A)  25% 
B)  30% 
C)  40% 
D)  60% 
A)  25% 
B)  30% 
C)  40% 
D)  60%

Question 10

For state and local governments,education accounts for approximately what percentage of spending?

Accepted Answer

A)  25 percent 
B)  34 percent 
C)  50 percent 
D)  75 percent 
A)  25 percent 
B)  34 percent 
C)  50 percent 
D)  75 percent

Question 11

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 12

If government spending exceeds government receipts,the government has a

Accepted Answer

A)  budget surplus. Other things the same, the surplus rises if taxes rise. 
B)  budget surplus. Other things the same the surplus rises if taxes fall. 
C)  budget deficit. Other things the same, the deficit rises if taxes rise. 
D)  budget deficit. Other things the same, the deficit rises if taxes fall. 
A)  budget surplus. Other things the same, the surplus rises if taxes rise. 
B)  budget surplus. Other things the same the surplus rises if taxes fall. 
C)  budget deficit. Other things the same, the deficit rises if taxes rise. 
D)  budget deficit. Other things the same, the deficit rises if taxes fall.

Question 13

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Accepted Answer

A)  corporate income taxes, individual income taxes, social insurance taxes 
B)  social insurance taxes, individual income taxes, corporate income taxes 
C)  individual income taxes, social insurance taxes, corporate income taxes 
D)  individual income taxes, corporate income taxes, social insurance taxes 
A)  corporate income taxes, individual income taxes, social insurance taxes 
B)  social insurance taxes, individual income taxes, corporate income taxes 
C)  individual income taxes, social insurance taxes, corporate income taxes 
D)  individual income taxes, corporate income taxes, social insurance taxes

Question 14

The average tax rate measures the

Accepted Answer

A)  fraction of spending paid in taxes. 
B)  fraction of income paid in taxes. 
C)  incremental rate of tax on income. 
D)  average deadweight loss from all taxes. 
A)  fraction of spending paid in taxes. 
B)  fraction of income paid in taxes. 
C)  incremental rate of tax on income. 
D)  average deadweight loss from all taxes.

Question 15

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Accepted Answer

A)  include tax payments as well as transfer payments received. 
B)  focus only on the tax payments of wealthy tax payers. 
C)  limit their analysis to taxes based on the ability-to-pay principle. 
D)  focus their analysis on issues of tax efficiency. 
A)  include tax payments as well as transfer payments received. 
B)  focus only on the tax payments of wealthy tax payers. 
C)  limit their analysis to taxes based on the ability-to-pay principle. 
D)  focus their analysis on issues of tax efficiency.

Question 16

Which of the following statements is not correct?

Accepted Answer

A)  The U.S. tax burden is high compared to many poor countries. 
B)  As nations get richer, their governments typically collect a smaller share of income in taxes. 
C)  The U.S. has a higher federal tax burden than China and India. 
D)  The U.S. tax burden is low compared to many European countries. 
A)  The U.S. tax burden is high compared to many poor countries. 
B)  As nations get richer, their governments typically collect a smaller share of income in taxes. 
C)  The U.S. has a higher federal tax burden than China and India. 
D)  The U.S. tax burden is low compared to many European countries.

Question 17

The concept that people should pay taxes based on the benefits they receive from government services is called

Accepted Answer

A)  the ability-to-pay principle. 
B)  the benefits principle. 
C)  horizontal equity. 
D)  vertical equity. 
A)  the ability-to-pay principle. 
B)  the benefits principle. 
C)  horizontal equity. 
D)  vertical equity.

Question 18

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
  
-Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's average tax rate between the two years?

Accepted Answer

A)  The average tax rate increased from 2009 to 2010. 
B)  The average tax rate decreased from 2009 to 2010. 
C)  The average tax rate remained constant from 2009 to 2010. 
D)  The change in the average tax rate cannot be determined for the two tax schedules shown. 
A)  The average tax rate increased from 2009 to 2010. 
B)  The average tax rate decreased from 2009 to 2010. 
C)  The average tax rate remained constant from 2009 to 2010. 
D)  The change in the average tax rate cannot be determined for the two tax schedules shown.

Question 19

When the marginal tax rate equals the average tax rate,the tax is

Accepted Answer

A)  proportional. 
B)  progressive. 
C)  regressive. 
D)  egalitarian. 
A)  proportional. 
B)  progressive. 
C)  regressive. 
D)  egalitarian.

Question 20

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.How much total consumer surplus do Skip and Walt get when each purchases one bottle of wine?

Accepted Answer

A)  $1 
B)  $2 
C)  $5 
D)  $7 
A)  $1 
B)  $2 
C)  $5 
D)  $7

The most efficient tax possible is a

The federal healthcare spending program that specifically targets the poor is called

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $50,000?

Table 12-11 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-11.Which tax schedules are regressive?

A budget deficit occurs when government receipts fall short of government spending.

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $35,000?

For state and local governments,education accounts for approximately what percentage of spending?

Corporate income taxes are based on the amount of revenue a corporation earns.

If government spending exceeds government receipts,the government has a

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

The average tax rate measures the

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Which of the following statements is not correct?

The concept that people should pay taxes based on the benefits they receive from government services is called

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's average tax rate between the two years?

When the marginal tax rate equals the average tax rate,the tax is

Scenario 12-1 Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15. -Refer to Scenario 12-1.How much total consumer surplus do Skip and Walt get when each purchases one bottle of wine?

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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Exam 12: The Design of the Tax System.

The most efficient tax possible is a

The federal healthcare spending program that specifically targets the poor is called

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What are the tax liability and the marginal tax rate for a person whose income is $50,000?

Table 12-11 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-11.Which tax schedules are regressive?

A budget deficit occurs when government receipts fall short of government spending.

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $35,000?

For state and local governments,education accounts for approximately what percentage of spending?

Corporate income taxes are based on the amount of revenue a corporation earns.

If government spending exceeds government receipts,the government has a

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

The average tax rate measures the

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Which of the following statements is not correct?

The concept that people should pay taxes based on the benefits they receive from government services is called

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $35,000 in taxable income in both years,which of the following describes the change in the individual's average tax rate between the two years?

When the marginal tax rate equals the average tax rate,the tax is

Scenario 12-1 Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15. -Refer to Scenario 12-1.How much total consumer surplus do Skip and Walt get when each purchases one bottle of wine?

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