Question 1

Scenario 12-4. A taxpayer faces the following tax rates on her income:
  
-Refer to Scenario 12-4.The taxpayer faces

Accepted Answer

A)  an average tax rate of 22.5 percent when her income is $30,000. 
B)  an average tax rate of 22.0 percent when her income is $50,000. 
C)  a marginal tax rate of 10 percent when her income rises from $40,000 to $40,001. 
D)  a marginal tax rate of 50 percent when her income rises from $60,000 to $60,001. 
A)  an average tax rate of 22.5 percent when her income is $30,000. 
B)  an average tax rate of 22.0 percent when her income is $50,000. 
C)  a marginal tax rate of 10 percent when her income rises from $40,000 to $40,001. 
D)  a marginal tax rate of 50 percent when her income rises from $60,000 to $60,001.

Question 2

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000.For a person earning $100,000,the marginal tax rate is

Accepted Answer

A)  30 percent, and the average tax rate is 50 percent. 
B)  30 percent, and the average tax rate is 36 percent. 
C)  50 percent, and the average tax rate is 40 percent. 
D)  50 percent, and the average tax rate is 36 percent. 
A)  30 percent, and the average tax rate is 50 percent. 
B)  30 percent, and the average tax rate is 36 percent. 
C)  50 percent, and the average tax rate is 40 percent. 
D)  50 percent, and the average tax rate is 36 percent.

Question 3

Individual Retirement Accounts and 401(k)plans make the current U.S.tax system

Accepted Answer

A)  more like a consumption tax and so more like the tax system of many European countries. 
B)  more like a consumption tax and so less like the tax system of many European countries. 
C)  less like a consumption tax and so more like the tax system of many European countries. 
D)  less like a consumption tax and so less like the tax system of many European countries. 
A)  more like a consumption tax and so more like the tax system of many European countries. 
B)  more like a consumption tax and so less like the tax system of many European countries. 
C)  less like a consumption tax and so more like the tax system of many European countries. 
D)  less like a consumption tax and so less like the tax system of many European countries.

Question 4

A person's tax liability refers to

Accepted Answer

A)  the percentage of income that a person must pay in taxes. 
B)  the amount of tax a person owes to the government. 
C)  the amount of tax the government is required to refund to each person. 
D)  deductions that can be legally subtracted from a person's income each year. 
A)  the percentage of income that a person must pay in taxes. 
B)  the amount of tax a person owes to the government. 
C)  the amount of tax the government is required to refund to each person. 
D)  deductions that can be legally subtracted from a person's income each year.

Question 5

According to the benefits principle,it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an important reason for the projected increase in government spending as a percentage of GDP over the next several decades?

Accepted Answer

A)  the increase in life expectancy resulting from advances in healthcare 
B)  an increase in the average number of children per family. 
C)  the increase in the number of jobs lost each year to foreign countries as a result of outsourcing 
D)  the reduction in the number of high-cost medical procedures 
A)  the increase in life expectancy resulting from advances in healthcare 
B)  an increase in the average number of children per family. 
C)  the increase in the number of jobs lost each year to foreign countries as a result of outsourcing 
D)  the reduction in the number of high-cost medical procedures

Question 7

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

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.What is total consumer surplus after the tax is levied?

Accepted Answer

A)  $2 
B)  $3 
C)  $4 
D)  $5 
A)  $2 
B)  $3 
C)  $4 
D)  $5

Question 9

Of the following countries,which country's government collects the least amount of tax revenue as a percentage of that country's total income?

Accepted Answer

A)  France 
B)  United States 
C)  Canada 
D)  Sweden 
A)  France 
B)  United States 
C)  Canada 
D)  Sweden

Question 10

According to the ability-to-pay principle,it is fair for people to pay taxes based on the amount of government services that they receive.

Accepted Answer

A) True 
 B)False

Question 11

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Accepted Answer

A) True 
 B)False

Question 12

A budget surplus occurs when government receipts exceed government spending.

Accepted Answer

A) True 
 B)False

Question 13

An advantage of a consumption tax is that it does not distort the incentive to save.

Accepted Answer

A) True 
 B)False

Question 14

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 average tax rate for an individual with $49,000 in taxable income?

Accepted Answer

A)  25.8% 
B)  27.5%. 
C)  40.0% 
D)  43.7% 
A)  25.8% 
B)  27.5%. 
C)  40.0% 
D)  43.7%

Question 15

If a government simplified its tax system the likeliest result would be

Accepted Answer

A)  a decrease in consumer surplus. 
B)  a decrease in producer surplus. 
C)  a decrease in deadweight loss. 
D)  a decrease in tax revenues. 
A)  a decrease in consumer surplus. 
B)  a decrease in producer surplus. 
C)  a decrease in deadweight loss. 
D)  a decrease in tax revenues.

Question 16

According to long-run projections,under current law,

Accepted Answer

A)  federal government spending as a percentage of GDP will rise gradually but substantially in the next several decades. 
B)  federal taxes as a percentage of GDP will rise gradually but substantially in the next several decades. 
C)  the federal government's budget deficit will gradually be eliminated in the next several decades. 
D)  All of the above are correct. 
A)  federal government spending as a percentage of GDP will rise gradually but substantially in the next several decades. 
B)  federal taxes as a percentage of GDP will rise gradually but substantially in the next several decades. 
C)  the federal government's budget deficit will gradually be eliminated in the next several decades. 
D)  All of the above are correct.

Question 17

Individual Retirement Accounts and 401(k)plans make the current U.S.tax system

Accepted Answer

A)  less like European tax systems than it otherwise would be. 
B)  more like a payroll tax than it otherwise would be. 
C)  more like an income tax than it otherwise would be. 
D)  more like a consumption tax than it otherwise would be. 
A)  less like European tax systems than it otherwise would be. 
B)  more like a payroll tax than it otherwise would be. 
C)  more like an income tax than it otherwise would be. 
D)  more like a consumption tax than it otherwise would be.

Question 18

Vertical equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 19

The deadweight loss associated with a tax on a commodity is generated by

Accepted Answer

A)  the consumers who still choose to consume the commodity but pay a higher price that reflects the tax. 
B)  the consumers who choose to not consume the commodity that is taxed. 
C)  all citizens who are able to use services provided by government. 
D)  the consumers who are unable to avoid paying the tax. 
A)  the consumers who still choose to consume the commodity but pay a higher price that reflects the tax. 
B)  the consumers who choose to not consume the commodity that is taxed. 
C)  all citizens who are able to use services provided by government. 
D)  the consumers who are unable to avoid paying the tax.

Question 20

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Accepted Answer

A)  It would not cause deadweight loss. 
B)  It imposes a minimal administrative burden on taxpayers. 
C)  It is more equitable. 
D)  It is more efficient. 
A)  It would not cause deadweight loss. 
B)  It imposes a minimal administrative burden on taxpayers. 
C)  It is more equitable. 
D)  It is more efficient.

Exam 12: The Design of the Tax System.

Scenario 12-4. A taxpayer faces the following tax rates on her income: -Refer to Scenario 12-4.The taxpayer faces

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000.For a person earning $100,000,the marginal tax rate is

Individual Retirement Accounts and 401(k)plans make the current U.S.tax system

A person's tax liability refers to

According to the benefits principle,it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Which of the following is an important reason for the projected increase in government spending as a percentage of GDP over the next several decades?

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Of the following countries,which country's government collects the least amount of tax revenue as a percentage of that country's total income?

According to the ability-to-pay principle,it is fair for people to pay taxes based on the amount of government services that they receive.

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

A budget surplus occurs when government receipts exceed government spending.

An advantage of a consumption tax is that it does not distort the incentive to save.

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 average tax rate for an individual with $49,000 in taxable income?

If a government simplified its tax system the likeliest result would be

According to long-run projections,under current law,

Individual Retirement Accounts and 401(k)plans make the current U.S.tax system

Vertical equity refers to a tax system in which individuals with similar incomes pay similar taxes.

The deadweight loss associated with a tax on a commodity is generated by

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

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