Question 1

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Accepted Answer

A)  has decreased from about 20 percent to about 10 percent. 
B)  has remained constant at about 10 percent. 
C)  has risen from less than 2 percent to about 44.4 percent. 
D)  has risen from less than 5 percent to about 33.3 percent. 
A)  has decreased from about 20 percent to about 10 percent. 
B)  has remained constant at about 10 percent. 
C)  has risen from less than 2 percent to about 44.4 percent. 
D)  has risen from less than 5 percent to about 33.3 percent.

Question 2

Deadweight losses are associated with

Accepted Answer

A)  taxes that distort the incentives that people face. 
B)  taxes that target expenditures on survivor's benefits for Social Security. 
C)  taxes that have no efficiency losses. 
D)  lump-sum taxes. 
A)  taxes that distort the incentives that people face. 
B)  taxes that target expenditures on survivor's benefits for Social Security. 
C)  taxes that have no efficiency losses. 
D)  lump-sum taxes.

Question 3

The typical state spends the most on

Accepted Answer

A)  education. 
B)  Medicare and Social Security. 
C)  highways. 
D)  defense. 
A)  education. 
B)  Medicare and Social Security. 
C)  highways. 
D)  defense.

Question 4

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

Accepted Answer

A)  a regressive tax 
B)  a proportional tax 
C)  a progressive tax 
D)  a horizontal equity tax 
A)  a regressive tax 
B)  a proportional tax 
C)  a progressive tax 
D)  a horizontal equity tax

Question 5

Who observed that "in this world nothing is certain but death and taxes"?

Accepted Answer

A)  Mark Twain 
B)  P.T. Barnum 
C)  Ben Franklin 
D)  Richard Nixon 
A)  Mark Twain 
B)  P.T. Barnum 
C)  Ben Franklin 
D)  Richard Nixon

Question 6

The idea that people in equal conditions should pay equal taxes is referred to as

Accepted Answer

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

Question 7

In the United States,the payroll tax is also called a

Accepted Answer

A)  dividend income tax. 
B)  social insurance tax. 
C)  value added tax. 
D)  capital gains tax. 
A)  dividend income tax. 
B)  social insurance tax. 
C)  value added tax. 
D)  capital gains tax.

Question 8

If we want to gauge how much the income tax system distorts incentives,we should use the

Accepted Answer

A)  average tax rate. 
B)  ability-to-pay principle. 
C)  total tax revenue collected. 
D)  marginal tax rate. 
A)  average tax rate. 
B)  ability-to-pay principle. 
C)  total tax revenue collected. 
D)  marginal tax rate.

Question 9

If the government were to impose a tax that assigned everyone the same tax liability,it would be

Accepted Answer

A)  a lump-sum tax. 
B)  an equitable tax. 
C)  supported by the poor. 
D)  a progressive tax. 
A)  a lump-sum tax. 
B)  an equitable tax. 
C)  supported by the poor. 
D)  a progressive tax.

Question 10

Table 12-2
Consider the tax rates shown in the table below.
  
-Refer to Table 12-2.If Noah has taxable income of $43,000,his tax liability is

Accepted Answer

A)  $1,920. 
B)  $4,400. 
C)  $6,320. 
D)  $8,175. 
A)  $1,920. 
B)  $4,400. 
C)  $6,320. 
D)  $8,175.

Question 11

Mary values a movie at $15 while Tim values it at $10.The price of the movie is $9.If the government imposes a $2 tax per movie and the price of a movie rises to $11,what part of the deadweight loss comes from Mary and what part comes from Tim?

Accepted Answer

A)  none comes from Mary, $1 comes from Tim 
B)  none comes from Mary, $3 comes from Tim 
C)  $2 comes from Mary, $1 comes from Tim 
D)  $4 comes from Mary, $3 comes from Tim 
A)  none comes from Mary, $1 comes from Tim 
B)  none comes from Mary, $3 comes from Tim 
C)  $2 comes from Mary, $1 comes from Tim 
D)  $4 comes from Mary, $3 comes from Tim

Question 12

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.How much consumer surplus does Regina receive from consuming her slice of cheesecake?

Accepted Answer

A)  $3 
B)  $5 
C)  $9 
D)  $12 
A)  $3 
B)  $5 
C)  $9 
D)  $12

Question 13

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
  
-Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What is his marginal tax rate in 2009?

Accepted Answer

A)  15% 
B)  28% 
C)  31% 
D)  36% 
A)  15% 
B)  28% 
C)  31% 
D)  36%

Question 14

The government taxes corporate income on the basis of

Accepted Answer

A)  profit. 
B)  the amount the firm receives for the goods or services it sells. 
C)  the number of employees. 
D)  All of the above are correct. 
A)  profit. 
B)  the amount the firm receives for the goods or services it sells. 
C)  the number of employees. 
D)  All of the above are correct.

Question 15

State and local government spending on public welfare includes

Accepted Answer

A)  trash removal. 
B)  transfer payments to the poor. 
C)  libraries. 
D)  road repairs. 
A)  trash removal. 
B)  transfer payments to the poor. 
C)  libraries. 
D)  road repairs.

Question 16

In designing a tax system,policymakers have two objectives that are often conflicting.They are

Accepted Answer

A)  maximizing revenue and minimizing costs to taxpayers. 
B)  efficiency and minimizing costs to taxpayers. 
C)  efficiency and equity. 
D)  maximizing revenue and reducing the national debt. 
A)  maximizing revenue and minimizing costs to taxpayers. 
B)  efficiency and minimizing costs to taxpayers. 
C)  efficiency and equity. 
D)  maximizing revenue and reducing the national debt.

Question 17

European countries tend to rely on which type of tax more so than the United States does?

Accepted Answer

A)  an income tax 
B)  a lump-sum tax 
C)  a value-added tax 
D)  a corrective tax 
A)  an income tax 
B)  a lump-sum tax 
C)  a value-added tax 
D)  a corrective tax

Question 18

Bert faces a progressive tax structure that has the following marginal tax rates: 0 percent on the first $10,000,10 percent on the next $10,000,15 percent on the next $10,000,25 percent on the next $10,000,and 50 percent on all additional income.If Bert earns $75,000,what is his average tax rate?

Accepted Answer

A)  20 percent 
B)  25 percent 
C)  30 percent 
D)  36.67 percent 
A)  20 percent 
B)  25 percent 
C)  30 percent 
D)  36.67 percent

Question 19

European countries tend to rely more on consumption taxes than does the United States.

Accepted Answer

A) True 
 B)False

Question 20

An advantage of a consumption tax over the present tax system is that a consumption tax

Accepted Answer

A)  raises more revenues. 
B)  would save the government millions in administrative costs. 
C)  places more of the tax burden on the wealthy. 
D)  does not discourage saving. 
A)  raises more revenues. 
B)  would save the government millions in administrative costs. 
C)  places more of the tax burden on the wealthy. 
D)  does not discourage saving.

Exam 12: The Design of the Tax System.

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Deadweight losses are associated with

The typical state spends the most on

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

Who observed that "in this world nothing is certain but death and taxes"?

The idea that people in equal conditions should pay equal taxes is referred to as

In the United States,the payroll tax is also called a

If we want to gauge how much the income tax system distorts incentives,we should use the

If the government were to impose a tax that assigned everyone the same tax liability,it would be

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Noah has taxable income of $43,000,his tax liability is

Mary values a movie at $15 while Tim values it at $10.The price of the movie is $9.If the government imposes a $2 tax per movie and the price of a movie rises to $11,what part of the deadweight loss comes from Mary and what part comes from Tim?

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What is his marginal tax rate in 2009?

The government taxes corporate income on the basis of

State and local government spending on public welfare includes

In designing a tax system,policymakers have two objectives that are often conflicting.They are

European countries tend to rely on which type of tax more so than the United States does?

Bert faces a progressive tax structure that has the following marginal tax rates: 0 percent on the first $10,000,10 percent on the next $10,000,15 percent on the next $10,000,25 percent on the next $10,000,and 50 percent on all additional income.If Bert earns $75,000,what is his average tax rate?

European countries tend to rely more on consumption taxes than does the United States.

An advantage of a consumption tax over the present tax system is that a consumption tax

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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