Question 1

The federal government collects taxes in a number of ways.Which of the following ranks the following sources of revenue from the largest to the smallest

Accepted Answer

A) corporate income taxes, GST, personal income taxes, and excise taxes and duties 
B) corporate income taxes, EI payroll taxes, personal income taxes, and excise taxes and duties 
C) personal income taxes, corporate income taxes, excise taxes and duties, and GST 
D) personal income taxes, corporate income taxes, GST, and excise taxes and duties 
A) corporate income taxes, GST, personal income taxes, and excise taxes and duties 
B) corporate income taxes, EI payroll taxes, personal income taxes, and excise taxes and duties 
C) personal income taxes, corporate income taxes, excise taxes and duties, and GST 
D) personal income taxes, corporate income taxes, GST, and excise taxes and duties

Question 2

What is total taxes paid divided by total income

Accepted Answer

A) the lump-sum tax liability 
B) the marginal tax rate 
C) the average tax rate 
D) the average consumption tax liability 
A) the lump-sum tax liability 
B) the marginal tax rate 
C) the average tax rate 
D) the average consumption tax liability

Question 3

MaKenna earns income of $80,000 per year.Her average tax rate is 50 percent.MaKenna paid $7000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000

Accepted Answer

A) 16.25 percent and 50.00 percent 
B) 18.00 percent and 60.00 percent 
C) 20.00 percent and 20.00 percent 
D) 23.33 percent and 66 percent 
A) 16.25 percent and 50.00 percent 
B) 18.00 percent and 60.00 percent 
C) 20.00 percent and 20.00 percent 
D) 23.33 percent and 66 percent

Question 4

-Refer to Table 12-8.Which tax illustrates a regressive tax

Accepted Answer

A) tax A 
B) tax B 
C) tax C 
D) tax D 
A) tax A 
B) tax B 
C) tax C 
D) tax D

Question 5

Which statement best describes tax evasion

Accepted Answer

A) It is facilitated by legal deductions to taxable income. 
B) It is the same as tax avoidance. 
C) It is recommended by the Canadian Accounting Association. 
D) It is illegal. 
A) It is facilitated by legal deductions to taxable income. 
B) It is the same as tax avoidance. 
C) It is recommended by the Canadian Accounting Association. 
D) It is illegal.

Question 6

What is the ranking of the following provincial and local government expenditure categories from largest to smallest

Accepted Answer

A) health, education, social services 
B) debt service, health, education 
C) social services, debt service, education 
D) health, social services, education 
A) health, education, social services 
B) debt service, health, education 
C) social services, debt service, education 
D) health, social services, education

Question 7

What does horizontal equity state that taxpayers with similar incomes should pay

Accepted Answer

A) taxes based only on their income 
B) exactly the same amount of taxes, regardless of circumstances 
C) similar amounts of tax 
D) taxes based on the benefits received from government services 
A) taxes based only on their income 
B) exactly the same amount of taxes, regardless of circumstances 
C) similar amounts of tax 
D) taxes based on the benefits received from government services

Question 8

What happens when interest income from savings is taxed

Accepted Answer

A) For the poor people, more will be saved than without the tax to make up for what is lost in taxes. 
B) For the rich people, more will be saved than without the tax to make up for what is lost in taxes. 
C) For the rich people, less will be saved than without the tax since tax lowers the return on income. 
D) For the poor people, less will be saved without tax since tax lowers the cost of investment. 
A) For the poor people, more will be saved than without the tax to make up for what is lost in taxes. 
B) For the rich people, more will be saved than without the tax to make up for what is lost in taxes. 
C) For the rich people, less will be saved than without the tax since tax lowers the return on income. 
D) For the poor people, less will be saved without tax since tax lowers the cost of investment.

Question 9

When the government taxes labour earnings,what can we expect people to do

Accepted Answer

A) work more so they can keep the same standard of living 
B) work less and enjoy more leisure 
C) quit their present job and find one that pays better 
D) stop working altogether and go on welfare in protest 
A) work more so they can keep the same standard of living 
B) work less and enjoy more leisure 
C) quit their present job and find one that pays better 
D) stop working altogether and go on welfare in protest

Question 10

What does the average tax rate measure

Accepted Answer

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

Question 11

When a taxpayer attempts to legally reduce her tax liability,what is she engaging in

Accepted Answer

A) tax avoidance 
B) tax evasion 
C) a tax return compensation plan 
D) activities outside the intent of tax law 
A) tax avoidance 
B) tax evasion 
C) a tax return compensation plan 
D) activities outside the intent of tax law

Question 12

The federal government collects about one-half of the taxes in our economy.

Accepted Answer

A) True 
 B)False

Question 13

While debate over tax policy is complex,how do economists play an important role

Accepted Answer

A) by arguing for policies that clearly lead to efficiency gains in the economy 
B) by shedding light on the tradeoff between efficiency and equity in tax policy 
C) by articulating the importance of equity as the most important goal of tax policy 
D) by demonstrating that there are no tradeoffs in tax policy: both efficiency and equity can be attained if the tax policy follows basic economic reasoning 
A) by arguing for policies that clearly lead to efficiency gains in the economy 
B) by shedding light on the tradeoff between efficiency and equity in tax policy 
C) by articulating the importance of equity as the most important goal of tax policy 
D) by demonstrating that there are no tradeoffs in tax policy: both efficiency and equity can be attained if the tax policy follows basic economic reasoning

Question 14

Vertical equity is not consistent with a regressive tax structure.

Accepted Answer

A) True 
 B)False

Question 15

What is an income tax in which the average tax rate is the same for all taxpayers

Accepted Answer

A) a progressive tax 
B) a regressive tax 
C) a distortion-free tax 
D) a proportional tax 
A) a progressive tax 
B) a regressive tax 
C) a distortion-free tax 
D) a proportional tax

Question 16

What is one of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity

Accepted Answer

A) determining whether or not a taxpayer falls within the highest income quintile 
B) determining the level of transfer payments made to low-income groups 
C) determining the source of income for taxpayers 
D) determining what differences are relevant to a family's ability to pay 
A) determining whether or not a taxpayer falls within the highest income quintile 
B) determining the level of transfer payments made to low-income groups 
C) determining the source of income for taxpayers 
D) determining what differences are relevant to a family's ability to pay

Question 17

What are taxes on specific goods such as cigarettes,gasoline,and alcoholic beverages called

Accepted Answer

A) sales taxes 
B) excise taxes 
C) social insurance taxes 
D) consumption taxes 
A) sales taxes 
B) excise taxes 
C) social insurance taxes 
D) consumption taxes

Question 18

What does tax incidence refer to

Accepted Answer

A) what product or service the tax is levied on 
B) who bears the tax burden 
C) what sector of the economy the imposed tax most affects 
D) the impact a tax will have on the economy 
A) what product or service the tax is levied on 
B) who bears the tax burden 
C) what sector of the economy the imposed tax most affects 
D) the impact a tax will have on the economy

Question 19

Scenario 12-1
Suppose Jeremy and Kelsey receive great satisfaction from their consumption of turkey.Kelsey would be willing to purchase only one slice and would pay up to $5 for it.Jeremy would be willing to pay $8 for his first slice, $6 for his second slice, and $2 for his third slice.The current market price is $2 per slice.
-Refer to Scenario 12-1.If a tax of $4 is levied on each slice of turkey,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 20

From which source do provincial and local governments NOT generate revenue

Accepted Answer

A) sales taxes 
B) the federal government 
C) corporate income taxes 
D) customs duties 
A) sales taxes 
B) the federal government 
C) corporate income taxes 
D) customs duties

Exam 12: The Design of the Tax System

The federal government collects taxes in a number of ways.Which of the following ranks the following sources of revenue from the largest to the smallest

What is total taxes paid divided by total income

MaKenna earns income of $80,000 per year.Her average tax rate is 50 percent.MaKenna paid $7000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000

-Refer to Table 12-8.Which tax illustrates a regressive tax

Which statement best describes tax evasion

What is the ranking of the following provincial and local government expenditure categories from largest to smallest

What does horizontal equity state that taxpayers with similar incomes should pay

What happens when interest income from savings is taxed

When the government taxes labour earnings,what can we expect people to do

What does the average tax rate measure

When a taxpayer attempts to legally reduce her tax liability,what is she engaging in

The federal government collects about one-half of the taxes in our economy.

While debate over tax policy is complex,how do economists play an important role

Vertical equity is not consistent with a regressive tax structure.

What is an income tax in which the average tax rate is the same for all taxpayers

What is one of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity

What are taxes on specific goods such as cigarettes,gasoline,and alcoholic beverages called

What does tax incidence refer to

From which source do provincial and local governments NOT generate revenue

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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