Question 1

Tax loopholes often arise from ambiguities or omissions in the tax laws.

Accepted Answer

A) True 
 B)False

Question 2

What happens as government debt increases

Accepted Answer

A) Evidence suggests that spending on social insurance programs will be reduced. 
B) Government must spend a larger share of its revenue on interest payments. 
C) A trade-off with government deficits is inevitable. 
D) Taxes must rise to cover the deficit. 
A) Evidence suggests that spending on social insurance programs will be reduced. 
B) Government must spend a larger share of its revenue on interest payments. 
C) A trade-off with government deficits is inevitable. 
D) Taxes must rise to cover the deficit.

Question 3

What are tax systems that impose record keeping requirements on taxpayers said to have

Accepted Answer

A) an auditing burden 
B) a lower incidence of compliance 
C) an administrative burden 
D) a certification requirement 
A) an auditing burden 
B) a lower incidence of compliance 
C) an administrative burden 
D) a certification requirement

Question 4

Table 12-2
  
-Refer to Table 12-2.If the price of a weekend ski pass is $138 and this price reflects the actual unit cost of providing a weekend of skiing,how much consumer surplus accrues to Allyn and Greg,respectively

Accepted Answer

A) $37 and $17 
B) $47 and $27 
C) $49 and $35 
D) $85 and $65 
A) $37 and $17 
B) $47 and $27 
C) $49 and $35 
D) $85 and $65

Question 5

Which tax systems is most fair

Accepted Answer

A) Low-income taxpayers pay a smaller amount of tax. 
B) High-income taxpayers pay a larger fraction of their income. 
C) All taxpayers pay the same fraction of income. 
D) There is no objective way to assess fairness. 
A) Low-income taxpayers pay a smaller amount of tax. 
B) High-income taxpayers pay a larger fraction of their income. 
C) All taxpayers pay the same fraction of income. 
D) There is no objective way to assess fairness.

Question 6

How is the incidence of a tax determined

Accepted Answer

A) It is not required when one is only interested in issues of equity. 
B) It is identical to the determination of legal liability for a tax. 
C) It requires one to evaluate where the tax burden eventually falls. 
D) It is solely determined by conditions of the "flypaper theory" of taxation. 
A) It is not required when one is only interested in issues of equity. 
B) It is identical to the determination of legal liability for a tax. 
C) It requires one to evaluate where the tax burden eventually falls. 
D) It is solely determined by conditions of the "flypaper theory" of taxation.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

What is the benefits principle used to justify

Accepted Answer

A) property taxes 
B) the gasoline tax 
C) taxes on cigarettes and alcoholic beverages 
D) personal income taxes 
A) property taxes 
B) the gasoline tax 
C) taxes on cigarettes and alcoholic beverages 
D) personal income taxes

Question 9

What is the tax that generates the most revenue for provincial and local governments

Accepted Answer

A) corporate income tax 
B) personal income tax 
C) property tax 
D) excise tax 
A) corporate income tax 
B) personal income tax 
C) property tax 
D) excise tax

Question 10

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

Accepted Answer

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

Question 11

List the three most important expenditure programs of the federal government.How do these differ from the three most important expenditure programs of provincial and local governments
 Explain why it makes more sense for the federal government to purchase "national defence" rather than provincial governments.

Accepted Answer

Federal government: CHST,Old Age Securit

Question 12

How does one calculate personal income taxes

Accepted Answer

A) It is based on a person's taxable income and a tax schedule. 
B) It is largely unaffected by deductions. 
C) It is the person's total income minus tax credits. 
D) It is some constant percentage of income. 
A) It is based on a person's taxable income and a tax schedule. 
B) It is largely unaffected by deductions. 
C) It is the person's total income minus tax credits. 
D) It is some constant percentage of income.

Question 13

In which markets do deadweight losses occur

Accepted Answer

A) markets in which firms decide to downsize 
B) markets in which the government imposes a tax 
C) markets in which profits fall because of low consumer demand 
D) markets in which equilibrium price rises, causing a loss in consumer surplus 
A) markets in which firms decide to downsize 
B) markets in which the government imposes a tax 
C) markets in which profits fall because of low consumer demand 
D) markets in which equilibrium price rises, causing a loss in consumer surplus

Question 14

Why is corporate tax popular among voters but economists believe consumers and workers bear most of the tax

Accepted Answer

The corporate income tax shows how dange

Question 15

What is the marginal tax rate for a lump-sum tax

Accepted Answer

A) always positive 
B) always negative 
C) zero 
D) can take on any value, but must always lie above the average tax 
A) always positive 
B) always negative 
C) zero 
D) can take on any value, but must always lie above the average tax

Question 16

Two families who live in Wawa have identical incomes.The Smiths deduct $5000 from their taxable income for child support interest paid during the year,while the Jones family is not eligible for this deduction.What does this situation exemplify

Accepted Answer

A) an application of the benefits principle of taxation 
B) a violation of horizontal equity 
C) a violation of vertical equity 
D) an application of egalitarian tax rules 
A) an application of the benefits principle of taxation 
B) a violation of horizontal equity 
C) a violation of vertical equity 
D) an application of egalitarian tax rules

Question 17

What happens if people do most of their saving through RRSP accounts

Accepted Answer

A) Their tax bill will reflect a lower return on savings than would otherwise be the case. 
B) Their tax bill is largely based on consumption rather than income. 
C) Even though taxes are deferred to some later date, their after-tax lifetime income is unchanged. 
D) Tax-deferred savings plans will increase tax equity. 
A) Their tax bill will reflect a lower return on savings than would otherwise be the case. 
B) Their tax bill is largely based on consumption rather than income. 
C) Even though taxes are deferred to some later date, their after-tax lifetime income is unchanged. 
D) Tax-deferred savings plans will increase tax equity.

Question 18

Not all provinces have sales taxes.

Accepted Answer

A) True 
 B)False

Question 19

What is NOT a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers

Accepted Answer

A) Everyone can easily compute the amount of tax they owe. 
B) There is no benefit to hiring an accountant to do your taxes. 
C) Everyone owes the same amount of tax, regardless of earnings. 
D) There is no deadweight loss. 
A) Everyone can easily compute the amount of tax they owe. 
B) There is no benefit to hiring an accountant to do your taxes. 
C) Everyone owes the same amount of tax, regardless of earnings. 
D) There is no deadweight loss.

Question 20

The most important taxes for the federal government are individual income taxes and corporate income taxes.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

Tax loopholes often arise from ambiguities or omissions in the tax laws.

What happens as government debt increases

What are tax systems that impose record keeping requirements on taxpayers said to have

Table 12-2 -Refer to Table 12-2.If the price of a weekend ski pass is $138 and this price reflects the actual unit cost of providing a weekend of skiing,how much consumer surplus accrues to Allyn and Greg,respectively

Which tax systems is most fair

How is the incidence of a tax determined

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

What is the benefits principle used to justify

What is the tax that generates the most revenue for provincial and local governments

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

How does one calculate personal income taxes

In which markets do deadweight losses occur

Why is corporate tax popular among voters but economists believe consumers and workers bear most of the tax

What is the marginal tax rate for a lump-sum tax

Two families who live in Wawa have identical incomes.The Smiths deduct $5000 from their taxable income for child support interest paid during the year,while the Jones family is not eligible for this deduction.What does this situation exemplify

What happens if people do most of their saving through RRSP accounts

Not all provinces have sales taxes.

What is NOT a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers

The most important taxes for the federal government are individual income taxes and corporate income 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 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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