Question 1

Which of the following is not a way that a corporate tax on the income of U.S.car companies will affect markets?

Accepted Answer

A)  The price of cars will rise. 
B)  The wages of auto workers will fall. 
C)  Owners of car companies (stockholders)will receive less profit. 
D)  Less deadweight loss will occur since corporations are entities and not people who respond to incentives. 
A)  The price of cars will rise. 
B)  The wages of auto workers will fall. 
C)  Owners of car companies (stockholders)will receive less profit. 
D)  Less deadweight loss will occur since corporations are entities and not people who respond to incentives.

Question 2

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2.What is total consumer surplus for Bob and Lisa?

Accepted Answer

A)  $0 
B)  $2 
C)  $5 
D)  $7 
A)  $0 
B)  $2 
C)  $5 
D)  $7

Question 3

Table 12-15
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
  
-Refer to Table 12-15.Which of the three tax systems is progressive?

Accepted Answer

A)  Tax System A 
B)  Tax System B 
C)  Tax System C 
D)  All of the tax systems are progressive. 
A)  Tax System A 
B)  Tax System B 
C)  Tax System C 
D)  All of the tax systems are progressive.

Question 4

As of 2005,the largest source of receipts for state and local governments was individual income taxes.

Accepted Answer

A) True 
 B)False

Question 5

Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake.Joan would be willing to purchase only one slice and would pay up to $6 for it.Jim would be willing to pay $9 for his first slice,$7 for his second slice,and $3 for his third slice.The current market price is $3 per slice.
-Refer to Scenario 12-1.Assume that the government places a $4 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)  $3 
B)  $6 
C)  $8 
D)  $9 
A)  $3 
B)  $6 
C)  $8 
D)  $9

Question 6

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2.Suppose the government levies a tax of $1 on each movie ticket and that,as a result,the price of a movie ticket increases to $6.00.If Bob and Lisa both purchase a movie ticket,what is total consumer surplus for Bob and Lisa?

Accepted Answer

A)  $0.00 
B)  $0.50 
C)  $5.00 
D)  $6.00 
A)  $0.00 
B)  $0.50 
C)  $5.00 
D)  $6.00

Question 8

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Accepted Answer

A)  10% 
B)  40% 
C)  50% 
D)  67% 
A)  10% 
B)  40% 
C)  50% 
D)  67%

Question 9

The two taxes that together provide the U.S.federal government with approximately 80 percent of its revenue are

Accepted Answer

A)  individual income taxes and property taxes. 
B)  individual income taxes and corporate income taxes. 
C)  individual income taxes and payroll taxes. 
D)  sales taxes and payroll taxes. 
A)  individual income taxes and property taxes. 
B)  individual income taxes and corporate income taxes. 
C)  individual income taxes and payroll taxes. 
D)  sales taxes and payroll taxes.

Question 10

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 11

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 12

Medicaid is

Accepted Answer

A)  the government's health plan for the elderly. 
B)  the government's health plan for the poor. 
C)  another name for Social Security. 
D)  Both a and c are correct. 
A)  the government's health plan for the elderly. 
B)  the government's health plan for the poor. 
C)  another name for Social Security. 
D)  Both a and c are correct.

Question 13

If your income is $50,000,your income tax liability is $10,000,and you paid $0.25 in taxes on the last dollar you earned,your

Accepted Answer

A)  marginal tax rate is 20 percent. 
B)  average tax rate is 5 percent. 
C)  marginal tax rate is 25 percent. 
D)  average tax rate is 25 percent. 
A)  marginal tax rate is 20 percent. 
B)  average tax rate is 5 percent. 
C)  marginal tax rate is 25 percent. 
D)  average tax rate is 25 percent.

Question 14

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the marginal income tax rate for an individual who earns $40,000 during the year?

Accepted Answer

A)  0% 
B)  10% 
C)  More than 10% 
D)  The marginal tax rate cannot be determined without knowing the entire tax schedule. 
A)  0% 
B)  10% 
C)  More than 10% 
D)  The marginal tax rate cannot be determined without knowing the entire tax schedule.

Question 15

Table 12-6
  
-Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

Accepted Answer

A)  25% 
B)  28% 
C)  40% 
D)  60% 
A)  25% 
B)  28% 
C)  40% 
D)  60%

Question 16

Medicare has been the focus of many proposed reforms over the last several years because

Accepted Answer

A)  health care costs have risen more rapidly than the cost of other goods and services produced in the economy. 
B)  nationalized health care systems are more efficient than private health care systems. 
C)  cures for many major diseases are likely to be found in the next few years. 
D)  government health care research has found that limiting access to doctors will increase the general health of the population. 
A)  health care costs have risen more rapidly than the cost of other goods and services produced in the economy. 
B)  nationalized health care systems are more efficient than private health care systems. 
C)  cures for many major diseases are likely to be found in the next few years. 
D)  government health care research has found that limiting access to doctors will increase the general health of the population.

Question 17

The deadweight loss of an income tax is determined by the

Accepted Answer

A)  amount of total tax revenue to the government. 
B)  marginal tax rate. 
C)  average tax rate. 
D)  ability-to-pay principle. 
A)  amount of total tax revenue to the government. 
B)  marginal tax rate. 
C)  average tax rate. 
D)  ability-to-pay principle.

Question 18

Table 12-17
  
-Refer to Table 12-17.A regressive tax is illustrated by tax

Accepted Answer

A)  A only. 
B)  B or D. 
C)  C only. 
D)  A or D. 
A)  A only. 
B)  B or D. 
C)  C only. 
D)  A or D.

Question 19

Nancy paid a tax of $0.50 on the last dollar she earned in 1999.Nancy's marginal tax rate in 1999 was

Accepted Answer

A)  more than 50 percent. 
B)  exactly 50 percent. 
C)  higher than her average tax rate. 
D)  lower than her average tax rate. 
A)  more than 50 percent. 
B)  exactly 50 percent. 
C)  higher than her average tax rate. 
D)  lower than her average tax rate.

Question 20

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

Accepted Answer

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

Exam 12: The Design of the Tax System

Which of the following is not a way that a corporate tax on the income of U.S.car companies will affect markets?

Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5. -Refer to Scenario 12-2.What is total consumer surplus for Bob and Lisa?

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-15.Which of the three tax systems is progressive?

As of 2005,the largest source of receipts for state and local governments was individual income taxes.

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

The U.S.federal government collects approximately what percentage of the taxes in the economy?

The two taxes that together provide the U.S.federal government with approximately 80 percent of its revenue are

State and local government spending on public welfare includes

According to long-run projections,under current law,

Medicaid is

If your income is $50,000,your income tax liability is $10,000,and you paid $0.25 in taxes on the last dollar you earned,your

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the marginal income tax rate for an individual who earns $40,000 during the year?

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

Medicare has been the focus of many proposed reforms over the last several years because

The deadweight loss of an income tax is determined by the

Table 12-17 -Refer to Table 12-17.A regressive tax is illustrated by tax

Nancy paid a tax of $0.50 on the last dollar she earned in 1999.Nancy's marginal tax rate in 1999 was

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

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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