Question 1

Which of the following statements concerning the federal corporate income tax is true?

Accepted Answer

A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. 
B) The incidence of the corporate income tax can be determined by using demand and supply analysis. 
C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. 
D) The corporate income tax is an example of the benefits-received principle. 
A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. 
B) The incidence of the corporate income tax can be determined by using demand and supply analysis. 
C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. 
D) The corporate income tax is an example of the benefits-received principle.

Question 2

The horizontal-equity principle of taxation is not easy to use in practice because

Accepted Answer

A) some people engage in rent seeking to reduce their taxes below the level other people pay. 
B) people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. 
C) different people receive different levels of government benefits even if their incomes are the same. 
D) it is difficult to determine whether people are in the same economic situation. 
A) some people engage in rent seeking to reduce their taxes below the level other people pay. 
B) people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. 
C) different people receive different levels of government benefits even if their incomes are the same. 
D) it is difficult to determine whether people are in the same economic situation.

Question 3

Figure 16.2   Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold,

Accepted Answer

A) the deadweight loss is identical under either supply curve. 
B) the deadweight loss is greater under the supply curve S1. 
C) the deadweight loss is greater under the supply curve S0. 
D) there is no deadweight loss since revenue raised is used to fund government projects. 
A) the deadweight loss is identical under either supply curve. 
B) the deadweight loss is greater under the supply curve S1. 
C) the deadweight loss is greater under the supply curve S0. 
D) there is no deadweight loss since revenue raised is used to fund government projects.

Question 4

If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) unfair. 
A) regressive. 
B) proportional. 
C) progressive. 
D) unfair.

Question 5

The term tax incidence refers to

Accepted Answer

A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes. 
A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes.

Question 6

To what does a personal exemption apply?

Accepted Answer

A) The tax bracket that represents basic living expenses 
B) The tax rate that applies to a particular tax bracket 
C) An amount representing basic living expenses that can be subtracted from income. 
D) A dispensation that allows certain qualifying individuals not to pay federal taxes. 
A) The tax bracket that represents basic living expenses 
B) The tax rate that applies to a particular tax bracket 
C) An amount representing basic living expenses that can be subtracted from income. 
D) A dispensation that allows certain qualifying individuals not to pay federal taxes.

Question 7

All of the following occur whenever a government taxes a product except

Accepted Answer

A) the quantity consumed of that product falls. 
B) the price of that product rises. 
C) the marginal benefit of the last unit sold exceeds the marginal cost of producing it. 
D) there will be no excess burden if the government's tax revenue is sufficiently large to offset the deadweight loss. 
A) the quantity consumed of that product falls. 
B) the price of that product rises. 
C) the marginal benefit of the last unit sold exceeds the marginal cost of producing it. 
D) there will be no excess burden if the government's tax revenue is sufficiently large to offset the deadweight loss.

Question 8

In reference to the federal income tax system, a tax bracket is

Accepted Answer

A) the estimated amount of federal income tax firms withhold from their employees' paychecks. 
B) the formula the federal government uses to determine the dollar amount of the personal exemption and the amounts taxpayers are allowed for deductions from their incomes. 
C) used to determine the average tax rate. 
D) the income range within which a tax rate applies. 
A) the estimated amount of federal income tax firms withhold from their employees' paychecks. 
B) the formula the federal government uses to determine the dollar amount of the personal exemption and the amounts taxpayers are allowed for deductions from their incomes. 
C) used to determine the average tax rate. 
D) the income range within which a tax rate applies.

Question 9

Last year, Anthony Millanti earned exactly $30 000 of taxable income.Assume that the income tax system used to determine Anthony's tax liability is progressive.The table below lists the tax brackets and the marginal tax rates that apply to each bracket.
a. Draw a new table that lists the amounts of income tax that Anthony is obligated to pay for each tax bracket, and the total tax he owes the government.(Assume that there are no allowable tax deductions, tax credits, personal exemptions or any other deductions that Anthony can use to reduce his tax liability).
b.Determine Anthony's average tax rate.

Accepted Answer

a. @#IMG-DLM& b.The average tax rate is

Question 10

According to the benefits-received principle of taxation,

Accepted Answer

A) individuals who receive the benefits from a government program should pay the taxes that support the program. 
B) because high income individuals receive the most benefits from government programs, they should pay more taxes than lower income individuals. 
C) people in the same economic situation should bear an equal share of the tax burden. 
D) the benefits of government programs such as national defense are shared equally by all people; therefore, the burden of paying for these programs should be shared equally. 
A) individuals who receive the benefits from a government program should pay the taxes that support the program. 
B) because high income individuals receive the most benefits from government programs, they should pay more taxes than lower income individuals. 
C) people in the same economic situation should bear an equal share of the tax burden. 
D) the benefits of government programs such as national defense are shared equally by all people; therefore, the burden of paying for these programs should be shared equally.

Question 11

Figure 16.2   Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Accepted Answer

A) is Pa - Pd under either supply curve. 
B) is Pb - Pe under either supply curve. 
C) is Pa - Pd if the supply curve is S0 and Pb - Pe if the supply curve is S1. 
D) is Pc - Pd if the supply curve is S0 and Pc - Pe if the supply curve is S1. 
A) is Pa - Pd under either supply curve. 
B) is Pb - Pe under either supply curve. 
C) is Pa - Pd if the supply curve is S0 and Pb - Pe if the supply curve is S1. 
D) is Pc - Pd if the supply curve is S0 and Pc - Pe if the supply curve is S1.

Question 12

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

Accepted Answer

A) The higher incomes of the 1 per cent may give them disproportionate political influence through campaign contributions. 
B) Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. 
C) Further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth. 
D) Rising income inequality can lead to political unrest. 
A) The higher incomes of the 1 per cent may give them disproportionate political influence through campaign contributions. 
B) Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. 
C) Further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth. 
D) Rising income inequality can lead to political unrest.

Question 13

How does a proportional tax impact people with lower incomes?

Accepted Answer

A) They pay a lower percentage of their incomes in tax than do people with higher incomes. 
B) They pay a higher percentage of their incomes in tax than do people with higher incomes. 
C) They pay the same percentage of their incomes in tax as do people with higher incomes. 
D) They pay the same amount of taxes as people with higher incomes pay. 
A) They pay a lower percentage of their incomes in tax than do people with higher incomes. 
B) They pay a higher percentage of their incomes in tax than do people with higher incomes. 
C) They pay the same percentage of their incomes in tax as do people with higher incomes. 
D) They pay the same amount of taxes as people with higher incomes pay.

Question 14

Figure 16.1  
-Refer to Figure 16.1.The excess burden of the tax is represented by the area

Accepted Answer

A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G. 
A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G.

Question 15

'For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic.' This statement is

Accepted Answer

A) correct. 
B) incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand. 
C) incorrect.When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic. 
D) incorrect.The statement confuses demand with quantity demanded. 
A) correct. 
B) incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand. 
C) incorrect.When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic. 
D) incorrect.The statement confuses demand with quantity demanded.

Question 16

If you pay $2000 in taxes on an income of $30 000, and a tax of $4000 on an income of $40 000, then over this range of income the tax is

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) There is insufficient information to answer the question. 
A) regressive. 
B) proportional. 
C) progressive. 
D) There is insufficient information to answer the question.

Question 17

What happens when the demand for a product is less elastic than the supply?

Accepted Answer

A) Consumers pay the entire tax on the product. 
B) Firms pay the majority of the tax on the product. 
C) Firms pay the entire tax on the product. 
D) Consumers pay the majority of the tax on the product. 
A) Consumers pay the entire tax on the product. 
B) Firms pay the majority of the tax on the product. 
C) Firms pay the entire tax on the product. 
D) Consumers pay the majority of the tax on the product.

Question 18

What is the difference between a marginal tax rate and an average tax rate? Which is more important in determining the impact of the tax system on economic behaviour?

Accepted Answer

A marginal tax rate is the fraction of e

Question 19

What happens as the value of the Gini coefficient approaches zero?

Accepted Answer

A) Income distribution becomes more unequal. 
B) Income distribution becomes less unequal. 
C) The percentage of the population under the poverty line decreases. 
D) The percentage of the population under the poverty line increases. 
A) Income distribution becomes more unequal. 
B) Income distribution becomes less unequal. 
C) The percentage of the population under the poverty line decreases. 
D) The percentage of the population under the poverty line increases.

Question 20

If your income is $92 000 and you pay taxes of $19 475, what is your average tax rate? Show your work.

Accepted Answer

Average tax rate = $

Which of the following statements concerning the federal corporate income tax is true?

The horizontal-equity principle of taxation is not easy to use in practice because

Figure 16.2 Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold,

If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is

The term tax incidence refers to

To what does a personal exemption apply?

All of the following occur whenever a government taxes a product except

In reference to the federal income tax system, a tax bracket is

According to the benefits-received principle of taxation,

Figure 16.2 Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

How does a proportional tax impact people with lower incomes?

Figure 16.1 -Refer to Figure 16.1.The excess burden of the tax is represented by the area

'For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic.' This statement is

If you pay $2000 in taxes on an income of $30 000, and a tax of $4000 on an income of $40 000, then over this range of income the tax is

What happens when the demand for a product is less elastic than the supply?

What is the difference between a marginal tax rate and an average tax rate? Which is more important in determining the impact of the tax system on economic behaviour?

What happens as the value of the Gini coefficient approaches zero?

If your income is $92 000 and you pay taxes of $19 475, what is your average tax rate? Show your work.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

Filters

Exam 16: The Distribution of Income and Social Policy

Which of the following statements concerning the federal corporate income tax is true?

The horizontal-equity principle of taxation is not easy to use in practice because

Figure 16.2 Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold,

If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is

The term tax incidence refers to

To what does a personal exemption apply?

All of the following occur whenever a government taxes a product except

In reference to the federal income tax system, a tax bracket is

According to the benefits-received principle of taxation,

Figure 16.2 Figure 16.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 16.2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 per cent is damaging to the country?

How does a proportional tax impact people with lower incomes?

Figure 16.1 -Refer to Figure 16.1.The excess burden of the tax is represented by the area

'For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic.' This statement is

If you pay $2000 in taxes on an income of $30 000, and a tax of $4000 on an income of $40 000, then over this range of income the tax is

What happens when the demand for a product is less elastic than the supply?

What is the difference between a marginal tax rate and an average tax rate? Which is more important in determining the impact of the tax system on economic behaviour?

What happens as the value of the Gini coefficient approaches zero?

If your income is $92 000 and you pay taxes of $19 475, what is your average tax rate? Show your work.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

Filters