Question 1

In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal government?

Accepted Answer

A)  5% 
B)  12% 
C)  36% 
D)  44% 
A)  5% 
B)  12% 
C)  36% 
D)  44%

Question 2

Table 12-3
  
-Refer to Table 12-3. What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)  20% 
B)  30% 
C)  40% 
D)  50% 
A)  20% 
B)  30% 
C)  40% 
D)  50%

Question 3

One reason that deadweight losses are so difficult to avoid is that

Accepted Answer

A)  taxes affect the decisions that people make. 
B)  income taxes are not paid by everyone. 
C)  consumption taxes must be universally applied to all commodities. 
D)  the administrative burden is hard to calculate. 
A)  taxes affect the decisions that people make. 
B)  income taxes are not paid by everyone. 
C)  consumption taxes must be universally applied to all commodities. 
D)  the administrative burden is hard to calculate.

Question 4

The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest.

Accepted Answer

A)  corporate income taxes, individual income taxes, social insurance taxes 
B)  social insurance taxes, individual income taxes, corporate income taxes 
C)  individual income taxes, social insurance taxes, corporate income taxes 
D)  individual income taxes, corporate income taxes, social insurance taxes 
A)  corporate income taxes, individual income taxes, social insurance taxes 
B)  social insurance taxes, individual income taxes, corporate income taxes 
C)  individual income taxes, social insurance taxes, corporate income taxes 
D)  individual income taxes, corporate income taxes, social insurance taxes

Question 5

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Accepted Answer

Both have increased over time, but the p

Question 6

A budget deficit

Accepted Answer

A)  occurs when government receipts are less than spending. 
B)  occurs when government spending is less than receipts. 
C)  occurs when government receipts are equal to spending. 
D)  is the accumulation of years of government overspending. 
A)  occurs when government receipts are less than spending. 
B)  occurs when government spending is less than receipts. 
C)  occurs when government receipts are equal to spending. 
D)  is the accumulation of years of government overspending.

Question 7

Which of the following programs is not included in the federal income security spending?

Accepted Answer

A)  Social Security 
B)  welfare 
C)  education 
D)  unemployment compensation 
A)  Social Security 
B)  welfare 
C)  education 
D)  unemployment compensation

Question 8

Table 12-3
  
-Refer to Table 12-3. What is the average tax rate for a person who makes $60,000?

Accepted Answer

A)  20% 
B)  30% 
C)  40% 
D)  50% 
A)  20% 
B)  30% 
C)  40% 
D)  50%

Question 9

Tax evasion is legal, but tax avoidance is illegal.

Accepted Answer

A) True 
 B)False

Question 10

If James earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 25 percent.

Accepted Answer

A) True 
 B)False

Question 11

A lump-sum tax would take different amounts from the poor and the rich.

Accepted Answer

A) True 
 B)False

Question 12

In general, Democrats tend to prefer

Accepted Answer

A)  higher marginal tax rates to promote vertical equity, while Republicans tend to prefer lower marginal tax rates to promote incentives to work and save. 
B)  lower marginal tax rates to promote vertical equity, while Republicans tend to prefer higher marginal tax rates to promote incentives to work and save. 
C)  higher marginal tax rates to promote incentives to work and save, while Republicans tend to prefer lower marginal tax rates to promote vertical equity. 
D)  lower marginal tax rates to promote incentives to work and save, while Republicans tend to prefer higher marginal tax rates to promote vertical equity. 
A)  higher marginal tax rates to promote vertical equity, while Republicans tend to prefer lower marginal tax rates to promote incentives to work and save. 
B)  lower marginal tax rates to promote vertical equity, while Republicans tend to prefer higher marginal tax rates to promote incentives to work and save. 
C)  higher marginal tax rates to promote incentives to work and save, while Republicans tend to prefer lower marginal tax rates to promote vertical equity. 
D)  lower marginal tax rates to promote incentives to work and save, while Republicans tend to prefer higher marginal tax rates to promote vertical equity.

Question 13

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Accepted Answer

A) True 
 B)False

Question 14

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 15

The largest category of federal government spending is growing because

Accepted Answer

A)  the U.S. must spend more on national defense due to the war against terror. 
B)  the elderly population is increasing due to rising life expectancies. 
C)  expenditures on space exploration have increased dramatically. 
D)  expenditures on school voucher programs have increased dramatically. 
A)  the U.S. must spend more on national defense due to the war against terror. 
B)  the elderly population is increasing due to rising life expectancies. 
C)  expenditures on space exploration have increased dramatically. 
D)  expenditures on school voucher programs have increased dramatically.

Question 16

Scenario 12-3
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 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. How much tax revenue will be generated from sales to Regina and Roger?

Accepted Answer

A)  zero 
B)  $4 
C)  $8 
D)  $12 
A)  zero 
B)  $4 
C)  $8 
D)  $12

Question 17

Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $11. Athos values a lesson at $16, Porthos at $14, and Aramis at $12. Suppose that if the government taxes fencing lessons at $2 each, the price will rise to $13. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)  $4 and tax revenues increase by $6, so there is a deadweight loss of $2. 
B)  $6 and tax revenues increase by $6, so there is no deadweight loss. 
C)  $5 and tax revenues increase by $6, so there is no deadweight loss. 
D)  $5 and tax revenues increase by $4, so there is a deadweight loss of $1. 
A)  $4 and tax revenues increase by $6, so there is a deadweight loss of $2. 
B)  $6 and tax revenues increase by $6, so there is no deadweight loss. 
C)  $5 and tax revenues increase by $6, so there is no deadweight loss. 
D)  $5 and tax revenues increase by $4, so there is a deadweight loss of $1.

Question 18

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the average 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 average tax rate cannot be determined without knowing the entire tax schedule. 
A)  0% 
B)  10% 
C)  More than 10% 
D)  The average tax rate cannot be determined without knowing the entire tax schedule.

Question 19

Table 12-25
  
-Refer to Table 12-25. Do any of the plans achieve vertical equity?

Accepted Answer

Yes. People with hig

Question 20

A payroll tax is also referred to as a social insurance tax.

Accepted Answer

A) True 
 B)False

In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal government?

Table 12-3 -Refer to Table 12-3. What is the marginal tax rate for a person who makes $60,000?

One reason that deadweight losses are so difficult to avoid is that

The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest.

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

A budget deficit

Which of the following programs is not included in the federal income security spending?

Table 12-3 -Refer to Table 12-3. What is the average tax rate for a person who makes $60,000?

Tax evasion is legal, but tax avoidance is illegal.

If James earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 25 percent.

A lump-sum tax would take different amounts from the poor and the rich.

In general, Democrats tend to prefer

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

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

The largest category of federal government spending is growing because

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

Table 12-25 -Refer to Table 12-25. Do any of the plans achieve vertical equity?

A payroll tax is also referred to as a social insurance 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 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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Exam 12: The Design of the Tax System

In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal government?

Table 12-3 -Refer to Table 12-3. What is the marginal tax rate for a person who makes $60,000?

One reason that deadweight losses are so difficult to avoid is that

The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest.

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

A budget deficit

Which of the following programs is not included in the federal income security spending?

Table 12-3 -Refer to Table 12-3. What is the average tax rate for a person who makes $60,000?

Tax evasion is legal, but tax avoidance is illegal.

If James earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 25 percent.

A lump-sum tax would take different amounts from the poor and the rich.

In general, Democrats tend to prefer

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

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

The largest category of federal government spending is growing because

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

Table 12-25 -Refer to Table 12-25. Do any of the plans achieve vertical equity?

A payroll tax is also referred to as a social insurance 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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters