Question 1

Table 12-4
  
-Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000?

Accepted Answer

A)  30% 
B)  40% 
C)  50% 
D)  60% 
A)  30% 
B)  40% 
C)  50% 
D)  60%

Question 2

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
  
-Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2012?

Accepted Answer

A)  10% 
B)  15% 
C)  12.5% 
D)  28% 
A)  10% 
B)  15% 
C)  12.5% 
D)  28%

Question 3

A tax that is higher for men than for women violates the criterion of

Accepted Answer

A)  horizontal equity. 
B)  vertical equity. 
C)  the ability-to-pay principle. 
D)  the marriage tax. 
A)  horizontal equity. 
B)  vertical equity. 
C)  the ability-to-pay principle. 
D)  the marriage tax.

Question 4

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. How much total consumer surplus do Regina and Roger collectively receive from consuming cheesecake?

Accepted Answer

A)  $3 
B)  $6 
C)  $9 
D)  $13 
A)  $3 
B)  $6 
C)  $9 
D)  $13

Question 5

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. Which of the following statements is correct?

Accepted Answer

A)  Roger will bear the full burden of the deadweight loss. 
B)  Regina will bear the full burden of the deadweight loss. 
C)  Both Regina and Roger will share the burden of the deadweight loss. 
D)  There will be no deadweight loss. 
A)  Roger will bear the full burden of the deadweight loss. 
B)  Regina will bear the full burden of the deadweight loss. 
C)  Both Regina and Roger will share the burden of the deadweight loss. 
D)  There will be no deadweight loss.

Question 6

Government spending is projected to rise over the next few decades. Three of the most important reasons are spending on Social Security, Medicare, and healthcare.

Accepted Answer

A) True 
 B)False

Question 7

Because the marginal tax rate rises as income rises,

Accepted Answer

A)  higher income families, in general, pay a larger percentage of their income in taxes. 
B)  lower income families, in general, pay a larger percentage of their income in taxes. 
C)  a disproportionately large share of the tax burden falls upon the poor. 
D)  higher income families pay the same percentage of their income in taxes as lower-income families. 
A)  higher income families, in general, pay a larger percentage of their income in taxes. 
B)  lower income families, in general, pay a larger percentage of their income in taxes. 
C)  a disproportionately large share of the tax burden falls upon the poor. 
D)  higher income families pay the same percentage of their income in taxes as lower-income families.

Question 8

Which of the following is an example of an excise tax?

Accepted Answer

A)  a tax on the wages that a firm pays its workers 
B)  a tax on tobacco 
C)  a tax on corporate profits 
D)  the portion of federal income taxes earmarked to pay for Social Security and Medicare 
A)  a tax on the wages that a firm pays its workers 
B)  a tax on tobacco 
C)  a tax on corporate profits 
D)  the portion of federal income taxes earmarked to pay for Social Security and Medicare

Question 9

The federal taxes owed by a taxpayer depend

Accepted Answer

A)  only upon the marginal tax rate on the taxpayer's first $25,000 of income. 
B)  only upon the marginal tax rate on the taxpayer's last $10,000 of income. 
C)  upon all the marginal tax rates up to the taxpayer's overall level of income. 
D)  upon all the marginal tax rates, including those for income levels that exceed the taxpayer's overall level of income. 
A)  only upon the marginal tax rate on the taxpayer's first $25,000 of income. 
B)  only upon the marginal tax rate on the taxpayer's last $10,000 of income. 
C)  upon all the marginal tax rates up to the taxpayer's overall level of income. 
D)  upon all the marginal tax rates, including those for income levels that exceed the taxpayer's overall level of income.

Question 10

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the marginal tax rate when income is $60,000?

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  50 percent 
A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  50 percent

Question 11

Table 12-1
  
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. The deadweight loss associated with the tax is

Accepted Answer

A)  $5. 
B)  $12. 
C)  $36. 
D)  $41. 
A)  $5. 
B)  $12. 
C)  $36. 
D)  $41.

Question 12

Deadweight losses are associated with

Accepted Answer

A)  taxes that distort the incentives that people face. 
B)  taxes that target expenditures on survivor's benefits for Social Security. 
C)  taxes that have no efficiency losses. 
D)  lump-sum taxes. 
A)  taxes that distort the incentives that people face. 
B)  taxes that target expenditures on survivor's benefits for Social Security. 
C)  taxes that have no efficiency losses. 
D)  lump-sum taxes.

Question 13

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?

Accepted Answer

A)  A lump-sum tax would achieve the second goal but not the first. 
B)  A regressive tax would achieve the second goal but not the first. 
C)  A progressive tax could achieve both goals. 
D)  A proportional tax could achieve the second goal but not the first. 
A)  A lump-sum tax would achieve the second goal but not the first. 
B)  A regressive tax would achieve the second goal but not the first. 
C)  A progressive tax could achieve both goals. 
D)  A proportional tax could achieve the second goal but not the first.

Question 14

Suppose the government levies a "fat tax" on naturally­sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Accepted Answer

A)  ability-to-pay principle. 
B)  benefits principle. 
C)  vertical-equity principle. 
D)  horizontal-equity principle. 
A)  ability-to-pay principle. 
B)  benefits principle. 
C)  vertical-equity principle. 
D)  horizontal-equity principle.

Question 15

Which of the following countries has lower total government tax revenue as a percentage of GDP than the United States?

Accepted Answer

A)  Canada 
B)  Germany 
C)  Sweden 
D)  Mexico 
A)  Canada 
B)  Germany 
C)  Sweden 
D)  Mexico

Question 16

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) two people with the same total income would pay taxes of the same amount, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following tax systems could achieve both goals?

Accepted Answer

A)  a lump-sum tax 
B)  a regressive tax 
C)  a progressive tax 
D)  a proportional tax 
A)  a lump-sum tax 
B)  a regressive tax 
C)  a progressive tax 
D)  a proportional tax

Question 17

If your income is $40,000 and your income tax liability is $5,000, your

Accepted Answer

A)  marginal tax rate is 8 percent. 
B)  average tax rate is 8 percent. 
C)  marginal tax rate is 12.5 percent. 
D)  average tax rate is 12.5 percent. 
A)  marginal tax rate is 8 percent. 
B)  average tax rate is 8 percent. 
C)  marginal tax rate is 12.5 percent. 
D)  average tax rate is 12.5 percent.

Question 18

A budget deficit occurs when government receipts exceed government spending.

Accepted Answer

A) True 
 B)False

Question 19

Table 12-20
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown.
  
-Refer to Table 12-20. Which tax schedules are regressive?

Accepted Answer

A)  Tax Schedule A and Tax Schedule B 
B)  Tax Schedule B and Tax Schedule C 
C)  Tax Schedule C and Tax Schedule D 
D)  None of the Tax Schedules are regressive. 
A)  Tax Schedule A and Tax Schedule B 
B)  Tax Schedule B and Tax Schedule C 
C)  Tax Schedule C and Tax Schedule D 
D)  None of the Tax Schedules are regressive.

Question 20

List several examples of the administrative burden of the U.S. income tax system.

Accepted Answer

time spent filling out tax for

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000?

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2012?

A tax that is higher for men than for women violates the criterion of

Government spending is projected to rise over the next few decades. Three of the most important reasons are spending on Social Security, Medicare, and healthcare.

Because the marginal tax rate rises as income rises,

Which of the following is an example of an excise tax?

The federal taxes owed by a taxpayer depend

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the marginal tax rate when income is $60,000?

Deadweight losses are associated with

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?

Suppose the government levies a "fat tax" on naturallysweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Which of the following countries has lower total government tax revenue as a percentage of GDP than the United States?

If your income is $40,000 and your income tax liability is $5,000, your

A budget deficit occurs when government receipts exceed government spending.

Table 12-20 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-20. Which tax schedules are regressive?

List several examples of the administrative burden of the U.S. income tax system.

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

Exam 12: The Design of the Tax System

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000?

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2012?

A tax that is higher for men than for women violates the criterion of

Government spending is projected to rise over the next few decades. Three of the most important reasons are spending on Social Security, Medicare, and healthcare.

Because the marginal tax rate rises as income rises,

Which of the following is an example of an excise tax?

The federal taxes owed by a taxpayer depend

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the marginal tax rate when income is $60,000?

Deadweight losses are associated with

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?

Suppose the government levies a "fat tax" on naturally­sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Which of the following countries has lower total government tax revenue as a percentage of GDP than the United States?

If your income is $40,000 and your income tax liability is $5,000, your

A budget deficit occurs when government receipts exceed government spending.

Table 12-20 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-20. Which tax schedules are regressive?

List several examples of the administrative burden of the U.S. income tax system.

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

Suppose the government levies a "fat tax" on naturallysweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the