Question 1

Table 12-25
  
-Refer to Table 12-25. Which plan illustrates a regressive tax?

Accepted Answer

Plan A illustrates a regressiv

Question 2

The largest budgetary expense for a typical state or local government is

Accepted Answer

A)  public order and safety. 
B)  welfare. 
C)  highways. 
D)  education. 
A)  public order and safety. 
B)  welfare. 
C)  highways. 
D)  education.

Question 3

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that in 2020 the average citizen's federal tax bill is $11,987, and total federal spending is $12,294 per person. In 2020, the federal government will have

Accepted Answer

A)  a budget surplus. 
B)  a budget deficit. 
C)  horizontal equity. 
D)  vertical equity. 
A)  a budget surplus. 
B)  a budget deficit. 
C)  horizontal equity. 
D)  vertical equity.

Question 5

In the United States, the marginal tax rate on individual federal income tax

Accepted Answer

A)  decreases as income increases. 
B)  increases as income increases. 
C)  is constant at all income levels. 
D)  applies only to payroll taxes. 
A)  decreases as income increases. 
B)  increases as income increases. 
C)  is constant at all income levels. 
D)  applies only to payroll taxes.

Question 6

When the government taxes labor earnings we can expect people to

Accepted Answer

A)  work more so they can keep the same standard of living. 
B)  work less and enjoy more leisure. 
C)  quit their present job and find one that pays better. 
D)  stop working altogether and go on welfare. 
A)  work more so they can keep the same standard of living. 
B)  work less and enjoy more leisure. 
C)  quit their present job and find one that pays better. 
D)  stop working altogether and go on welfare.

Question 7

Under a progressive tax system, the marginal tax rate could be equal to the average tax rate only when a taxpayer

Accepted Answer

A)  has a very high income. 
B)  has a very low income. 
C)  is self-employed. 
D)  invests in a retirement plan. 
A)  has a very high income. 
B)  has a very low income. 
C)  is self-employed. 
D)  invests in a retirement plan.

Question 8

In which of the following tax systems do taxes increase as income increases?

Accepted Answer

A)  both proportional and progressive 
B)  proportional but not progressive 
C)  progressive but not proportional 
D)  neither proportional nor progressive 
A)  both proportional and progressive 
B)  proportional but not progressive 
C)  progressive but not proportional 
D)  neither proportional nor progressive

Question 9

Table 12-10
  
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

Accepted Answer

A)  23.8%. 
B)  24.3%. 
C)  25.9%. 
D)  28.0%. 
A)  23.8%. 
B)  24.3%. 
C)  25.9%. 
D)  28.0%.

Question 10

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 11

Table 12-24
  
-Refer to Table 12-24. Does the tax system achieve vertical equity?

Accepted Answer

Yes. People with hig

Question 12

Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two years.
  
-Refer to Table 12-7. For an individual who earned $80,000 in both years, which of the following statements is true regarding the individual's marginal tax rate?

Accepted Answer

A)  The marginal tax rate is higher in 2010 than in 2009. 
B)  The marginal tax rate is the same in 2010 as it was in 2009. 
C)  The marginal tax rate is lower in 2010 than in 2009. 
D)  With a proportional tax, as in 2010, it is not possible to determine the individual's marginal tax rate so it is not possible to compare the marginal tax rates in the two years. 
A)  The marginal tax rate is higher in 2010 than in 2009. 
B)  The marginal tax rate is the same in 2010 as it was in 2009. 
C)  The marginal tax rate is lower in 2010 than in 2009. 
D)  With a proportional tax, as in 2010, it is not possible to determine the individual's marginal tax rate so it is not possible to compare the marginal tax rates in the two years.

Question 13

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
  
-Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2013?

Accepted Answer

A)  15.3% 
B)  17.6% 
C)  21.3% 
D)  24.8% 
A)  15.3% 
B)  17.6% 
C)  21.3% 
D)  24.8%

Question 14

Table 12-18
United States Income Tax Rates for a Single Individual, 2009 and 2010.
  
-Refer to Table 12-18. What type of tax structure does the United States have in 2010 for single individuals?

Accepted Answer

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

Question 15

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Accepted Answer

A) True 
 B)False

Question 16

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 17

In 2011, the U.S. federal government collected 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 18

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Accepted Answer

A)  national defense and income security (welfare) programs 
B)  national defense and Medicare 
C)  Social Security and public schools 
D)  Social Security and Medicare 
A)  national defense and income security (welfare) programs 
B)  national defense and Medicare 
C)  Social Security and public schools 
D)  Social Security and Medicare

Question 19

Sue earns income of $80,000 per year. Her average tax rate is 30 percent. Sue paid 20 percent in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Accepted Answer

A)  20 percent 
B)  24 percent 
C)  30 percent 
D)  36 percent 
A)  20 percent 
B)  24 percent 
C)  30 percent 
D)  36 percent

Question 20

The administrative burden of any tax system is part of the inefficiency it creates.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

Table 12-25 -Refer to Table 12-25. Which plan illustrates a regressive tax?

The largest budgetary expense for a typical state or local government is

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Suppose that in 2020 the average citizen's federal tax bill is $11,987, and total federal spending is $12,294 per person. In 2020, the federal government will have

In the United States, the marginal tax rate on individual federal income tax

When the government taxes labor earnings we can expect people to

Under a progressive tax system, the marginal tax rate could be equal to the average tax rate only when a taxpayer

In which of the following tax systems do taxes increase as income increases?

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Table 12-24 -Refer to Table 12-24. Does the tax system achieve vertical equity?

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 in both years, which of the following statements is true regarding the individual's marginal tax rate?

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2013?

Table 12-18 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-18. What type of tax structure does the United States have in 2010 for single individuals?

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

In 2011, the U.S. federal government collected approximately what percentage of the taxes in the economy?

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Sue earns income of $80,000 per year. Her average tax rate is 30 percent. Sue paid 20 percent in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

The administrative burden of any tax system is part of the inefficiency it creates.

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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