Question 1

Deadweight losses represent the

Accepted Answer

A)  inefficiency that taxes create. 
B)  shift in benefit from producers to consumers. 
C)  part of consumer and producer surplus that is now revenue to the government. 
D)  increase in revenue to the government. 
A)  inefficiency that taxes create. 
B)  shift in benefit from producers to consumers. 
C)  part of consumer and producer surplus that is now revenue to the government. 
D)  increase in revenue to the government.

Question 2

Of the following countries, which country's government collects the largest amount of tax revenue as a percentage of that country's total income?

Accepted Answer

A)  Denmark 
B)  United States 
C)  Canada 
D)  Greece 
A)  Denmark 
B)  United States 
C)  Canada 
D)  Greece

Question 3

One tax system is less efficient than another if it

Accepted Answer

A)  places a lower tax burden on lower-income families than on higher-income families. 
B)  places a higher tax burden on lower-income families than on higher-income families. 
C)  raises the same amount of revenue at a higher cost to taxpayers. 
D)  raises less revenue at a lower cost to taxpayers. 
A)  places a lower tax burden on lower-income families than on higher-income families. 
B)  places a higher tax burden on lower-income families than on higher-income families. 
C)  raises the same amount of revenue at a higher cost to taxpayers. 
D)  raises less revenue at a lower cost to taxpayers.

Question 4

The federal healthcare spending program that specifically targets the poor is called

Accepted Answer

A)  Medicaid. 
B)  Medicare. 
C)  National Institutes of Health. 
D)  Blue Cross/Blue Shield. 
A)  Medicaid. 
B)  Medicare. 
C)  National Institutes of Health. 
D)  Blue Cross/Blue Shield.

Question 5

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 6

The U.S. tax burden is

Accepted Answer

A)  about the same as most European countries. 
B)  higher than most European countries. 
C)  lower than most European countries. 
D)  higher than all European countries. 
A)  about the same as most European countries. 
B)  higher than most European countries. 
C)  lower than most European countries. 
D)  higher than all European countries.

Question 7

A lump-sum tax

Accepted Answer

A)  is most frequently used to tax real property. 
B)  does not distort incentives. 
C)  distorts incentives more than any other type of tax. 
D)  is the most fair tax. 
A)  is most frequently used to tax real property. 
B)  does not distort incentives. 
C)  distorts incentives more than any other type of tax. 
D)  is the most fair tax.

Question 8

Tax incidence refers to

Accepted Answer

A)  what product or service the tax is levied on. 
B)  who bears the tax burden. 
C)  what sector of the economy is most affected by the tax. 
D)  the dollar value of the tax revenues. 
A)  what product or service the tax is levied on. 
B)  who bears the tax burden. 
C)  what sector of the economy is most affected by the tax. 
D)  the dollar value of the tax revenues.

Question 9

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. What is total consumer surplus after the tax is levied?

Accepted Answer

A)  $0 
B)  $2 
C)  $5 
D)  $6 
A)  $0 
B)  $2 
C)  $5 
D)  $6

Question 10

An advantage of a consumption tax over the present tax system is that a consumption tax

Accepted Answer

A)  raises more revenues. 
B)  would save the government millions in administrative costs. 
C)  places more of the tax burden on the wealthy. 
D)  does not discourage saving. 
A)  raises more revenues. 
B)  would save the government millions in administrative costs. 
C)  places more of the tax burden on the wealthy. 
D)  does not discourage saving.

Question 11

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Accepted Answer

A) True 
 B)False

Question 12

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

Plan B illustrates a proportio

Question 14

As a person's or family's income rises, the marginal federal income tax rate .

Accepted Answer

The answer of As a person's or family's income rises,...

Question 15

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Accepted Answer

A) True 
 B)False

Question 16

A tax levied on the total amount spent in retail stores is called

Accepted Answer

A)  a sales tax. 
B)  an excise tax. 
C)  a retail tax. 
D)  an income tax. 
A)  a sales tax. 
B)  an excise tax. 
C)  a retail tax. 
D)  an income tax.

Question 17

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $100,000, the marginal tax rate is

Accepted Answer

A)  30 percent, and the average tax rate is 50 percent. 
B)  30 percent, and the average tax rate is 36 percent. 
C)  50 percent, and the average tax rate is 40 percent. 
D)  50 percent, and the average tax rate is 36 percent. 
A)  30 percent, and the average tax rate is 50 percent. 
B)  30 percent, and the average tax rate is 36 percent. 
C)  50 percent, and the average tax rate is 40 percent. 
D)  50 percent, and the average tax rate is 36 percent.

Question 18

The benefits principle is used to justify

Accepted Answer

A)  sales taxes. 
B)  gasoline taxes. 
C)  "sin" taxes on cigarettes and alcoholic beverages. 
D)  personal income taxes. 
A)  sales taxes. 
B)  gasoline taxes. 
C)  "sin" taxes on cigarettes and alcoholic beverages. 
D)  personal income taxes.

Question 19

A tax imposed at every stage of production is a

Accepted Answer

A)  value-added tax. 
B)  lump sum tax. 
C)  corrective tax. 
D)  regressive tax. 
A)  value-added tax. 
B)  lump sum tax. 
C)  corrective tax. 
D)  regressive tax.

Question 20

The typical state spends the most on

Accepted Answer

A)  education. 
B)  Medicare and Social Security. 
C)  highways. 
D)  defense. 
A)  education. 
B)  Medicare and Social Security. 
C)  highways. 
D)  defense.

Exam 12: The Design of the Tax System

Deadweight losses represent the

Of the following countries, which country's government collects the largest amount of tax revenue as a percentage of that country's total income?

One tax system is less efficient than another if it

The federal healthcare spending program that specifically targets the poor is called

A lump-sum tax minimizes deadweight loss.

The U.S. tax burden is

A lump-sum tax

Tax incidence refers to

An advantage of a consumption tax over the present tax system is that a consumption tax

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

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

As a person's or family's income rises, the marginal federal income tax rate .

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

A tax levied on the total amount spent in retail stores is called

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $100,000, the marginal tax rate is

The benefits principle is used to justify

A tax imposed at every stage of production is a

The typical state spends the most on

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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