Question 1

A trust that is the legal owner of a life insurance policy is

Accepted Answer

A) a policy holder. 
B) a insurance trust. 
C) a trust fund. 
D) none of the above. 
A) a policy holder. 
B) a insurance trust. 
C) a trust fund. 
D) none of the above.

Question 2

The general tax can be considered a retail sales tax.

Accepted Answer

A) True 
 B)False

Question 3

General sales taxes totaled 226.7 billion dollars as a source of state revenue in 2008.

Accepted Answer

A) True 
 B)False

Question 4

Many states have no state-level personal income tax.How do you think that effects expenditure decisions?

Accepted Answer

States that do not have income taxes rel

Question 5

Who pays a consumption tax?

Accepted Answer

A) people who purchase goods 
B) firms who purchase goods 
C) the elderly when they purchase goods 
D) all of the above 
A) people who purchase goods 
B) firms who purchase goods 
C) the elderly when they purchase goods 
D) all of the above

Question 6

Disadvantages of a consumption tax are

Accepted Answer

A) the administrative problems. 
B) the transitional problems. 
C) dealing with gifts and bequests. 
D) all of the above. 
A) the administrative problems. 
B) the transitional problems. 
C) dealing with gifts and bequests. 
D) all of the above.

Question 7

Why might an individual set up trusts?

Accepted Answer

A) as a strategy to avoid taxes on wealth. 
B) for lower insurance premiums. 
C) to insure the security of a loan. 
D) to have a steady stream of income during retirement. 
A) as a strategy to avoid taxes on wealth. 
B) for lower insurance premiums. 
C) to insure the security of a loan. 
D) to have a steady stream of income during retirement.

Question 8

One advantage of a consumption tax is that there are fewer problems with inflation.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a unit excise tax?

Accepted Answer

A) a tax of 15% 
B) an admission fee of $2.00 on each ticket purchased 
C) an ad valorem tax of $3.00 
D) an income tax of $3.00 
A) a tax of 15% 
B) an admission fee of $2.00 on each ticket purchased 
C) an ad valorem tax of $3.00 
D) an income tax of $3.00

Question 10

A tax on consumption for those who are nonsavers

Accepted Answer

A) is equivalent to a tax on income. 
B) causes income gains to increase dramatically. 
C) would be preferred to a tax on wealth. 
D) makes it difficult to tell what the result for the nonsavers would be. 
A) is equivalent to a tax on income. 
B) causes income gains to increase dramatically. 
C) would be preferred to a tax on wealth. 
D) makes it difficult to tell what the result for the nonsavers would be.

Question 11

A publisher sells $400,000 worth of books,magazines,and other reading materials in a given year.The publisher earns a profit of $100,000 that year.Her purchase invoices indicate that she bought $100,000 worth of glue,paper,and other materials during the year.Her labor costs were $150,000,and she purchased $45,000 of new equipment that year.Calculate her tax liability under a 12% consumption-type,value-added tax.

Accepted Answer

Value added is $400,000 - $100,000 = $30

Question 12

A differential commodity tax is the same as an excise tax.

Accepted Answer

A) True 
 B)False

Question 13

A unit tax is

Accepted Answer

A) levied at different rates on the purchase of different commodities. 
B) less than 0. 
C) a percentage of the value of the purchase. 
D) a given amount for each unit purchased. 
A) levied at different rates on the purchase of different commodities. 
B) less than 0. 
C) a percentage of the value of the purchase. 
D) a given amount for each unit purchased.

Question 14

-Refer to Figure 16.1.Suppose that the total number of hours (T)is 720 and the wage rate is $10.Suppose further that all income is spent on consumption,so that the vertical axis is also total consumption.
(A)Sketch this graph.
(B)Sketch the graph if a 5% consumption tax is imposed.
(C)Can you say conclusively that a consumption tax will lower hours worked?

Accepted Answer

(A)and (B) @#IMG-DLM& (C)We ca

Question 15

Assume two people,Tom and Rose,live for two periods and are taxed on consumption in both periods.In period 0,Rose has consumption of 50.In period 1,Rose has consumption of 50.Tom has consumption of 40 in period 0.Use the formula below for lifetime consumption tax liability,Ri,to find out what Tom's period 1 consumption must be,to ensure that tax liabilities between the two are equal,if the consumption tax rate is 9% and the rate of interest is 4%,

Accepted Answer

Set these equations equal for

Question 16

uppose that the supply of land is constant at L acres,and Price per acre is $400.In addition,the before-tax demand for land can be characterized by the equation P = 500 - 2L,where L is the acres of land and P is the price.
-Refer to Question above.Your textbook points out the importance of not deducting payments made as wages.What difference would it make in total tax revenue collected using the consumption-type VAT if this deduction were allowed at the firm level,but individuals were subject to the same tax on their wages?

Accepted Answer

The change would be that now $

Question 17

The gross estate is

Accepted Answer

A) very disgusting. 
B) all property owned by decedent at time of death. 
C) general property that is held in a trust. 
D) being phased out of current tax law. 
A) very disgusting. 
B) all property owned by decedent at time of death. 
C) general property that is held in a trust. 
D) being phased out of current tax law.

A trust that is the legal owner of a life insurance policy is

The general tax can be considered a retail sales tax.

General sales taxes totaled 226.7 billion dollars as a source of state revenue in 2008.

Many states have no state-level personal income tax.How do you think that effects expenditure decisions?

Who pays a consumption tax?

Disadvantages of a consumption tax are

Why might an individual set up trusts?

One advantage of a consumption tax is that there are fewer problems with inflation.

Which of the following is a unit excise tax?

A tax on consumption for those who are nonsavers

A differential commodity tax is the same as an excise tax.

A unit tax is

The gross estate is

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Public Finance in a Federal System

Filters

Exam 21: Fundamental Tax Reform: Taxes on Consumption and Wealth

A trust that is the legal owner of a life insurance policy is

The general tax can be considered a retail sales tax.

General sales taxes totaled 226.7 billion dollars as a source of state revenue in 2008.

Many states have no state-level personal income tax.How do you think that effects expenditure decisions?

Who pays a consumption tax?

Disadvantages of a consumption tax are

Why might an individual set up trusts?

One advantage of a consumption tax is that there are fewer problems with inflation.

Which of the following is a unit excise tax?

A tax on consumption for those who are nonsavers

A differential commodity tax is the same as an excise tax.

A unit tax is

The gross estate is

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Public Finance in a Federal System

Filters