Question 1

If a person were in the 20% tax bracket and given the choice of a $500 credit or a $2500 deduction

Accepted Answer

A) he would take the deduction every time. 
B) he would take the credit every time. 
C) he would not care. They would constitute the same tax benefit. 
D) he would not qualify for either. 
A) he would take the deduction every time. 
B) he would take the credit every time. 
C) he would not care. They would constitute the same tax benefit. 
D) he would not qualify for either. C

Question 2

Adjusted gross income is

Accepted Answer

A) total income from all sources. 
B) any profit you have from asset sales. 
C) income after deductions and exemptions are taken. 
D) the amount of income a taxpayer has after taxes are paid. 
A) total income from all sources. 
B) any profit you have from asset sales. 
C) income after deductions and exemptions are taken. 
D) the amount of income a taxpayer has after taxes are paid. A

Question 3

Exemptions are reductions of adjusted gross income that depend on

Accepted Answer

A) family structure (i.e. filing status). 
B) family size. 
C) how money is spent (e.g. on state and local taxes or home mortgage interest). 
D) how much money is saved. 
A) family structure (i.e. filing status). 
B) family size. 
C) how money is spent (e.g. on state and local taxes or home mortgage interest). 
D) how much money is saved. B

Question 4

Personal income tax withholding is

Accepted Answer

A) voluntary. 
B) involuntary. 
C) designed to spread out the impact of taxes throughout the year. 
D) involuntary and designed to spread out the impact of taxes throughout the year. 
A) voluntary. 
B) involuntary. 
C) designed to spread out the impact of taxes throughout the year. 
D) involuntary and designed to spread out the impact of taxes throughout the year.

Question 5

If a person were in the 25% tax bracket and given the choice of a $500 credit or a $2500 deduction

Accepted Answer

A) he would take the deduction every time. 
B) he would take the credit every time. 
C) he would not care. They would constitute the same tax benefit. 
D) he would not qualify for either. 
A) he would take the deduction every time. 
B) he would take the credit every time. 
C) he would not care. They would constitute the same tax benefit. 
D) he would not qualify for either.

Question 6

If a tax is placed on one good and not another, the effect that causes you to buy more or less of the taxed good because you have less real buying power is called

Accepted Answer

A) substitution effect. 
B) net effect. 
C) income effect. 
D) domino effect. 
A) substitution effect. 
B) net effect. 
C) income effect. 
D) domino effect.

Question 7

An across-the-board income tax cut where all income taxes were cut by a constant percentage would

Accepted Answer

A) necessarily go to higher income people. 
B) alter the after-tax distribution of income in favor of high income people. 
C) by definition, keep the after-tax distribution of income relationships constant. 
D) necessarily go to higher income people and alter the after-tax distribution of income in favor of high income people. 
A) necessarily go to higher income people. 
B) alter the after-tax distribution of income in favor of high income people. 
C) by definition, keep the after-tax distribution of income relationships constant. 
D) necessarily go to higher income people and alter the after-tax distribution of income in favor of high income people.

Question 8

Vertical equity means that

Accepted Answer

A) equal people are treated unequally. 
B) equal people are treated equally. 
C) people across the income scale are treated fairly with regard to ability to pay. 
D) people pay a flat rate. 
A) equal people are treated unequally. 
B) equal people are treated equally. 
C) people across the income scale are treated fairly with regard to ability to pay. 
D) people pay a flat rate.

Question 9

The earned income tax credit goes to

Accepted Answer

A) non-working poor people living off of government assistance. 
B) the retired. 
C) low-income working people. 
D) all taxpayers regardless of income. 
A) non-working poor people living off of government assistance. 
B) the retired. 
C) low-income working people. 
D) all taxpayers regardless of income.

Question 10

The majority of economists would argue that an increase in taxes

Accepted Answer

A) dramatically increases savings. 
B) dramatically decreases savings. 
C) has little or no effect on savings. 
D) slightly increases savings. 
A) dramatically increases savings. 
B) dramatically decreases savings. 
C) has little or no effect on savings. 
D) slightly increases savings.

Question 11

Shortly after the 2012 election, the AMT was reformed to

Accepted Answer

A) reduce the tax liabilities of the taxpayers with the lowest taxable incomes. 
B) remove inflation. 
C) reduce the tax liabilities of the taxpayers with the highest taxable incomes. 
D) index its thresholds for inflation. 
A) reduce the tax liabilities of the taxpayers with the lowest taxable incomes. 
B) remove inflation. 
C) reduce the tax liabilities of the taxpayers with the highest taxable incomes. 
D) index its thresholds for inflation.

Question 12

If a single person has a standard deduction of $6,300, itemized deductions of $6,650 and a personal exemption of $4,000, then the first _____ of income is federal income tax free.

Accepted Answer

A) $10,300 
B) $10,650 
C) $12,950 
D) $16,950 
A) $10,300 
B) $10,650 
C) $12,950 
D) $16,950

Question 13

Economists generally believe that tax credits and deductions that are used to create an incentive for individuals to go to college

Accepted Answer

A) perversely, cause fewer people to go to college. 
B) cause dramatically more people to go to college, working precisely as was intended. 
C) cause a few more people to go to college, working somewhat as was intended. 
D) cause no more people to go to college, amounting to a special break for people who would have gone to college anyway. 
A) perversely, cause fewer people to go to college. 
B) cause dramatically more people to go to college, working precisely as was intended. 
C) cause a few more people to go to college, working somewhat as was intended. 
D) cause no more people to go to college, amounting to a special break for people who would have gone to college anyway.

Question 14

The 2001 and 2003 tax cuts of the George W. Bush administration each had provisions to

Accepted Answer

A) lower the earned income tax credit. 
B) raise tax rates at the lower end. 
C) raise tax rates at the upper end. 
D) increase (or speed up the already scheduled increase in)the child tax credit. 
A) lower the earned income tax credit. 
B) raise tax rates at the lower end. 
C) raise tax rates at the upper end. 
D) increase (or speed up the already scheduled increase in)the child tax credit.

Question 15

In 2015, the U.S. personal income tax system consisted of the following tax rates:

Accepted Answer

A) 5%, 10%, 15%, 20%, 25% and 30%. 
B) 5%, 10%, 15%, 25%, 30% and 35%. 
C) 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. 
D) 10%, 20%, 30%, 40%, 55% and 69%. 
A) 5%, 10%, 15%, 20%, 25% and 30%. 
B) 5%, 10%, 15%, 25%, 30% and 35%. 
C) 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. 
D) 10%, 20%, 30%, 40%, 55% and 69%.

Question 16

One of the key income tax topics debated during the 2008 Presidential election was whether the

Accepted Answer

A) 2003 tax cuts should be allowed to expire in 2011. 
B) 1986 tax increases should be finally repealed in 2011. 
C) National sales tax should be abolished and replaced with a single income tax rate of 21%. 
D) Iraqi oil revenues should be taxed by the U.S. to provide care for disabled Iraqi War veterans. 
A) 2003 tax cuts should be allowed to expire in 2011. 
B) 1986 tax increases should be finally repealed in 2011. 
C) National sales tax should be abolished and replaced with a single income tax rate of 21%. 
D) Iraqi oil revenues should be taxed by the U.S. to provide care for disabled Iraqi War veterans.

Question 17

The tax reform package that eliminated much of the social engineering aspects within the tax code was passed in

Accepted Answer

A) 1982 during Reagan's first term. 
B) 1986 during Reagan's second term. 
C) 1993 during Clinton's first term. 
D) 2001 during George W. Bush's first term. 
A) 1982 during Reagan's first term. 
B) 1986 during Reagan's second term. 
C) 1993 during Clinton's first term. 
D) 2001 during George W. Bush's first term.

Question 18

The income tax acts as a wedge driven between the value a worker creates and her highest possible

Accepted Answer

A) inheritance. 
B) capital gain. 
C) take-home pay. 
D) mortgage loan. 
A) inheritance. 
B) capital gain. 
C) take-home pay. 
D) mortgage loan.

Question 19

An example of the "equity vs. simplicity" tradeoff is the tax treatment of

Accepted Answer

A) capital gains. 
B) earned income. 
C) children. 
D) spouses. 
A) capital gains. 
B) earned income. 
C) children. 
D) spouses.

Question 20

Provisions of the 2009 Economic Recovery Act (i.e., President Obama's "Stimulus Package")calling for tax credits for first-time home buyers and hybrid cars confirm that the

Accepted Answer

A) Obama Administration is committed to across-the-board reductions in personal income tax rates. 
B) Obama Administration believes that taxes can alter the spending decisions of taxpayers. 
C) Bush Administration's tax cuts were too costly. 
D) credo of Congress is "No Good Deed Will Go Untaxed." 
A) Obama Administration is committed to across-the-board reductions in personal income tax rates. 
B) Obama Administration believes that taxes can alter the spending decisions of taxpayers. 
C) Bush Administration's tax cuts were too costly. 
D) credo of Congress is "No Good Deed Will Go Untaxed."

Exam 41: Personal Income Taxes

If a person were in the 20% tax bracket and given the choice of a $500 credit or a $2500 deduction

Adjusted gross income is

Exemptions are reductions of adjusted gross income that depend on

Personal income tax withholding is

If a person were in the 25% tax bracket and given the choice of a $500 credit or a $2500 deduction

If a tax is placed on one good and not another, the effect that causes you to buy more or less of the taxed good because you have less real buying power is called

An across-the-board income tax cut where all income taxes were cut by a constant percentage would

Vertical equity means that

The earned income tax credit goes to

The majority of economists would argue that an increase in taxes

Shortly after the 2012 election, the AMT was reformed to

If a single person has a standard deduction of $6,300, itemized deductions of $6,650 and a personal exemption of $4,000, then the first _____ of income is federal income tax free.

Economists generally believe that tax credits and deductions that are used to create an incentive for individuals to go to college

The 2001 and 2003 tax cuts of the George W. Bush administration each had provisions to

In 2015, the U.S. personal income tax system consisted of the following tax rates:

One of the key income tax topics debated during the 2008 Presidential election was whether the

The tax reform package that eliminated much of the social engineering aspects within the tax code was passed in

The income tax acts as a wedge driven between the value a worker creates and her highest possible

An example of the "equity vs. simplicity" tradeoff is the tax treatment of

Provisions of the 2009 Economic Recovery Act (i.e., President Obama's "Stimulus Package")calling for tax credits for first-time home buyers and hybrid cars confirm that the

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

Filters