Question 1

The alternative minimum tax (AMT)was created to

Accepted Answer

A) make sure poor people paid at least something in taxes. 
B) make sure that everyone had an equal chance of facing a tax audit. 
C) make sure that everyone paid the same proportion of their income in taxes. 
D) make sure that upper income taxpayers could not use deductions to avoid paying income taxes. 
A) make sure poor people paid at least something in taxes. 
B) make sure that everyone had an equal chance of facing a tax audit. 
C) make sure that everyone paid the same proportion of their income in taxes. 
D) make sure that upper income taxpayers could not use deductions to avoid paying income taxes.

Question 2

If a household has a husband, wife and two kids, has a standard deduction of $12,600, its itemized deductions are $13,850 and personal exemptions of $16,000 (4*$4,000), then the first _____ of income is federal income tax free.

Accepted Answer

A) $28,600 
B) $29,850 
C) $37,100 
D) $41,450 
A) $28,600 
B) $29,850 
C) $37,100 
D) $41,450

Question 3

A tax structure is progressive as long as a person who has more income pays

Accepted Answer

A) more tax than someone who has less income. 
B) a higher rate of tax than someone who has less income. 
C) the same tax than someone who has less income. 
D) the same rate of tax than someone who has less income. 
A) more tax than someone who has less income. 
B) a higher rate of tax than someone who has less income. 
C) the same tax than someone who has less income. 
D) the same rate of tax than someone who has less income.

Question 4

Capital gains are

Accepted Answer

A) total net income from all sources. 
B) any profit you have from asset sales. 
C) total sales prices of from assets. 
D) the amount of income a taxpayer has after taxes are paid. 
A) total net income from all sources. 
B) any profit you have from asset sales. 
C) total sales prices of from assets. 
D) the amount of income a taxpayer has after taxes are paid.

Question 5

If a tax is placed on one good and not another, the effect that causes you to buy less of the taxed good because it has become relatively more expensive is called the

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 6

If a household has a single woman and three kids, has a standard deduction of $6,300, its itemized deductions are $5,650 and personal exemptions of $12,000 (3*$4,000), then the first _____ of income is federal income tax free.

Accepted Answer

A) $11,950 
B) $18,300 
C) $17,650 
D) $28,950 
A) $11,950 
B) $18,300 
C) $17,650 
D) $28,950

Question 7

A tax code is described as being "neutral" if it

Accepted Answer

A) does not favor particular forms of income or expenditures. 
B) achieves both vertical equity and horizontal equity. 
C) favors socially good consumption over destructive consumption. 
D) encourages work and savings rather than consumption. 
A) does not favor particular forms of income or expenditures. 
B) achieves both vertical equity and horizontal equity. 
C) favors socially good consumption over destructive consumption. 
D) encourages work and savings rather than consumption.

Question 8

The top 10% of income earners pay ____ of federal income taxes.

Accepted Answer

A) 10% 
B) 53% 
C) 71% 
D) 93% 
A) 10% 
B) 53% 
C) 71% 
D) 93%

Question 9

The child care credit goes

Accepted Answer

A) directly to child care centers. 
B) directly to children under 6. 
C) to all households spending money on child and elder care so that they may work. 
D) directly to the states. 
A) directly to child care centers. 
B) directly to children under 6. 
C) to all households spending money on child and elder care so that they may work. 
D) directly to the states.

Question 10

If a single person has a standard deduction of $6,300, itemized deductions of $3,650 and a personal exemption of $4,000, then the first _____ of income is federal income tax free.

Accepted Answer

A) $7,650 
B) $9,950 
C) $10,300 
D) $13,950 
A) $7,650 
B) $9,950 
C) $10,300 
D) $13,950

Question 11

Horizontal 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 12

One of the key income tax topics debated during the 2010 mid-term elections 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 13

Simply indexing the alternative minimum tax for inflation and making no other adjustments would

Accepted Answer

A) help the poor more than the rich. 
B) help the rich more than the poor. 
C) help all people equally. 
D) result in a large surplus. 
A) help the poor more than the rich. 
B) help the rich more than the poor. 
C) help all people equally. 
D) result in a large surplus.

Question 14

Taxable income is

Accepted Answer

A) Adjusted Gross Income - Exemptions. 
B) Adjusted Gross Income - Exemptions - Deductions. 
C) Adjusted Gross Income - Exemptions - Deductions - Credits. 
D) Adjusted Gross Income - Exemptions - Deductions - Credits - Taxes Withheld. 
A) Adjusted Gross Income - Exemptions. 
B) Adjusted Gross Income - Exemptions - Deductions. 
C) Adjusted Gross Income - Exemptions - Deductions - Credits. 
D) Adjusted Gross Income - Exemptions - Deductions - Credits - Taxes Withheld.

Question 15

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) phase out the estate tax. 
A) lower the earned income tax credit. 
B) raise tax rates at the lower end. 
C) raise tax rates at the upper end. 
D) phase out the estate tax.

Question 16

The filing status of an unmarried single parent living with another person is likely to be

Accepted Answer

A) married filing jointly. 
B) married filing separately. 
C) single head of household. 
D) single. 
A) married filing jointly. 
B) married filing separately. 
C) single head of household. 
D) single.

Question 17

One of the key outcomes of the 2010 mid-term elections was that

Accepted Answer

A) 2003 tax cuts were continued for everyone through the end of 2012. 
B) 1986 tax increases were finally repealed in 2011. 
C) A national sales tax was created and replaced the income tax. 
D) Iraqi oil revenues were taxed by the U.S. to provide care for disabled Iraqi War veterans. 
A) 2003 tax cuts were continued for everyone through the end of 2012. 
B) 1986 tax increases were finally repealed in 2011. 
C) A national sales tax was created and replaced the income tax. 
D) Iraqi oil revenues were taxed by the U.S. to provide care for disabled Iraqi War veterans.

Question 18

Economists estimate that an increase in tax rates by 8% will _______ work by _____.

Accepted Answer

A) decrease; 15% 
B) increase; 15% 
C) decrease; 1% 
D) increase; 1% 
A) decrease; 15% 
B) increase; 15% 
C) decrease; 1% 
D) increase; 1%

Question 19

The amount a family can take in deductions is the larger of

Accepted Answer

A) their exemptions and the standard deduction. 
B) their exemptions and their itemized deductions. 
C) their exemptions and their capital gains. 
D) their standard deduction and their itemized deductions. 
A) their exemptions and the standard deduction. 
B) their exemptions and their itemized deductions. 
C) their exemptions and their capital gains. 
D) their standard deduction and their itemized deductions.

Question 20

The marginal tax rate is

Accepted Answer

A) the percentage of all dollars of income paid in tax. 
B) the percentage of all taxable dollars of income paid in tax. 
C) the percentage of the last dollar of income paid in tax. 
D) the percentage of all dollars of income paid in tax and the percentage of the last dollar of income paid in tax. 
A) the percentage of all dollars of income paid in tax. 
B) the percentage of all taxable dollars of income paid in tax. 
C) the percentage of the last dollar of income paid in tax. 
D) the percentage of all dollars of income paid in tax and the percentage of the last dollar of income paid in tax.

Exam 41: Personal Income Taxes

The alternative minimum tax (AMT)was created to

If a household has a husband, wife and two kids, has a standard deduction of $12,600, its itemized deductions are $13,850 and personal exemptions of $16,000 (4*$4,000), then the first _____ of income is federal income tax free.

A tax structure is progressive as long as a person who has more income pays

Capital gains are

If a tax is placed on one good and not another, the effect that causes you to buy less of the taxed good because it has become relatively more expensive is called the

If a household has a single woman and three kids, has a standard deduction of $6,300, its itemized deductions are $5,650 and personal exemptions of $12,000 (3*$4,000), then the first _____ of income is federal income tax free.

A tax code is described as being "neutral" if it

The top 10% of income earners pay ____ of federal income taxes.

The child care credit goes

If a single person has a standard deduction of $6,300, itemized deductions of $3,650 and a personal exemption of $4,000, then the first _____ of income is federal income tax free.

Horizontal equity means that

One of the key income tax topics debated during the 2010 mid-term elections was whether the

Simply indexing the alternative minimum tax for inflation and making no other adjustments would

Taxable income is

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

The filing status of an unmarried single parent living with another person is likely to be

One of the key outcomes of the 2010 mid-term elections was that

Economists estimate that an increase in tax rates by 8% will _______ work by _____.

The amount a family can take in deductions is the larger of

The marginal tax rate is

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

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Income and Wealth Inequality

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Minimum Wage

Ticket Brokers and Ticket Scalping

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Head Start

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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

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Economists estimate that an increase in tax rates by 8% will ___ work by _.