Question 1

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Accepted Answer

A)  $800 million 
B)  $2.5 billion 
C)  $5.2 billion 
D)  $8.7 billion 
A)  $800 million 
B)  $2.5 billion 
C)  $5.2 billion 
D)  $8.7 billion

Question 2

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Accepted Answer

A)  the ability-to-pay principle. 
B)  the equity principle. 
C)  the benefits principle. 
D)  regressive. 
A)  the ability-to-pay principle. 
B)  the equity principle. 
C)  the benefits principle. 
D)  regressive.

Question 3

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 a movie ticket and that, as a result, the price of a movie ticket increases to $6. If Bob and Lisa both purchase a movie ticket, what is the deadweight loss from the tax?

Accepted Answer

A)  $0 
B)  $1 
C)  $2 
D)  $3 
A)  $0 
B)  $1 
C)  $2 
D)  $3

Question 4

In 2011 the largest percentage of federal government spending was on

Accepted Answer

A)  national defense. The largest source of federal revenues was from corporate income taxes. 
B)  health. The largest source of federal revenues was from individual income taxes. 
C)  income security. The largest source of federal revenues was from corporate income taxes. 
D)  income security. The largest source of federal revenues was from individual income taxes. 
A)  national defense. The largest source of federal revenues was from corporate income taxes. 
B)  health. The largest source of federal revenues was from individual income taxes. 
C)  income security. The largest source of federal revenues was from corporate income taxes. 
D)  income security. The largest source of federal revenues was from individual income taxes.

Question 5

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 6

Who observed that "in this world nothing is certain but death and taxes"?

Accepted Answer

A)  Mark Twain 
B)  P.T. Barnum 
C)  Ben Franklin 
D)  Richard Nixon 
A)  Mark Twain 
B)  P.T. Barnum 
C)  Ben Franklin 
D)  Richard Nixon

Question 7

In general, Democrats tend to prefer

Accepted Answer

A)  higher marginal tax rates to promote vertical equity, while Republicans tend to prefer lower marginal tax rates to promote incentives to work and save. 
B)  lower marginal tax rates to promote vertical equity, while Republicans tend to prefer higher marginal tax rates to promote incentives to work and save. 
C)  higher marginal tax rates to promote incentives to work and save, while Republicans tend to prefer lower marginal tax rates to promote vertical equity. 
D)  lower marginal tax rates to promote incentives to work and save, while Republicans tend to prefer higher marginal tax rates to promote vertical equity. 
A)  higher marginal tax rates to promote vertical equity, while Republicans tend to prefer lower marginal tax rates to promote incentives to work and save. 
B)  lower marginal tax rates to promote vertical equity, while Republicans tend to prefer higher marginal tax rates to promote incentives to work and save. 
C)  higher marginal tax rates to promote incentives to work and save, while Republicans tend to prefer lower marginal tax rates to promote vertical equity. 
D)  lower marginal tax rates to promote incentives to work and save, while Republicans tend to prefer higher marginal tax rates to promote vertical equity.

Question 8

In 2011, the federal government spent 9 percent of the budget on net interest. Which of the following statements regarding net interest is correct?

Accepted Answer

A)  If the government pays down its debt, the amount of the budget needed for net interest decreases. 
B)  If the government accrues more debt, the amount of the budget needed for net interest increases. 
C)  In 2011, the federal government spent 325 billion dollars to cover interest payments on its loans. 
D)  All of the above are correct. 
A)  If the government pays down its debt, the amount of the budget needed for net interest decreases. 
B)  If the government accrues more debt, the amount of the budget needed for net interest increases. 
C)  In 2011, the federal government spent 325 billion dollars to cover interest payments on its loans. 
D)  All of the above are correct.

Question 9

Table 12-25  
-Refer to Table 12-25. Which plan represents the best tax?

Accepted Answer

The best tax depends on the criteria. Pl

Question 10

Which of the following countries has the largest tax burden?

Accepted Answer

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

Question 11

Leonard, Sheldon, Raj, and Penny each like science fiction moves. The price of a special boxed set of Star Trek DVDs is $50. Leonard values the set of movies at $70, Sheldon at $65, Raj at $60, and Penny at $55. Suppose that if the government taxes DVDs at $10 each, the price rises to $60. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)  $50 and tax revenues increase by $30, so there is a deadweight loss of $20. 
B)  $35 and tax revenues increase by $30, so there is a deadweight loss of $5. 
C)  $20 and tax revenues increase by $20, so there is no deadweight loss. 
D)  $15 and tax revenues increase by $20, so there is no deadweight loss. 
A)  $50 and tax revenues increase by $30, so there is a deadweight loss of $20. 
B)  $35 and tax revenues increase by $30, so there is a deadweight loss of $5. 
C)  $20 and tax revenues increase by $20, so there is no deadweight loss. 
D)  $15 and tax revenues increase by $20, so there is no deadweight loss.

Question 12

The U.S. federal government spends its revenues in a number of ways. Rank the following spending categories from largest to smallest.

Accepted Answer

A)  income security, health, national defense, net interest 
B)  health, national defense, net interest, income security 
C)  net interest, health, income security, national defense 
D)  national defense, income security, net interest, health 
A)  income security, health, national defense, net interest 
B)  health, national defense, net interest, income security 
C)  net interest, health, income security, national defense 
D)  national defense, income security, net interest, health

Question 13

Scenario 12-5
Senator Filch argues that a tax must be paid by people who benefit from government services. Senator Fudge argues that a tax must be paid in accordance with a person's ability to bear the tax burden. Senator Malfoy argues that people with a greater ability to pay a tax should pay a larger amount. Senator Moody argues that taxpayers with similar abilities to pay should contribute the same amount.
-Refer to Scenario 12-5. Which Senator is advocating for taxes based on horizontal equity?

Accepted Answer

A)  Senator Filch 
B)  Senator Fudge 
C)  Senator Malfoy 
D)  Senator Moody 
A)  Senator Filch 
B)  Senator Fudge 
C)  Senator Malfoy 
D)  Senator Moody

Question 14

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 15

The government raises revenue through taxation to pay for the services it provides.

Accepted Answer

A) True 
 B)False

Question 16

Table 12-1  
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. How much consumer surplus accrues to Anna and Clem individually?

Accepted Answer

A)  $125 and $20 respectively 
B)  $105 and $30 respectively 
C)  $85 and $40 respectively 
D)  $65 and $50 respectively 
A)  $125 and $20 respectively 
B)  $105 and $30 respectively 
C)  $85 and $40 respectively 
D)  $65 and $50 respectively

Question 17

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Accepted Answer

A)  deadweight losses and administrative burdens. 
B)  deadweight losses and frustration with the political system. 
C)  administrative burdens and tax-preparation costs. 
D)  administrative burdens and the risk of punishment for failure to comply with tax laws. 
A)  deadweight losses and administrative burdens. 
B)  deadweight losses and frustration with the political system. 
C)  administrative burdens and tax-preparation costs. 
D)  administrative burdens and the risk of punishment for failure to comply with tax laws.

Question 18

Taxes create deadweight loss when they

Accepted Answer

A)  distort behavior. 
B)  cause the price of the product to increase. 
C)  don't raise sufficient government revenue. 
D)  cannot be computed easily. 
A)  distort behavior. 
B)  cause the price of the product to increase. 
C)  don't raise sufficient government revenue. 
D)  cannot be computed easily.

Question 19

Some colleges charge all students the same fee for a weekly dining services meal plan. Suppose that students differ by how much food they consume each week. For example, members of the women's swimming team consume, on average, twice as much food as the average female college student, and the average male college student consumes 20 percent more food than the average female college student. The dining services fee is most like a(n)

Accepted Answer

A)  excise tax that conforms to the benefits principle. 
B)  excise tax that violates the benefits principle. 
C)  lump-sum tax that conforms to the benefits principle. 
D)  lump-sum tax that violates the benefits principle. 
A)  excise tax that conforms to the benefits principle. 
B)  excise tax that violates the benefits principle. 
C)  lump-sum tax that conforms to the benefits principle. 
D)  lump-sum tax that violates the benefits principle.

Question 20

Table 12-22  
-Refer to Table 12-22. A progressive tax is illustrated by tax

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Exam 12: The Design of the Tax System

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

In 2011 the largest percentage of federal government spending was on

A lump-sum tax

Who observed that "in this world nothing is certain but death and taxes"?

In general, Democrats tend to prefer

In 2011, the federal government spent 9 percent of the budget on net interest. Which of the following statements regarding net interest is correct?

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Which of the following countries has the largest tax burden?

The U.S. federal government spends its revenues in a number of ways. Rank the following spending categories from largest to smallest.

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

The government raises revenue through taxation to pay for the services it provides.

Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. How much consumer surplus accrues to Anna and Clem individually?

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Taxes create deadweight loss when they

Table 12-22 -Refer to Table 12-22. A progressive tax is illustrated by tax

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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