Question 1

A tax on the wages that a firm pays its workers is called

Accepted Answer

A)  an income tax. 
B)  an excise tax. 
C)  a consumption tax. 
D)  a payroll tax. 
A)  an income tax. 
B)  an excise tax. 
C)  a consumption tax. 
D)  a payroll tax.

Question 2

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.  
-Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What is her marginal tax rate in 2013?

Accepted Answer

A)  15% 
B)  27% 
C)  30% 
D)  35% 
A)  15% 
B)  27% 
C)  30% 
D)  35%

Question 3

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

Accepted Answer

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

Question 4

Suppose that in 2020 the average citizen's federal tax bill is $14,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

Accepted Answer

A)  a per person budget surplus of $891. 
B)  a per person budget deficit of $891. 
C)  horizontal equity. 
D)  vertical equity. 
A)  a per person budget surplus of $891. 
B)  a per person budget deficit of $891. 
C)  horizontal equity. 
D)  vertical equity.

Question 5

Table 12-21
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.  
-Refer to Table 12-21. Which of the three tax systems is proportional?

Accepted Answer

A)  Tax System A 
B)  Tax System B 
C)  Tax System C 
D)  None of the systems are proportional. 
A)  Tax System A 
B)  Tax System B 
C)  Tax System C 
D)  None of the systems are proportional.

Question 6

If the rich pay more in taxes than the poor, the tax system must be progressive.

Accepted Answer

A) True 
 B)False

Question 7

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Accepted Answer

A)  a progressive tax 
B)  a proportional tax 
C)  a regressive tax 
D)  a lump-sum tax 
A)  a progressive tax 
B)  a proportional tax 
C)  a regressive tax 
D)  a lump-sum tax

Question 8

What are the characteristic(s) of an efficient tax system?

Accepted Answer

One tax system is more efficie

Question 9

The resources that a taxpayer devotes to complying with the tax laws are a type of

Accepted Answer

A)  marginal tax. 
B)  administrative burden. 
C)  deadweight loss. 
D)  Both b and c are correct. 
A)  marginal tax. 
B)  administrative burden. 
C)  deadweight loss. 
D)  Both b and c are correct.

Question 10

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the .

Accepted Answer

The answer of If tax revenues from a tax on...

Question 11

The income tax requires that taxpayers pay 10 percent on the first $50,000 of income and 20 percent on all income over $50,000. Andy paid $9,000 in taxes. What were his marginal and average tax rates?

Accepted Answer

A)  20 percent and 13 percent, respectively 
B)  20 percent and 15 percent, respectively 
C)  10 percent and 13 percent respectively 
D)  10 percent and 15 percent respectively 
A)  20 percent and 13 percent, respectively 
B)  20 percent and 15 percent, respectively 
C)  10 percent and 13 percent respectively 
D)  10 percent and 15 percent respectively

Question 12

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Accepted Answer

Horizontal equity is the idea that taxpa

Question 13

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about state income taxes is correct?

Accepted Answer

A)  Some states do not tax income at all. 
B)  If states tax income, they must follow federal guidelines for designing the tax structure. 
C)  States are not allowed to have a higher marginal tax rate than the federal marginal tax rate. 
D)  All of the above are correct. 
A)  Some states do not tax income at all. 
B)  If states tax income, they must follow federal guidelines for designing the tax structure. 
C)  States are not allowed to have a higher marginal tax rate than the federal marginal tax rate. 
D)  All of the above are correct.

Question 15

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Accepted Answer

A)  medical advances that provide new, better, but often more expensive medical treatments. 
B)  a rising population of the elderly in the economy. 
C)  health insurance reform that will include government subsidies for health insurance for many low-to- moderate income families. 
D)  All of the above are important factors. 
A)  medical advances that provide new, better, but often more expensive medical treatments. 
B)  a rising population of the elderly in the economy. 
C)  health insurance reform that will include government subsidies for health insurance for many low-to- moderate income families. 
D)  All of the above are important factors.

Question 16

Table 12-25  
-Refer to Table 12-25. Do any of the plans achieve vertical equity?

Accepted Answer

Yes. People with hig

Question 17

Suppose that the government collected taxes in the following fashion: people who earn less than $50,000 pay 25 percent in taxes, people who earn between $50,000 and $100,000 pay 35 percent in taxes, people who earn between $100,000 and $200,000 pay 30 percent in taxes, and people who earn more than $200,000 pay 28 percent in taxes. Which of the following statements is correct?

Accepted Answer

A)  The tax system is proportional for income levels less than $50,000 and regressive for income levels above $50,000. 
B)  The tax system is regressive for income levels less than $100,000 and progressive for income levels above $100,000. 
C)  The tax system is progressive for income levels less than $100,000 and regressive for income levels above $100,000. 
D)  The tax system is progressive for income levels less than $50,000 and proportional for income levels above $100,000. 
A)  The tax system is proportional for income levels less than $50,000 and regressive for income levels above $50,000. 
B)  The tax system is regressive for income levels less than $100,000 and progressive for income levels above $100,000. 
C)  The tax system is progressive for income levels less than $100,000 and regressive for income levels above $100,000. 
D)  The tax system is progressive for income levels less than $50,000 and proportional for income levels above $100,000.

Question 18

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Emily paid $9,000 in taxes. What were her marginal and average tax rates?

Accepted Answer

A)  20 percent and 13.8 percent, respectively 
B)  20 percent and 15 percent, respectively 
C)  10 percent and 13.8 percent respectively 
D)  10 percent and 15 percent respectively 
A)  20 percent and 13.8 percent, respectively 
B)  20 percent and 15 percent, respectively 
C)  10 percent and 13.8 percent respectively 
D)  10 percent and 15 percent respectively

Question 19

Table 12-16  
-Refer to Table 12-16. In this tax system which of the following is possible?

Accepted Answer

A)  vertical and horizontal equity 
B)  vertical but not horizontal equity 
C)  horizontal but not vertical equity 
D)  neither horizontal nor vertical equity 
A)  vertical and horizontal equity 
B)  vertical but not horizontal equity 
C)  horizontal but not vertical equity 
D)  neither horizontal nor vertical equity

Question 20

Tax evasion is

Accepted Answer

A)  facilitated by legal deductions to taxable income. 
B)  the same as tax avoidance. 
C)  recommended by the American Accounting Association. 
D)  illegal. 
A)  facilitated by legal deductions to taxable income. 
B)  the same as tax avoidance. 
C)  recommended by the American Accounting Association. 
D)  illegal.

Exam 12: The Design of the Tax System

A tax on the wages that a firm pays its workers is called

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What is her marginal tax rate in 2013?

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

Suppose that in 2020 the average citizen's federal tax bill is $14,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

Table 12-21 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-21. Which of the three tax systems is proportional?

If the rich pay more in taxes than the poor, the tax system must be progressive.

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

What are the characteristic(s) of an efficient tax system?

The resources that a taxpayer devotes to complying with the tax laws are a type of

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the .

The income tax requires that taxpayers pay 10 percent on the first $50,000 of income and 20 percent on all income over $50,000. Andy paid $9,000 in taxes. What were his marginal and average tax rates?

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Which of the following statements about state income taxes is correct?

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Table 12-25 -Refer to Table 12-25. Do any of the plans achieve vertical equity?

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Emily paid $9,000 in taxes. What were her marginal and average tax rates?

Table 12-16 -Refer to Table 12-16. In this tax system which of the following is possible?

Tax evasion is

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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