Question 1

Table 12-11  
-Refer to Table 12-11. If Al has taxable income of $165,000, his tax liability is

Accepted Answer

A)  $23,800. 
B)  $36,000. 
C)  $45,000. 
D)  $47,698. 
A)  $23,800. 
B)  $36,000. 
C)  $45,000. 
D)  $47,698.

Question 2

The flypaper theory of tax incidence

Accepted Answer

A)  ignores the indirect effects of taxes. 
B)  assumes that most taxes should be "stuck on " the rich. 
C)  says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it. 
D)  suggests that taxes are like flies because they are everywhere and will never go away. 
A)  ignores the indirect effects of taxes. 
B)  assumes that most taxes should be "stuck on " the rich. 
C)  says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it. 
D)  suggests that taxes are like flies because they are everywhere and will never go away.

Question 3

An efficient tax system is one that

Accepted Answer

A)  (i) only 
B)  (ii) and (iii) only 
C)  (i), (ii), and (iii) only 
D)  (i), (ii), (iii), and (iv) 
A)  (i) only 
B)  (ii) and (iii) only 
C)  (i), (ii), and (iii) only 
D)  (i), (ii), (iii), and (iv)

Question 4

Bert faces a progressive tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. If Bert earns $75,000, what is his average tax rate?

Accepted Answer

A)  20 percent 
B)  25 percent 
C)  30 percent 
D)  36.67 percent 
A)  20 percent 
B)  25 percent 
C)  30 percent 
D)  36.67 percent

Question 5

In 2011, approximately what percentage of the U.S. federal government's receipts came from individual income taxes?

Accepted Answer

A)  9% 
B)  15% 
C)  43% 
D)  67% 
A)  9% 
B)  15% 
C)  43% 
D)  67%

Question 6

If government spending exceeds government receipts, the government has a

Accepted Answer

A)  budget surplus. Other things the same, the surplus rises if taxes rise. 
B)  budget surplus. Other things the same the surplus rises if taxes fall. 
C)  budget deficit. Other things the same, the deficit rises if taxes rise. 
D)  budget deficit. Other things the same, the deficit rises if taxes fall. 
A)  budget surplus. Other things the same, the surplus rises if taxes rise. 
B)  budget surplus. Other things the same the surplus rises if taxes fall. 
C)  budget deficit. Other things the same, the deficit rises if taxes rise. 
D)  budget deficit. Other things the same, the deficit rises if taxes fall.

Question 7

Two families who live in Plains, GA have identical incomes. The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year. The Jones family lives in an apartment and is not eligible for a mortgage- interest deduction. This situation exemplifies

Accepted Answer

A)  an application of the benefits principle of taxation. 
B)  a violation of horizontal equity. 
C)  a violation of vertical equity. 
D)  an application of egalitarian tax rules. 
A)  an application of the benefits principle of taxation. 
B)  a violation of horizontal equity. 
C)  a violation of vertical equity. 
D)  an application of egalitarian tax rules.

Question 8

Taxes can be justified if the government uses the revenue to

Accepted Answer

A)  (ii) only 
B)  (ii) and (iii) only 
C)  (i), (ii), and (iii) only 
D)  (i), (ii), (iii), and (iv) 
A)  (ii) only 
B)  (ii) and (iii) only 
C)  (i), (ii), and (iii) only 
D)  (i), (ii), (iii), and (iv)

Question 9

Individual Retirement Accounts and 401(k) plans make the current U.S. tax system

Accepted Answer

A)  less like European tax systems than it otherwise would be. 
B)  more like a payroll tax than it otherwise would be. 
C)  more like an income tax than it otherwise would be. 
D)  more like a consumption tax than it otherwise would be. 
A)  less like European tax systems than it otherwise would be. 
B)  more like a payroll tax than it otherwise would be. 
C)  more like an income tax than it otherwise would be. 
D)  more like a consumption tax than it otherwise would be.

Exam 12: The Design of the Tax System

Table 12-11 -Refer to Table 12-11. If Al has taxable income of $165,000, his tax liability is

The flypaper theory of tax incidence

An efficient tax system is one that

In 2011, approximately what percentage of the U.S. federal government's receipts came from individual income taxes?

If government spending exceeds government receipts, the government has a

Two families who live in Plains, GA have identical incomes. The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year. The Jones family lives in an apartment and is not eligible for a mortgage- interest deduction. This situation exemplifies

Taxes can be justified if the government uses the revenue to

Individual Retirement Accounts and 401(k) plans make the current U.S. tax system

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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