Question 1

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?
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Accepted Answer

The answer of If grocery stores were legally required to...

Question 2

According to the ability-to-pay principle of taxation,

Accepted Answer

A)  individuals who receive the benefit of a good or service should bear a greater share of the tax burden. 
B)  it is fair to expect a greater share of the tax burden to be borne by people who have a greater ability to pay. 
C)  people in the same economic situation should bear an equal share of the tax burden. 
D)  individuals who are willing to bear a greater share of the tax burden should be compensated with nonmonetary benefits.

Question 3

If you pay $3000 in taxes on an income of $28 000,and $4450 in taxes on an income of $38 000,what is your marginal tax rate? Show your work.
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Accepted Answer

The answer of If you pay $3000 in taxes on...

Question 4

The marginal tax rate is

Accepted Answer

A)  the amount of taxes paid as a percentage of income. 
B)  the amount of per-capita taxes paid. 
C)  the amount of taxes paid as a percentage of gross domestic product (GDP). 
D)  the fraction of each additional dollar of income that must be paid in taxes.

Question 5

Figure 12.6  Figure 12.6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 12.6.Which country has the more unequal distribution of income?

Accepted Answer

A)  Islandia 
B)  Syldavia 
C)  They may have the same absolute income distribution although their relative income distribution is different. 
D)  There is insufficient information to answer the question.

Question 6

Since lower-income people spend a larger proportion of their incomes on groceries than do higher-income people,if grocery stores were required by law to charge a 10-cent fee for disposable bags,this fee could be considered

Accepted Answer

A)  a proportional tax. 
B)  a progressive tax. 
C)  a regressive tax. 
D)  an income tax.

Question 7

When considering changes in tax policy,economists usually focus on

Accepted Answer

A)  the average tax rate. 
B)  the marginal tax rate. 
C)  people's willingness to pay taxes. 
D)  people's ability to pay taxes.

Question 8

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

Accepted Answer

A)  The demand for the product would rise and the equilibrium price would fall by the amount of the tax. 
B)  The equilibrium price for the product would fall by less than the amount of the tax. 
C)  The reduction in government revenue from the tax would be made up by an increase in property taxes. 
D)  The supply of the product would become more elastic.

Question 9

What is a statistical tool used to measure inequality?

Accepted Answer

A)  The Gini coefficient 
B)  The Lorenz curve 
C)  The relative poverty rate 
D)  The absolute poverty rate

Question 10

Horizontal equity is achieved when taxes are collected from those who benefit from the government expenditure of the tax revenue.

Accepted Answer

A) True 
 B)False

Question 11

The average tax rate is calculated as

Accepted Answer

A)  total income divided by the total tax paid. 
B)  the change in total tax paid divided by the change in income. 
C)  total tax paid divided by total income. 
D)  the change in income divided by the change in total tax paid.

Question 12

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

Accepted Answer

A) True 
 B)False

Question 13

Describe the main factors economists believe cause inequality of income.
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Accepted Answer

The answer of Describe the main factors economists believe cause...

Question 14

If your income is $40 000 and you pay taxes of $4650,what is your average tax rate? Show your work.
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Accepted Answer

The answer of If your income is $40 000 and...

Question 15

To what does a personal exemption apply?

Accepted Answer

A)  The tax bracket that represents basic living expenses 
B)  The tax rate that applies to a particular tax bracket 
C)  An amount representing basic living expenses that can be subtracted from income 
D)  A dispensation that allows certain qualifying individuals not to pay federal taxes

Question 16

Figure 12.2  Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,the government's revenue from the tax

Accepted Answer

A)  is larger if the supply curve is S0. 
B)  is larger if the supply curve is S1. 
C)  is identical under either supply curve. 
D)  is not maximised.

Question 17

According to the benefits-received principle of taxation,

Accepted Answer

A)  individuals who receive the benefits from a government program should pay the taxes that support the program. 
B)  because high-income individuals receive the most benefits from government programs, they should pay more taxes than lower income individuals. 
C)  people in the same economic situation should bear an equal share of the tax burden. 
D)  the benefits of government programs such as national defence are shared equally by all people; therefore, the burden of paying for these programs should be shared equally.

Question 18

All of the following occur whenever a government taxes a product except

Accepted Answer

A)  the quantity consumed of that product falls. 
B)  the price of that product rises. 
C)  the marginal benefit of the last unit sold exceeds the marginal cost of producing it. 
D)  there will be no excess burden if the government's tax revenue is sufficiently large to offset the deadweight loss.

Question 19

If you pay $3000 in taxes on an income of $30 000,and a tax of $4400 on an income of $40 000,then over this range of income the tax is -.

Accepted Answer

A)  regressive 
B)  proportional 
C)  progressive 
D)  There is insufficient information to answer the question.

Question 20

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called -.

Accepted Answer

A)  the ability-to-pay principle 
B)  the horizontal-equity principle 
C)  the vertical-equity principle 
D)  the benefits-received principle

Exam 12: Social Policy and Inequality