Question 1

In which of the following tax systems do taxes increase as income increases?

Accepted Answer

A)   both proportional and progressive
B)   proportional but not progressive
C)   progressive but not proportional
D)   neither proportional nor progressiveE) B) and C)
F) C) and D)

Question 2

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 3

In 2009,the federal government spent 5 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 2009,the federal government spent 187 billion dollars to cover interest payments on its loans.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 4

Table 12-3
 
-Refer to Table 12-3.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.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)   $75
B)   $105
C)   $185
D)   $215E) A) and B)
F) All of the above

Question 5

Table 12-12
United States Income Tax Rates for a Single Individual,2009 and 2010.
 
-Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) A) and B)
F) None of the above

Question 6

Tax incidence refers to

Accepted Answer

A)   what product or service the tax is levied on.
B)   who bears the tax burden.
C)   what sector of the economy is most affected by the tax.
D)   the dollar value of the tax revenues.E) A) and D)
F) B) and D)

Question 7

Many economists believe that

Accepted Answer

A)   the corporate income tax satisfies the goal of horizontal equity.
B)   the corporate income tax does not distort the incentives of customers.
C)   the corporate income tax is more efficient than the personal income tax.
D)   workers and customers bear much of the burden of the corporate income tax.E) A) and B)
F) A) and C)

Question 8

According to long-run projections,under current law,

Accepted Answer

A)   federal government spending as a percentage of GDP will rise gradually but substantially in the next several decades.
B)   federal taxes as a percentage of GDP will rise gradually but substantially in the next several decades.
C)   the federal government's budget deficit will gradually be eliminated in the next several decades.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 9

Which of the following statements is not correct?

Accepted Answer

A)   All states have state income taxes,but the percentages vary widely.
B)   Sales taxes and property taxes are important revenue sources for state and local governments.
C)   Medicare spending has increased because the percentage of the population that is elderly and the cost of health care have both increased.
D)   A budget deficit occurs when government spending exceeds government receipts.E) B) and C)
F) A) and D)

Question 10

High marginal income tax rates

Accepted Answer

A)   distort incentives to work.
B)   are used to encourage saving behavior.
C)   will invariably lead to lower average tax rates.
D)   are not associated with deadweight losses.E) A) and B)
F) A) and C)

Question 11

The administrative burden of any tax system is part of the inefficiency it creates.

Accepted Answer

A) True 
 B)False

Question 12

In the 1980s,President Ronald Reagan argued that high tax rates distorted economic incentives to work and save.In the 1990s,President Bill Clinton argued that the rich were not paying their fair share of taxes.Which of the following statements best summarizes the economic theories behind the differing philosophies?

Accepted Answer

A)   President Reagan was concerned about vertical equity,whereas President Clinton was concerned about horizontal equity.
B)   President Reagan was concerned about average tax rates,whereas President Clinton was concerned about horizontal equity.
C)   President Reagan was concerned about marginal tax rates,whereas President Clinton was concerned about vertical equity.
D)   None of the above is correct.E) None of the above
F) A) and C)

Question 13

Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

Accepted Answer

A)   8%
B)   15%
C)   43%
D)   67%E) B) and D)
F) A) and D)

Question 14

Deadweight losses are associated with

Accepted Answer

A)   taxes that distort the incentives that people face.
B)   taxes that target expenditures on survivor's benefits for Social Security.
C)   taxes that have no efficiency losses.
D)   lump-sum taxes.E) A) and C)
F) A) and B)

Question 15

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 16

In 2009,what percentage of federal government receipts came from corporate income taxes?

Accepted Answer

A)   7%
B)   15%
C)   25%
D)   42%E) B) and D)
F) B) and C)

Question 17

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.Which of the following best describes the tax schedule in 2009?

Accepted Answer

A)   proportional tax
B)   progressive tax
C)   regressive tax
D)   vertical taxE) B) and D)
F) All of the above

Question 18

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 19

Table 12-5
 
-Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)   20%
B)   30%
C)   40%
D)   50%E) A) and B)
F) A) and C)

Question 20

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

Table 12-3 -Refer to Table 12-3.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.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct Answer
verified

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Correct Answer
verified

In 2009,what percentage of federal government receipts came from corporate income taxes?

Correct Answer
verified

According to long-run projections,under current law,

Correct Answer
verified

Correct Answer
verified

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Correct Answer
verified

A lump-sum tax minimizes deadweight loss.

Correct Answer
verified

Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

Correct Answer
verified

In 2009,the federal government spent 5 percent of the budget on net interest.Which of the following statements regarding net interest is correct?

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
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Many economists believe that

Correct Answer
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In which of the following tax systems do taxes increase as income increases?

Correct Answer
verified

Deadweight losses are associated with

Correct Answer
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Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.Which of the following best describes the tax schedule in 2009?

Correct Answer
verified

Tax incidence refers to

Correct Answer
verified

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Correct Answer
verified

High marginal income tax rates

Correct Answer
verified

The administrative burden of any tax system is part of the inefficiency it creates.

Correct Answer
verified

Table 12-5 -Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-3 -Refer to Table 12-3.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.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct AnswerverifiedShow Answer

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Correct AnswerverifiedShow Answer

In 2009,what percentage of federal government receipts came from corporate income taxes?

Correct AnswerverifiedShow Answer

According to long-run projections,under current law,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Correct AnswerverifiedShow Answer

A lump-sum tax minimizes deadweight loss.

Correct AnswerverifiedShow Answer

Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

Correct AnswerverifiedShow Answer

In 2009,the federal government spent 5 percent of the budget on net interest.Which of the following statements regarding net interest is correct?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Many economists believe that

Correct AnswerverifiedShow Answer

In which of the following tax systems do taxes increase as income increases?

Correct AnswerverifiedShow Answer

Deadweight losses are associated with

Correct AnswerverifiedShow Answer

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.Which of the following best describes the tax schedule in 2009?

Correct AnswerverifiedShow Answer

Tax incidence refers to

Correct AnswerverifiedShow Answer

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Correct AnswerverifiedShow Answer

High marginal income tax rates

Correct AnswerverifiedShow Answer

The administrative burden of any tax system is part of the inefficiency it creates.

Correct AnswerverifiedShow Answer

Table 12-5 -Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Correct AnswerverifiedShow Answer

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