Question 1

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

Accepted Answer

A)  Denmark
B)  United States
C)  Canada
D)  GreeceE) None of the above
F) A) and D)

Question 2

Of all the taxes collected in the U.S. economy, what percentage is collected by the federal government?

Accepted Answer

The answer of Of all the taxes collected in the...

Question 3

Define the marginal tax rate.

Accepted Answer

The marginal tax rat...

Question 4

Table 12-17
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-17. 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) A) and C)
F) All of the above

Question 5

Part of the deadweight loss from taxing labor earnings is that people

Accepted Answer

A)  will work more.
B)  will be reluctant to hire accountants to file their tax returns.
C)  with low tax liabilities will universally be worse off than under some other tax policy.
D)  will work less.E) A) and C)
F) B) and C)

Question 6

Which of the following statements is correct?

Accepted Answer

A)  Vertical equity is the idea that taxpayers with similar abilities to pay taxes should pay the same amount.
B)  Horizontal equity is the idea that taxes should be levied on a person according to how well that person can shoulder the burden.
C)  A regressive tax would mean that high-income tax payers pay a larger fraction of their income in taxes than would low-income taxpayers.
D)  A proportional tax would mean that high-income and low-income taxpayers pay the same fraction of income in taxes.E) C) and D)
F) All of the above

Question 7

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Accepted Answer

A)  The price of cars will rise.
B)  The wages of auto workers will fall.
C)  Owners of car companies (stockholders)  will receive less profit.
D)  Less deadweight loss will occur since corporations are entities and not people who respond to incentives.E) None of the above
F) C) and D)

Question 9

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Accepted Answer

A)  both are 10 percent
B)  10 percent and $2,000, respectively
C)  $3,000 and 10 percent, respectively
D)  $3,000 and 20 percent, respectivelyE) None of the above
F) All of the above

Question 10

In 2011, state and local government education spending was more than five times highway spending.

Accepted Answer

A) True 
 B)False

Question 11

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Accepted Answer

Before the tax, the total surplus was $3...

Question 13

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 14

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 regressive?

Accepted Answer

A)  Tax System A
B)  Tax System B
C)  Tax System C
D)  None of the systems are regressive.E) A) and B)
F) A) and C)

Question 15

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.E) A) and B)
F) B) and D)

Question 16

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Accepted Answer

A)  include tax payments as well as transfer payments received.
B)  focus only on the tax payments of wealthy tax payers.
C)  limit their analysis to taxes based on the ability-to-pay principle.
D)  focus their analysis on issues of tax efficiency.E) All of the above
F) C) and D)

Question 17

Table 12-24 
-Refer to Table 12-24. The tax system is an example of a __________ tax.

Accepted Answer

regressive; the perc...

Question 18

In 2010, the co-chairmen of President Obama's deficit reduction commission proposed curtailing or eliminating the mortgage interest deduction that millions of homeowner taxpayers receive every year. Economists who favor the proposal would argue that
(i) too much of the economy's capital stock is tied up in residential housing.
(ii) too little of the economy's capital stock is invested in corporate capital.
(iii) the misallocation of resources results in lower productivity and reduced real wages.

Accepted Answer

A)  (i)  only
B)  (ii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii) E) All of the above
F) None of the above

Question 19

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

Accepted Answer

The best tax depends on the criteria. Pl...

Question 20

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) All of the above
F) A) and B)

Exam 12: The Design of the Tax System

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Correct Answer
verified

Correct Answer
verified

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Correct Answer
verified

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Correct Answer
verified

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

Correct Answer
verified

Define the marginal tax rate.

Correct Answer
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The marginal tax rat...
View Answer

Table 12-24 -Refer to Table 12-24. The tax system is an example of a __________ tax.

Correct Answer
verified
regressive; the perc...
View Answer

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 regressive?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Deadweight losses are associated with

Correct Answer
verified

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

Correct Answer
verified
The best tax depends on the criteria. Pl...
View Answer

Lump-sum taxes are equitable but not efficient.

Correct Answer
verified

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Correct Answer
verified

Part of the deadweight loss from taxing labor earnings is that people

Correct Answer
verified

Of all the taxes collected in the U.S. economy, what percentage is collected by the federal government?

Correct Answer
verified

In 2011, state and local government education spending was more than five times highway spending.

Correct Answer
verified

Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Correct Answer
verified

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?

Correct Answer
verified

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Correct Answer
verified
Before the tax, the total surplus was $3...
View Answer

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Correct Answer
verified

Exam 12: The Design of the Tax System

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Correct AnswerverifiedShow Answer

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Define the marginal tax rate.

Correct AnswerverifiedThe marginal tax rat...View AnswerShow Answer

Table 12-24 -Refer to Table 12-24. The tax system is an example of a __________ tax.

Correct Answerverifiedregressive; the perc...View AnswerShow Answer

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 regressive?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Deadweight losses are associated with

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe best tax depends on the criteria. Pl...View AnswerShow Answer

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Correct AnswerverifiedShow Answer

Part of the deadweight loss from taxing labor earnings is that people

Correct AnswerverifiedShow Answer

Of all the taxes collected in the U.S. economy, what percentage is collected by the federal government?

Correct AnswerverifiedShow Answer

In 2011, state and local government education spending was more than five times highway spending.

Correct AnswerverifiedShow Answer

Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Correct AnswerverifiedBefore the tax, the total surplus was $3...View AnswerShow Answer

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The marginal tax rat...
View Answer

Correct Answer
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regressive; the perc...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The best tax depends on the criteria. Pl...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Before the tax, the total surplus was $3...
View Answer

Correct Answer
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