Question 1

Incentives to work and save are reduced when

Accepted Answer

A)  income taxes are higher.
B)  consumption taxes replace income taxes.
C)  corrective taxes are implemented.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

In 2009, the lowest quintile of income earners paid about

Accepted Answer

A)  1 percent of income as taxes and paid less than 1 percent of all taxes.
B)  5 percent of income as taxes and paid less than 1 percent of all taxes.
C)  1 percent of income as taxes and paid about 5 percent of all taxes.
D)  5 percent of income as taxes and paid about 5 percent of all taxes.E) B) and D)
F) C) and D)

Question 4

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. Because total consumer surplus has

Accepted Answer

A)  fallen by more than the tax revenue, the tax has a deadweight loss.
B)  fallen by less than the tax revenue, the tax has no deadweight loss.
C)  fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
D)  increased by less than the tax revenue, the tax has a deadweight loss.E) B) and D)
F) A) and B)

Question 5

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has

Accepted Answer

A)  fallen by more than the tax revenue, the tax has a deadweight loss
B)  fallen by less than the tax revenue, the tax has no dead weight loss.
C)  fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
D)  increased by less than the tax revenue, the tax has a deadweight loss.E) C) and D)
F) None of the above

Question 6

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

Accepted Answer

A)  more like a consumption tax and so more like the tax system of many European countries.
B)  more like a consumption tax and so less like the tax system of many European countries.
C)  less like a consumption tax and so more like the tax system of many European countries.
D)  less like a consumption tax and so less like the tax system of many European countries.E) A) and D)
F) B) and D)

Question 7

Suppose Darby values a certain smart phone at $400. Jake values the same smart phone at $300. The pre-tax price of this smart phone is $250. The government imposes a tax of $75 on each smart phone, and the price rises to $325. The deadweight loss from the tax is

Accepted Answer

A)  $150.
B)  $100.
C)  $50.
D)  $0.E) A) and B)
F) C) and D)

Question 8

Table 12-22 
-Refer to Table 12-22. A lump-sum tax is illustrated by tax

Accepted Answer

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

Question 9

If a poor family has three children in public school and a rich family has two children in private school, the ability-to-pay principle would suggest that

Accepted Answer

A)  the poor family should pay more in taxes to pay for public education than the rich family.
B)  the rich family should pay more in taxes to pay for public education than the poor family.
C)  the benefits of private school exceed those of public school.
D)  public schools should be financed by property taxes.E) A) and D)
F) B) and C)

Question 10

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. What is total consumer surplus after the tax is levied?

Accepted Answer

A)  $2
B)  $3
C)  $4
D)  $5E) A) and B)
F) B) and D)

Question 11

The largest category of expenditures for state and local governments is __________.

Accepted Answer

The answer of The largest category of expenditures for state...

Question 12

Which of the following are taxed?

Accepted Answer

A)  both corporate profits and dividends shareholders receive
B)  corporate profits but not dividends shareholders receive
C)  dividends shareholders receive but not corporate profits
D)  neither corporate profits nor dividends shareholders receiveE) A) and B)
F) A) and C)

Question 13

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.E) All of the above
F) B) and C)

Question 14

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Accepted Answer

A)  tax evasion
B)  a political payoff
C)  a tax loophole
D)  compensation for the benefit of societyE) B) and C)
F) None of the above

Question 15

Table 12-10 
-Refer to Table 12-10. If Si has $100,000 in taxable income, his tax liability will be

Accepted Answer

A)  $838.
B)  $3,844.
C)  $12,100.
D)  $21,709.E) B) and D)
F) A) and C)

Question 16

The single largest expenditure by state and local governments is on

Accepted Answer

A)  highways.
B)  police.
C)  public welfare.
D)  education.E) B) and C)
F) A) and D)

Question 17

Table 12-6
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. 
-Refer to Table 12-6. For this tax schedule, what is the total income tax due for an individual with $49,000 in taxable income?

Accepted Answer

A)  $12,650
B)  $14,370
C)  $15,960
D)  $16,220E) A) and B)
F) A) and C)

Question 18

Table 12-5 
-Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Accepted Answer

A)  25%
B)  35%
C)  45%
D)  60%E) B) and D)
F) C) and D)

Question 19

Table 12-17
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-17. Suppose one goal of the tax system was to achieve vertical equity. While people may disagree about what is "equitable," based on the marginal tax rates given for the two years, which of the following statements is true?

Accepted Answer

A)  Vertical equity is possible in both years.
B)  Vertical equity is possible in 2009 but not in 2010.
C)  Vertical equity is not possible in 2009 but is possible in 2010.
D)  Vertical equity is not possible in either year.E) None of the above
F) A) and C)

Question 20

Table 12-10 
-Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her tax liability is

Accepted Answer

A)  $11,581.
B)  $16,181.
C)  $20,000.
D)  $24,881.E) A) and B)
F) A) and C)

Exam 12: The Design of the Tax System

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her tax liability is

Correct Answer
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In 2009, the lowest quintile of income earners paid about

Correct Answer
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Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Correct Answer
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Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his tax liability will be

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

Correct Answer
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Correct Answer
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Incentives to work and save are reduced when

Correct Answer
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If a poor family has three children in public school and a rich family has two children in private school, the ability-to-pay principle would suggest that

Correct Answer
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Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Correct Answer
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Suppose Darby values a certain smart phone at $400. Jake values the same smart phone at $300. The pre-tax price of this smart phone is $250. The government imposes a tax of $75 on each smart phone, and the price rises to $325. The deadweight loss from the tax is

Correct Answer
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Table 12-22 -Refer to Table 12-22. A lump-sum tax is illustrated by tax

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

Correct Answer
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The single largest expenditure by state and local governments is on

Correct Answer
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Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the total income tax due for an individual with $49,000 in taxable income?

Correct Answer
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Tax evasion is

Correct Answer
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Which of the following are taxed?

Correct Answer
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The largest category of expenditures for state and local governments is __________.

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her tax liability is

Correct AnswerverifiedShow Answer

In 2009, the lowest quintile of income earners paid about

Correct AnswerverifiedShow Answer

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his tax liability will be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Incentives to work and save are reduced when

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school, the ability-to-pay principle would suggest that

Correct AnswerverifiedShow Answer

Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Correct AnswerverifiedShow Answer

Suppose Darby values a certain smart phone at $400. Jake values the same smart phone at $300. The pre-tax price of this smart phone is $250. The government imposes a tax of $75 on each smart phone, and the price rises to $325. The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

Table 12-22 -Refer to Table 12-22. A lump-sum tax is illustrated by tax

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The single largest expenditure by state and local governments is on

Correct AnswerverifiedShow Answer

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the total income tax due for an individual with $49,000 in taxable income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Tax evasion is

Correct AnswerverifiedShow Answer

Which of the following are taxed?

Correct AnswerverifiedShow Answer

The largest category of expenditures for state and local governments is __________.

Correct AnswerverifiedShow Answer

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