Question 1

In 2011, which category represented the largest category of spending for the U.S. federal government?

Accepted Answer

A)  health
B)  income security
C)  national defense
D)  net interestE) C) and D)
F) B) and D)

Question 2

Over the past 100 years, as the U.S. economy's income has grown,

Accepted Answer

A)  tax rates have decreased, while tax revenues have increased.
B)  tax rates have increased, while tax revenues have decreased.
C)  both tax rates and tax revenues have increased.
D)  both tax rates and tax revenues have decreased.E) B) and D)
F) A) and B)

Question 3

The U.S. federal government collects about

Accepted Answer

A)  one-third of the taxes in our economy.
B)  one-half of the taxes in our economy.
C)  two-thirds of the taxes in our economy.
D)  three-fourths of the taxes in our economy.E) A) and D)
F) A) and C)

Question 4

Which of the following is not a cost of taxes to taxpayers?

Accepted Answer

A)  the tax payment itself
B)  deadweight losses
C)  administrative burdens
D)  goods and services provided by the governmentE) C) and D)
F) A) and B)

Question 5

Table 12-20
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. 
-Refer to Table 12-20. Which tax schedules are proportional?

Accepted Answer

A)  Tax Schedule B only
B)  Tax Schedule B and Tax Schedule C
C)  Tax Schedule D only
D)  Tax Schedule A and Tax Schedule BE) A) and B)
F) All of the above

Question 6

What are the characteristic(s) of an efficient tax system?

Accepted Answer

One tax system is more efficie...

Question 7

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 8

In the United States, the marginal tax rate on individual federal income tax

Accepted Answer

A)  decreases as income increases.
B)  increases as income increases.
C)  is constant at all income levels.
D)  applies only to payroll taxes.E) C) and D)
F) B) and C)

Question 9

Table 12-23
The dollar amounts in the last three columns are the taxes owed under the three different tax systems. 
-Refer to Table 12-23. Which of the three tax systems is progressive?

Accepted Answer

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

Question 10

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) None of the above
F) A) and B)

Question 11

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2. Suppose the government levies a tax of $3 on a movie ticket and that, as a result, the price of a movie ticket increases to $8. What is total consumer surplus after the tax is imposed?

Accepted Answer

A)  $0
B)  $1
C)  $2
D)  $3E) A) and B)
F) A) and C)

Question 12

Some colleges charge all students the same fee for a weekly dining services meal plan. Suppose that students differ by how much food they consume each week. For example, members of the women's swimming team consume, on average, twice as much food as the average female college student, and the average male college student consumes 20 percent more food than the average female college student. The dining services fee is most like a(n)

Accepted Answer

A)  excise tax that conforms to the benefits principle.
B)  excise tax that violates the benefits principle.
C)  lump-sum tax that conforms to the benefits principle.
D)  lump-sum tax that violates the benefits principle.E) A) and B)
F) None of the above

Question 13

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) None of the above

Question 14

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. How much tax revenue is collected?

Accepted Answer

A)  $0
B)  $2
C)  $3
D)  $6E) B) and D)
F) B) and C)

Question 15

Leonard, Sheldon, Raj, and Penny each like to attend comic-book conventions. The price of a ticket to a convention is $50. Leonard values a ticket at $70, Sheldon at $65, Raj at $60, and Penny at $55. Suppose that if the government taxes tickets at $5 each, the price will rise to $55. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)  $50 and tax revenues increase by $20, so there is a deadweight loss of $30.
B)  $30 and tax revenues increase by $20, so there is a deadweight loss of $10.
C)  $20 and tax revenues increase by $20, so there is no deadweight loss.
D)  $50 and tax revenues increase by $20, so there is no deadweight loss.E) B) and D)
F) All of the above

Question 16

Who observed that "in this world nothing is certain but death and taxes"?

Accepted Answer

A)  Mark Twain
B)  P.T. Barnum
C)  Ben Franklin
D)  Richard NixonE) All of the above
F) B) and C)

Question 17

Which type of tax is used to finance the Social Security program in the United States?

Accepted Answer

A)  consumption tax
B)  income tax
C)  payroll tax
D)  property taxE) B) and C)
F) C) and D)

Question 18

From 2009 to 2012, the federal budget deficits were the largest budget shortfalls since World War II. The primary reason for the record-large deficits was

Accepted Answer

A)  the recession experienced during this time.
B)  severe budget tightening by members of Congress.
C)  the shift in political power from Republicans to Democrats.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 19

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1)  a person with no income would pay no taxes, and 2)  a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?

Accepted Answer

A)  A lump-sum tax would achieve the second goal but not the first.
B)  A regressive tax would achieve the second goal but not the first.
C)  A progressive tax could achieve both goals.
D)  A proportional tax could achieve the second goal but not the first.E) A) and B)
F) A) and C)

Question 20

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

Accepted Answer

A)  18.5%.
B)  20.2%.
C)  21.8%.
D)  25.0%.E) None of the above
F) B) and D)

Exam 12: The Design of the Tax System

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct Answer
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Correct Answer
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Many economists believe that

Correct Answer
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The U.S. federal government collects about

Correct Answer
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What are the characteristic(s) of an efficient tax system?

Correct Answer
verified
One tax system is more efficie...
View Answer

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems is progressive?

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

Correct Answer
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You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?

Correct Answer
verified

Over the past 100 years, as the U.S. economy's income has grown,

Correct Answer
verified

In the United States, the marginal tax rate on individual federal income tax

Correct Answer
verified

From 2009 to 2012, the federal budget deficits were the largest budget shortfalls since World War II. The primary reason for the record-large deficits was

Correct Answer
verified

Correct Answer
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Who observed that "in this world nothing is certain but death and taxes"?

Correct Answer
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Which type of tax is used to finance the Social Security program in the United States?

Correct Answer
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Correct Answer
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Table 12-20 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-20. Which tax schedules are proportional?

Correct Answer
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Which of the following is not a cost of taxes to taxpayers?

Correct Answer
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In 2011, which category represented the largest category of spending for the U.S. federal government?

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

Correct Answer
verified

Exam 12: The Design of the Tax System

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Many economists believe that

Correct AnswerverifiedShow Answer

The U.S. federal government collects about

Correct AnswerverifiedShow Answer

What are the characteristic(s) of an efficient tax system?

Correct AnswerverifiedOne tax system is more efficie...View AnswerShow Answer

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems is progressive?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Over the past 100 years, as the U.S. economy's income has grown,

Correct AnswerverifiedShow Answer

In the United States, the marginal tax rate on individual federal income tax

Correct AnswerverifiedShow Answer

From 2009 to 2012, the federal budget deficits were the largest budget shortfalls since World War II. The primary reason for the record-large deficits was

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Who observed that "in this world nothing is certain but death and taxes"?

Correct AnswerverifiedShow Answer

Which type of tax is used to finance the Social Security program in the United States?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-20 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-20. Which tax schedules are proportional?

Correct AnswerverifiedShow Answer

Which of the following is not a cost of taxes to taxpayers?

Correct AnswerverifiedShow Answer

In 2011, which category represented the largest category of spending for the U.S. federal government?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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One tax system is more efficie...
View Answer

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