Question 1

In 1950 there were approximately 7 working age people for every elderly person; however, in 2050 there will be

Accepted Answer

A)   only 2.5 working people for every elderly person.
B)   only 5 working age people for every elderly person.
C)   10 working age people for every elderly person.
D)   14 working age people for every elderly person.E) None of the above
F) B) and C)

Question 2

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Accepted Answer

Social Security and Medicare payments wi...

Question 3

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Accepted Answer

A)   15 percent
B)   32 percent
C)   40 percent
D)   55 percentE) A) and B)
F) A) and C)

Question 4

According to the ability-to-pay principle, it is fair for people to pay taxes based on the amount of government services that they receive.

Accepted Answer

A) True 
 B)False

Question 5

Total taxes paid divided by total income is called the

Accepted Answer

A)   lump-sum tax liability.
B)   marginal tax rate.
C)   average tax rate.
D)   average consumption tax liability.E) None of the above
F) B) and C)

Question 6

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. What is the deadweight loss of the tax?

Accepted Answer

A)   $3
B)   $6
C)   $8
D)   $9E) B) and C)
F) A) and C)

Question 7

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) None of the above

Question 8

Economists play an important role in the complex debates over tax policy by

Accepted Answer

A)   identifying efficiency as the most important goal of tax policy.
B)   identifying equity as the most important goal of tax policy.
C)   shedding light on the tradeoff between efficiency and equity in tax policy.
D)   None of the above is correct.E) B) and C)
F) A) and B)

Question 9

Suppose New York City passes a local "big gulp" tax that taxes carbonated beverages larger than 20 ounces if they contain sugar or high fructose corn syrup. If the revenue from the "big gulp" tax is earmarked for diabetes research, the "big gulp" tax may be justified

Accepted Answer

A)   on the basis of the ability-to-pay principle.
B)   because it is an example of a lump-sum tax and thus is the most efficient tax.
C)   on the basis of the benefits principle.
D)   because it is an example of a progressive tax and thus is the most equitable tax.E) All of the above
F) A) and B)

Question 10

Goals of efficiency and equity in tax policy are

Accepted Answer

A)   complementary in most countries.
B)   necessary for application of the ability-to-pay principle.
C)   often in conflict with each other.
D)   easier to achieve when tax codes are complex.E) B) and C)
F) A) and B)

Question 11

European countries tend to rely more on consumption taxes than does the United States.

Accepted Answer

A) True 
 B)False

Question 12

Table 12-19
 
-Refer to Table 12-19. The tax system is

Accepted Answer

A)   progressive.
B)   regressive.
C)   proportional.
D)   lump sum.E) B) and C)
F) B) and D)

Question 13

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
 
-Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What is his marginal tax rate in 2012?

Accepted Answer

A)   15%
B)   28%
C)   31%
D)   36%E) B) and C)
F) A) and B)

Question 14

A payroll tax is a tax on

Accepted Answer

A)   the wages that a firm pays its workers.
B)   earned and unearned income.
C)   specific goods like gasoline and cigarettes.
D)   corporate profits.E) B) and C)
F) A) and D)

Question 15

Alan Greenspan, former Chairman of the Federal Reserve, discussed the advantages of which kind of tax system, "particularly if one were designing a tax system from scratch"?

Accepted Answer

A)   a progressive tax system
B)   a regressive tax system
C)   a consumption tax
D)   a lump-sum taxE) B) and C)
F) A) and C)

Question 16

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Accepted Answer

A) True 
 B)False

Question 17

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Accepted Answer

A) True 
 B)False

Question 18

Rank the following state and local government expenditure categories from largest to smallest.

Accepted Answer

A)   education, health, highways
B)   education, highways, income security
C)   highways, education, public order and safety
D)   public order and safety, highways, healthE) C) and D)
F) B) and D)

Question 19

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 exhibits vertical equity?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   All of the systems exhibit vertical equity.E) C) and D)
F) A) and D)

Question 20

The deadweight loss associated with a tax on a commodity is generated by

Accepted Answer

A)   the consumers who still choose to consume the commodity but pay a higher price that reflects the tax.
B)   the consumers who choose to not consume the commodity that is taxed.
C)   all citizens who are able to use services provided by government.
D)   the consumers who are unable to avoid paying the tax.E) A) and C)
F) B) and C)

Exam 12: The Design of the Tax System

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What is his marginal tax rate in 2012?

Correct Answer
verified

Rank the following state and local government expenditure categories from largest to smallest.

Correct Answer
verified

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Correct Answer
verified
Social Security and Medicare payments wi...
View Answer

According to the ability-to-pay principle, it is fair for people to pay taxes based on the amount of government services that they receive.

Correct Answer
verified

Total taxes paid divided by total income is called the

Correct Answer
verified

Table 12-19 -Refer to Table 12-19. The tax system is

Correct Answer
verified

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Correct Answer
verified

Goals of efficiency and equity in tax policy are

Correct Answer
verified

Economists play an important role in the complex debates over tax policy by

Correct Answer
verified

The deadweight loss associated with a tax on a commodity is generated by

Correct Answer
verified

Suppose New York City passes a local "big gulp" tax that taxes carbonated beverages larger than 20 ounces if they contain sugar or high fructose corn syrup. If the revenue from the "big gulp" tax is earmarked for diabetes research, the "big gulp" tax may be justified

Correct Answer
verified

Correct Answer
verified

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Correct Answer
verified

A payroll tax is a tax on

Correct Answer
verified

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 exhibits vertical equity?

Correct Answer
verified

European countries tend to rely more on consumption taxes than does the United States.

Correct Answer
verified

Alan Greenspan, former Chairman of the Federal Reserve, discussed the advantages of which kind of tax system, "particularly if one were designing a tax system from scratch"?

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 regressive?

Correct Answer
verified

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Correct Answer
verified

In 1950 there were approximately 7 working age people for every elderly person; however, in 2050 there will be

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What is his marginal tax rate in 2012?

Correct AnswerverifiedShow Answer

Rank the following state and local government expenditure categories from largest to smallest.

Correct AnswerverifiedShow Answer

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Correct AnswerverifiedSocial Security and Medicare payments wi...View AnswerShow Answer

According to the ability-to-pay principle, it is fair for people to pay taxes based on the amount of government services that they receive.

Correct AnswerverifiedShow Answer

Total taxes paid divided by total income is called the

Correct AnswerverifiedShow Answer

Table 12-19 -Refer to Table 12-19. The tax system is

Correct AnswerverifiedShow Answer

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Correct AnswerverifiedShow Answer

Goals of efficiency and equity in tax policy are

Correct AnswerverifiedShow Answer

Economists play an important role in the complex debates over tax policy by

Correct AnswerverifiedShow Answer

The deadweight loss associated with a tax on a commodity is generated by

Correct AnswerverifiedShow Answer

Suppose New York City passes a local "big gulp" tax that taxes carbonated beverages larger than 20 ounces if they contain sugar or high fructose corn syrup. If the revenue from the "big gulp" tax is earmarked for diabetes research, the "big gulp" tax may be justified

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Correct AnswerverifiedShow Answer

A payroll tax is a tax on

Correct AnswerverifiedShow 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 exhibits vertical equity?

Correct AnswerverifiedShow Answer

European countries tend to rely more on consumption taxes than does the United States.

Correct AnswerverifiedShow Answer

Alan Greenspan, former Chairman of the Federal Reserve, discussed the advantages of which kind of tax system, "particularly if one were designing a tax system from scratch"?

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 regressive?

Correct AnswerverifiedShow Answer

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Correct AnswerverifiedShow Answer

In 1950 there were approximately 7 working age people for every elderly person; however, in 2050 there will be

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Social Security and Medicare payments wi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified