Question 1

Table 12-9
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income.
 
-Refer to Table 12-9.For this tax schedule,what is the average tax rate for an individual with $280,000 in taxable income?

Accepted Answer

A)   39.9%
B)   40.2%
C)   42.7%
D)   44.8%E) C) and D)
F) B) and D)

Question 2

Deadweight losses arise because a tax causes some individuals to change their behavior.

Accepted Answer

A) True 
 B)False

Question 3

Country A's tax system is more efficient than Country B's tax system if

Accepted Answer

A)   Country A collects less tax revenue than Country B,and the cost to taxpayers is the same in both countries.
B)   Country A collects more tax revenue than Country B,even though the cost to taxpayers is greater in Country A than in Country B.
C)   the same amount of revenue is raised in both countries,but the cost to taxpayers is smaller in Country A than in Country B.
D)   the same amount of revenue is raised in both countries,but the taxes are collected in a shorter amount of time in Country A than in Country B.E) A) and B)
F) C) and D)

Question 4

Many health economists believe that President Obama's 2010 healthcare reform bill and other measures proposed by policymakers to reduce the growth of healthcare costs will have only a limited impact because

Accepted Answer

A)   providing universal coverage is very expensive.
B)   the main source of higher costs is medical advances which extend and improve lives.
C)   lawsuits do not create a costly burden on the healthcare system.
D)   encouraging competition does not usually result in lower costs.E) A) and B)
F) B) and D)

Question 5

If a government simplified its tax system the likeliest result would be

Accepted Answer

A)   a decrease in consumer surplus.
B)   a decrease in producer surplus.
C)   a decrease in deadweight loss.
D)   a decrease in tax revenues.E) A) and B)
F) A) and D)

Question 6

Corporate profits are

Accepted Answer

A)   included in payroll taxes.
B)   exempt from taxes.
C)   taxed twice,once as profit and once as dividends.
D)   taxed to pay for Medicare.E) A) and D)
F) A) and C)

Question 7

In addition to tax payments,the two other primary costs that a tax system inevitably imposes on taxpayers are

Accepted Answer

A)   deadweight losses and administrative burdens.
B)   deadweight losses and frustration with the political system.
C)   administrative burdens and tax-preparation costs.
D)   administrative burdens and the risk of punishment for failure to comply with tax laws.E) A) and D)
F) B) and D)

Question 8

Deadweight losses represent the

Accepted Answer

A)   inefficiency that taxes create.
B)   shift in benefit from producers to consumers.
C)   part of consumer and producer surplus that is now revenue to the government.
D)   increase in revenue to the government.E) C) and D)
F) None of the above

Question 9

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Accepted Answer

A) True 
 B)False

Question 10

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 11

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.For an individual who earned $80,000 of taxable income in 2009,what was the individual's average tax rate in 2009?

Accepted Answer

A)   12.7%
B)   15.0%
C)   16.1%
D)   16.9%E) A) and B)
F) All of the above

Question 12

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) All of the above

Question 13

Table 12-1
 
-Refer to Table 12-1.If Betina has $170,000 in taxable income,her average tax rate is

Accepted Answer

A)   23.8%.
B)   24.3%.
C)   25.9%.
D)   28.0%.E) B) and D)
F) C) and D)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A country is using a proportional tax when

Accepted Answer

A)   its marginal tax rate equals its average tax rate.
B)   its marginal tax rate is less than its average tax rate.
C)   its marginal tax rate is greater than its average tax rate.
D)   it uses a lump-sum tax.E) A) and D)
F) C) and D)

Question 16

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Noah has taxable income of $43,000,his average tax rate is

Accepted Answer

A)   14.7%.
B)   16.3%.
C)   20.8%.
D)   24.0%.E) A) and B)
F) All of the above

Question 17

Which of the following is not an administrative burden of our tax system?

Accepted Answer

A)   government resources used to enforce tax laws
B)   keeping tax records throughout the year
C)   paying the taxes owed
D)   time spent in April filling out formsE) B) and C)
F) A) and D)

Question 18

When the government levies a tax on a corporation,

Accepted Answer

A)   all the burden of the tax ultimately falls on the corporation's owners.
B)   the corporation is more like a tax collector than a taxpayer.
C)   output must increase to compensate for reduced profits.
D)   less deadweight loss will occur since corporations are entities and not people who respond to incentives.E) A) and B)
F) A) and C)

Question 19

Which of the following statements is correct?

Accepted Answer

A)   Both tax avoidance and tax evasion are legal.
B)   Both tax avoidance and tax evasion are illegal.
C)   Tax avoidance is legal,whereas tax evasion is illegal.
D)   Tax avoidance is illegal,whereas tax evasion is legal.E) A) and C)
F) None of the above

Question 20

Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

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Many people consider lump-sum taxes to be unfair to low-income taxpayers.

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If a government simplified its tax system the likeliest result would be

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Which of the following is not an administrative burden of our tax system?

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

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Deadweight losses represent the

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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.For an individual who earned $80,000 of taxable income in 2009,what was the individual's average tax rate in 2009?

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Country A's tax system is more efficient than Country B's tax system if

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Corporate profits are

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

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Lump-sum taxes are equitable but not efficient.

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A country is using a proportional tax when

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Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her average tax rate is

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Table 12-9 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-9.For this tax schedule,what is the average tax rate for an individual with $280,000 in taxable income?

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When the government levies a tax on a corporation,

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Many health economists believe that President Obama's 2010 healthcare reform bill and other measures proposed by policymakers to reduce the growth of healthcare costs will have only a limited impact because

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Which of the following statements is correct?

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Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Noah has taxable income of $43,000,his average tax rate is

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Deadweight losses arise because a tax causes some individuals to change their behavior.

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In addition to tax payments,the two other primary costs that a tax system inevitably imposes on taxpayers are

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