Question 1

High marginal income tax rates

Accepted Answer

A)   distort incentives to work.
B)   are used to encourage saving behavior.
C)   will invariably lead to lower average tax rates.
D)   are not associated with deadweight losses.E) A) and B)
F) None of the above

Question 2

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 3

Table 12-3
 
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)   $75
B)   $105
C)   $185
D)   $215E) C) and D)
F) B) and C)

Question 4

Tax incidence refers to

Accepted Answer

A)   what product or service the tax is levied on.
B)   who bears the tax burden.
C)   what sector of the economy is most affected by the tax.
D)   the dollar value of the tax revenues.E) All of the above
F) B) and C)

Question 5

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 6

In 2009,the federal government spent 5 percent of the budget on net interest.Which of the following statements regarding net interest is correct?

Accepted Answer

A)   If the government pays down its debt,the amount of the budget needed for net interest decreases.
B)   If the government accrues more debt,the amount of the budget needed for net interest increases.
C)   In 2009,the federal government spent 187 billion dollars to cover interest payments on its loans.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 7

Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

Accepted Answer

A)   8%
B)   15%
C)   43%
D)   67%E) A) and D)
F) None of the above

Question 8

Table 12-5
 
-Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)   20%
B)   30%
C)   40%
D)   50%E) C) and D)
F) B) and D)

Question 9

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Accepted Answer

A) True 
 B)False

Question 10

In the 1980s,President Ronald Reagan argued that high tax rates distorted economic incentives to work and save.In the 1990s,President Bill Clinton argued that the rich were not paying their fair share of taxes.Which of the following statements best summarizes the economic theories behind the differing philosophies?

Accepted Answer

A)   President Reagan was concerned about vertical equity,whereas President Clinton was concerned about horizontal equity.
B)   President Reagan was concerned about average tax rates,whereas President Clinton was concerned about horizontal equity.
C)   President Reagan was concerned about marginal tax rates,whereas President Clinton was concerned about vertical equity.
D)   None of the above is correct.E) C) and D)
F) All of the above

Question 11

Which of the following statements is not correct?

Accepted Answer

A)   All states have state income taxes,but the percentages vary widely.
B)   Sales taxes and property taxes are important revenue sources for state and local governments.
C)   Medicare spending has increased because the percentage of the population that is elderly and the cost of health care have both increased.
D)   A budget deficit occurs when government spending exceeds government receipts.E) C) and D)
F) B) and D)

Question 12

In 2009,what percentage of federal government receipts came from corporate income taxes?

Accepted Answer

A)   7%
B)   15%
C)   25%
D)   42%E) A) and D)
F) B) and D)

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 C)
F) A) and B)

Question 14

According to long-run projections,under current law,

Accepted Answer

A)   federal government spending as a percentage of GDP will rise gradually but substantially in the next several decades.
B)   federal taxes as a percentage of GDP will rise gradually but substantially in the next several decades.
C)   the federal government's budget deficit will gradually be eliminated in the next several decades.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 15

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.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 B)
F) A) and C)

Question 16

Table 12-12
United States Income Tax Rates for a Single Individual,2009 and 2010.
 
-Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) A) and B)
F) B) and D)

Question 17

The administrative burden of any tax system is part of the inefficiency it creates.

Accepted Answer

A) True 
 B)False

Question 18

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 19

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) B) and D)
F) A) and D)

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) A) and D)
F) B) and C)

Exam 12: The Design of the Tax System

A lump-sum tax minimizes deadweight loss.

Correct Answer
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Corporate income taxes are based on the amount of revenue a corporation earns.

Correct Answer
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High marginal income tax rates

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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If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Correct Answer
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In 2009,what percentage of federal government receipts came from corporate income taxes?

Correct Answer
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Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Correct Answer
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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.Which of the following best describes the tax schedule in 2009?

Correct Answer
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Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Correct Answer
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Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

Correct Answer
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Table 12-5 -Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Correct Answer
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Deadweight losses are associated with

Correct Answer
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Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct Answer
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Correct Answer
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Tax incidence refers to

Correct Answer
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In 2009,the federal government spent 5 percent of the budget on net interest.Which of the following statements regarding net interest is correct?

Correct Answer
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According to long-run projections,under current law,

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Many economists believe that

Correct Answer
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The administrative burden of any tax system is part of the inefficiency it creates.

Correct Answer
verified

Exam 12: The Design of the Tax System

A lump-sum tax minimizes deadweight loss.

Correct AnswerverifiedShow Answer

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct AnswerverifiedShow Answer

High marginal income tax rates

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Correct AnswerverifiedShow Answer

In 2009,what percentage of federal government receipts came from corporate income taxes?

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Correct AnswerverifiedShow Answer

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.Which of the following best describes the tax schedule in 2009?

Correct AnswerverifiedShow Answer

Social Security is an income support program,designed primarily to maintain the living standards of the poor.

Correct AnswerverifiedShow Answer

Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

Correct AnswerverifiedShow Answer

Table 12-5 -Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Correct AnswerverifiedShow Answer

Deadweight losses are associated with

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Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Tax incidence refers to

Correct AnswerverifiedShow Answer

In 2009,the federal government spent 5 percent of the budget on net interest.Which of the following statements regarding net interest is correct?

Correct AnswerverifiedShow Answer

According to long-run projections,under current law,

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Many economists believe that

Correct AnswerverifiedShow Answer

The administrative burden of any tax system is part of the inefficiency it creates.

Correct AnswerverifiedShow Answer

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