Question 1

With a lump-sum tax,

Accepted Answer

A)   the average tax rate for high income taxpayers will be the same as the average tax rate for low income taxpayers.
B)   the average tax rate for high income taxpayers will be lower than the average tax rate for low income taxpayers.
C)   the average tax rate for high income taxpayers will be higher than the average tax rate for high income taxpayers.
D)   Any of the above could be true under a regressive tax system.E) C) and D)
F) A) and D)

Question 2

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What happened to his average tax rate between 2002 and 2003?

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 C)
F) None of the above

Question 3

The marginal tax rate for a lump-sum tax

Accepted Answer

A)   is always positive.
B)   is always negative.
C)   is zero.
D)   can take on any value but must be greater than the average tax rate.E) None of the above
F) All of the above

Question 4

The government's health plan for the elderly is called

Accepted Answer

A)   Medicaid.
B)   Medicare.
C)   Social Security.
D)   TANF.E) A) and B)
F) A) and C)

Question 5

Like spending on Social Security,the share of federal government spending on Medicare has risen substantially over time.This is most likely a result of

Accepted Answer

A)   a rising population of poor in the economy.
B)   the elderly population growing more rapidly than the overall population.
C)   an immigration policy that promotes an influx of migrant farm workers.
D)   All of the above are important factors.E) B) and C)
F) B) and D)

Question 6

In many cases,tax loopholes are designed by Congress to

Accepted Answer

A)   give special treatment to specific types of behavior.
B)   reduce the overall administrative burden of the tax system.
C)   raise revenues for special projects.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 7

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 8

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

Question 9

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What is the average tax rate when income is $50,000?

Accepted Answer

A)   20 percent
B)   15 percent
C)   12 percent
D)   10 percentE) A) and B)
F) C) and D)

Question 11

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Accepted Answer

A)   include tax payments as well as transfer payments received.
B)   focus only on the tax payments of wealthy tax payers.
C)   limit their analysis to taxes based on the ability-to-pay principle.
D)   focus their analysis on issues of tax efficiency.E) B) and C)
F) A) and B)

Question 12

The U.S.federal government spends its revenues in a number of ways.Rank the following spending categories from largest to smallest.

Accepted Answer

A)   Social Security,national defense,income security,net interest
B)   Health care,national defense,net interest,income security
C)   Social Security,health care,national defense,Medicare
D)   National defense,Social Security,net interest,income securityE) C) and D)
F) A) and D)

Question 13

The most efficient tax possible is a

Accepted Answer

A)   marginal income tax.
B)   lump-sum tax.
C)   consumption tax.
D)   corporate profit tax.E) B) and D)
F) A) and B)

Question 14

For state and local governments,education accounts for approximately what percentage of spending?

Accepted Answer

A)   25 percent
B)   34 percent
C)   50 percent
D)   75 percentE) A) and D)
F) A) and C)

Question 15

In the United States,all families pay the same proportion of their income in taxes.

Accepted Answer

A) True 
 B)False

Question 16

A value-added tax or VAT is a tax on

Accepted Answer

A)   retail purchases only.
B)   wholesale purchases only.
C)   pollution.
D)   all stages of production of a good.E) C) and D)
F) B) and C)

Question 17

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 18

Table 12-4
 
-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Deadweight loss arises because

Accepted Answer

A)   Jennifer will pay more tax as a percentage of her value of delights than Brad.
B)   Brad must pay the $2.00 tax from his consumer surplus.
C)   Brad will have to pay a higher price for delights.
D)   Jennifer will leave the market.E) A) and B)
F) C) and D)

Question 19

As the economy's income has grown,the government has

Accepted Answer

A)   grown at about the same pace.
B)   grown at a faster pace.
C)   grown at a slower pace.
D)   shrunk.E) A) and B)
F) All of the above

Question 20

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If John has taxable income of $72,000,his tax liability is

Accepted Answer

A)   $13,720.
B)   $14,620.
C)   $22,320.
D)   $23,470.E) A) and C)
F) A) and B)

Exam 12: The Design of the Tax System

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000.What is the average tax rate when income is $50,000?

Correct AnswerverifiedShow Answer

Table 12-4 -Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Deadweight loss arises because

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What happened to his average tax rate between 2002 and 2003?

Correct AnswerverifiedShow Answer

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If John has taxable income of $72,000,his tax liability is

Correct AnswerverifiedShow Answer

In order to construct a more complete picture of the economic burden of government across income classes,economists usually

Correct AnswerverifiedShow Answer

The U.S.federal government spends its revenues in a number of ways.Rank the following spending categories from largest to smallest.

Correct AnswerverifiedShow Answer

In the United States,all families pay the same proportion of their income in taxes.

Correct AnswerverifiedShow Answer

The marginal tax rate for a lump-sum tax

Correct AnswerverifiedShow Answer

Incentives to work and save are reduced when

Correct AnswerverifiedShow Answer

For state and local governments,education accounts for approximately what percentage of spending?

Correct AnswerverifiedShow Answer

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Correct AnswerverifiedShow Answer

Like spending on Social Security,the share of federal government spending on Medicare has risen substantially over time.This is most likely a result of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The government's health plan for the elderly is called

Correct AnswerverifiedShow Answer

With a lump-sum tax,

Correct AnswerverifiedShow Answer

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

In many cases,tax loopholes are designed by Congress to

Correct AnswerverifiedShow Answer

As the economy's income has grown,the government has

Correct AnswerverifiedShow Answer

A value-added tax or VAT is a tax on

Correct AnswerverifiedShow Answer

The most efficient tax possible is a

Correct AnswerverifiedShow 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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified