Question 1

If Mary earns $80,000 in taxable income and pays $40,000 in taxes, her marginal tax rate must be 50 percent.

Accepted Answer

A) True 
 B)False

Question 2

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the __________.

Accepted Answer

The answer of If tax revenues from a tax on...

Question 3

Of all the taxes collected in the U.S. economy, what percentage is collected by the federal government?

Accepted Answer

The answer of Of all the taxes collected in the...

Question 4

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the average income tax rate for an individual who earns $40,000 during the year?

Accepted Answer

A)  0%
B)  10%
C)  More than 10%
D)  The average tax rate cannot be determined without knowing the entire tax schedule.E) C) and D)
F) B) and C)

Question 5

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Accepted Answer

A) True 
 B)False

Question 6

The state government requires all persons to pay 5% of their incomes in income tax.This is an example of:

Accepted Answer

A)  ​The benefits principle
B)  ​a proportional tax
C)  ​a regressive tax
D)  ​a progressive taxE) C) and D)
F) A) and B)

Question 7

Table 12-24 
-Refer to Table 12-24. Does the tax system achieve vertical equity?

Accepted Answer

Yes. People with hig...

Question 8

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) B) and D)
F) All of the above

Question 9

The flypaper theory of tax incidence

Accepted Answer

A)  ignores the indirect effects of taxes.
B)  assumes that most taxes should be "stuck on " the rich.
C)  says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it.
D)  suggests that taxes are like flies because they are everywhere and will never go away.E) A) and B)
F) B) and D)

Question 10

The income tax requires that taxpayers pay 10 percent on the first $50,000 of income and 20 percent on all income over $50,000. Andy paid $9,000 in taxes. What were his marginal and average tax rates?

Accepted Answer

A)  20 percent and 13 percent, respectively
B)  20 percent and 15 percent, respectively
C)  10 percent and 13 percent respectively
D)  10 percent and 15 percent respectivelyE) A) and B)
F) B) and C)

Question 11

When interest income from savings is taxed, people will save

Accepted Answer

A)  more to make up for what is lost in taxes.
B)  the same amount as they would have without the tax.
C)  less than they would without the tax.
D)  None of the above is correct since the government would not tax interest on savings.E) B) and D)
F) A) and D)

Question 12

Define the deadweight loss of a tax.

Accepted Answer

The deadweight loss of a tax i...

Question 13

Taxes can be justified if the government uses the revenue to (i) 
Provide public goods such as national defense.(ii) 
Clean up negative externalities such as water pollution.
(iii) 
Regulate a common resource such as fish in a public lake.(iv) 
Provide goods with positive externalities such as medical research.

Accepted Answer

A)  (ii)  only
B)  (ii)  and (iii)  only
C)  (i) , (ii) , and (iii)  only
D)  (i) , (ii) , (iii) , and (iv) E) A) and B)
F) C) and D)

Question 14

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 proportional?

Accepted Answer

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

Question 15

Table 12-16 
-Refer to Table 12-16. The tax system is

Accepted Answer

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

Question 16

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. How much consumer surplus does Regina receive from consuming her slice of cheesecake?

Accepted Answer

A)  $3
B)  $5
C)  $9
D)  $12E) A) and B)
F) All of the above

Question 17

If Christopher earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 20 percent.

Accepted Answer

A) True 
 B)False

Question 18

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 progressive?

Accepted Answer

A)  Tax Schedule A only
B)  Tax Schedule A and Tax Schedule B
C)  Tax Schedule A, Tax Schedule B, and Tax Schedule C
D)  All four Tax Schedules are progressive.E) B) and C)
F) All of the above

Question 19

Which of the following statements is correct?

Accepted Answer

A)  Vertical equity is the idea that taxpayers with similar abilities to pay taxes should pay the same amount.
B)  Horizontal equity is the idea that taxes should be levied on a person according to how well that person can shoulder the burden.
C)  A regressive tax would mean that high-income tax payers pay a larger fraction of their income in taxes than would low-income taxpayers.
D)  A proportional tax would mean that high-income and low-income taxpayers pay the same fraction of income in taxes.E) A) and D)
F) None of the above

Question 20

Part of the administrative burden of a tax is

Accepted Answer

A)  the money people pay to the government in taxes.
B)  reducing the size of the market because of the tax.
C)  the hassle of filling out tax forms that is imposed on taxpayers who comply with the tax.
D)  the cost of administering programs that use tax revenue.E) All of the above
F) A) and D)

Exam 12: The Design of the Tax System

Tax incidence refers to

Correct Answer
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Of all the taxes collected in the U.S. economy, what percentage is collected by the federal government?

Correct Answer
verified

The flypaper theory of tax incidence

Correct Answer
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If Christopher earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 20 percent.

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 is proportional?

Correct Answer
verified

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the __________.

Correct Answer
verified

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct Answer
verified

The income tax requires that taxpayers pay 10 percent on the first $50,000 of income and 20 percent on all income over $50,000. Andy paid $9,000 in taxes. What were his marginal and average tax rates?

Correct Answer
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Correct Answer
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Correct Answer
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Table 12-24 -Refer to Table 12-24. Does the tax system achieve vertical equity?

Correct Answer
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Yes. People with hig...
View Answer

Define the deadweight loss of a tax.

Correct Answer
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The deadweight loss of a tax i...
View Answer

Table 12-16 -Refer to Table 12-16. The tax system is

Correct Answer
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The state government requires all persons to pay 5% of their incomes in income tax.This is an example of:

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 progressive?

Correct Answer
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If Mary earns $80,000 in taxable income and pays $40,000 in taxes, her marginal tax rate must be 50 percent.

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the average income tax rate for an individual who earns $40,000 during the year?

Correct Answer
verified

Part of the administrative burden of a tax is

Correct Answer
verified

When interest income from savings is taxed, people will save

Correct Answer
verified

Exam 12: The Design of the Tax System

Tax incidence refers to

Correct AnswerverifiedShow Answer

Of all the taxes collected in the U.S. economy, what percentage is collected by the federal government?

Correct AnswerverifiedShow Answer

The flypaper theory of tax incidence

Correct AnswerverifiedShow Answer

If Christopher earns $80,000 in taxable income and pays $20,000 in taxes, his average tax rate is 20 percent.

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 is proportional?

Correct AnswerverifiedShow Answer

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the __________.

Correct AnswerverifiedShow Answer

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct AnswerverifiedShow Answer

The income tax requires that taxpayers pay 10 percent on the first $50,000 of income and 20 percent on all income over $50,000. Andy paid $9,000 in taxes. What were his marginal and average tax rates?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-24 -Refer to Table 12-24. Does the tax system achieve vertical equity?

Correct AnswerverifiedYes. People with hig...View AnswerShow Answer

Define the deadweight loss of a tax.

Correct AnswerverifiedThe deadweight loss of a tax i...View AnswerShow Answer

Table 12-16 -Refer to Table 12-16. The tax system is

Correct AnswerverifiedShow Answer

The state government requires all persons to pay 5% of their incomes in income tax.This is an example of:

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 progressive?

Correct AnswerverifiedShow Answer

If Mary earns $80,000 in taxable income and pays $40,000 in taxes, her marginal tax rate must be 50 percent.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the average income tax rate for an individual who earns $40,000 during the year?

Correct AnswerverifiedShow Answer

Part of the administrative burden of a tax is

Correct AnswerverifiedShow Answer

When interest income from savings is taxed, people will save

Correct AnswerverifiedShow Answer

Correct Answer
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Yes. People with hig...
View Answer

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The deadweight loss of a tax i...
View Answer

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