Question 1

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000.What is the marginal tax rate when income is $60,000?

Accepted Answer

A)   10 percent
B)   20 percent
C)   30 percent
D)   50 percentE) None of the above
F) C) and D)

Question 2

If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following programs is not included in the federal income security spending?

Accepted Answer

A)   Social Security
B)   Temporary Assistance for Needy Families (TANF) 
C)   Food Stamps
D)   unemployment compensationE) C) and D)
F) None of the above

Question 4

Table 12-8
 
-Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

Accepted Answer

A)   0 percent.
B)   5 percent.
C)   6.7 percent.
D)   10 percent.E) A) and C)
F) A) and D)

Question 5

Taxes create deadweight loss when they

Accepted Answer

A)   distort behavior.
B)   cause the price of the product to increase.
C)   don't raise sufficient government revenue.
D)   cannot be computed easily.E) None of the above
F) B) and C)

Question 6

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 7

In practice,the U.S.income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Accepted Answer

A) True 
 B)False

Question 8

An efficient tax system is one that
(i) maximizes tax revenues.
(ii) minimizes deadweight losses from taxes.
(iii) minimizes administrative burdens from taxes.
(iv) promotes equity across taxpayers.

Accepted Answer

A)   (i)  only
B)   (ii)  and (iii)  only
C)   (i) , (ii) , and (iii)  only
D)   (i) , (ii) , (iii) , and (iv) E) A) and B)
F) None of the above

Question 9

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Accepted Answer

A)   In 1902 the government collected about 7 percent of total income. In recent years, it collected about 30 percent of total income.
B)   In 1902 the government collected about 30 percent of total income. In recent years, it collected about 7 percent of total income.
C)   In 1902 the government collected about 7 percent of total income. In recent years, it collected about 7 percent of total income.
D)   In 1902 the government collected about 30 percent of total income. In recent years, it collected about 30 percent of total income.E) B) and C)
F) None of the above

Question 10

State and local governments generate revenue from all of the following sources except

Accepted Answer

A)   sales taxes.
B)   the federal government.
C)   corporate income taxes.
D)   customs duties.E) C) and D)
F) A) and D)

Question 11

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 are the tax liability and the marginal tax rate for a person whose income is $30,000?

Accepted Answer

A)   both are 10 percent
B)   10 percent and $2,000, respectively
C)   $3,000 and 10 percent, respectively
D)   $3,000 and 20 percent, respectivelyE) All of the above
F) B) and C)

Question 12

Table 12-17
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-17.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) All of the above
F) B) and D)

Question 13

The deadweight loss of a tax is

Accepted Answer

A)   the reduction in economic welfare of taxpayers that exceeds the revenue raised by the government.
B)   the improved efficiency created as people reallocate resources according to the tax incentive rather than the true costs and benefits.
C)   the loss in tax revenues.
D)   Both a and b are correct.E) B) and C)
F) A) and D)

Question 14

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Accepted Answer

A)   Everyone can easily compute the amount of tax owed.
B)   There is no benefit to hiring an accountant to do your taxes.
C)   Everyone owes the same amount of tax, regardless of earnings.
D)   The government can easily forecast tax revenues.E) A) and D)
F) C) and D)

Question 15

The public welfare spending category for state and local governments includes

Accepted Answer

A)   many programs that are initiated by private foundations.
B)   contributions in support of public universities.
C)   some federal programs that are administered by state and local governments.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 16

In 2009,which category represented the largest category of spending for the U.S.federal government?

Accepted Answer

A)   Medicare
B)   Social Security
C)   national defense
D)   net interestE) None of the above
F) C) and D)

Question 17

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 is her average tax rate in 2009?

Accepted Answer

A)   22.3%
B)   25.3%
C)   27.8%
D)   28.4%E) A) and B)
F) A) and C)

Question 18

Tax evasion is

Accepted Answer

A)   facilitated by legal deductions to taxable income.
B)   the same as tax avoidance.
C)   recommended by the American Accounting Association.
D)   illegal.E) All of the above
F) C) and D)

Question 19

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Accepted Answer

A) True 
 B)False

Question 20

The tax that generates the most revenue for state and local government is the

Accepted Answer

A)   corporate income tax.
B)   individual income tax.
C)   property tax.
D)   sales tax.E) A) and D)
F) A) and C)

Exam 12: The Design of the Tax System.

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

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The deadweight loss of a tax is

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The tax that generates the most revenue for state and local government is the

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The public welfare spending category for state and local governments includes

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Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000.What is the marginal tax rate when income is $60,000?

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Which of the following programs is not included in the federal income security spending?

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If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

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Taxes create deadweight loss when they

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An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

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An efficient tax system is one that (i) maximizes tax revenues. (ii) minimizes deadweight losses from taxes. (iii) minimizes administrative burdens from taxes. (iv) promotes equity across taxpayers.

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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 are the tax liability and the marginal tax rate for a person whose income is $30,000?

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Tax evasion is

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Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

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In practice,the U.S.income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

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State and local governments generate revenue from all of the following sources except

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Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

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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 is her average tax rate in 2009?

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Table 12-17 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-17.Which of the three tax systems is proportional?

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In 2009,which category represented the largest category of spending for the U.S.federal government?

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Table 12-8 -Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

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