Question 1

According to the ability-to-pay principle,it is fair for people to pay taxes based on their ability to handle the financial burden.

Accepted Answer

A) True 
 B)False

Question 2

Table 12-11
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 12-11.Which tax schedules are proportional?

Accepted Answer

A)   Tax Schedule B only
B)   Tax Schedule B and Tax Schedule C
C)   Tax Schedule D only
D)   Tax Schedule A and Tax Schedule BE) All of the above
F) C) and D) C

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A recent increase in federal gasoline taxes was estimated to cause a $150 million reduction in the total surplus (consumer plus producer surplus)in the gasoline market.If tax revenues increased by $100 million,what is the deadweight loss associated with the tax? As a result of the tax,10,000 people sold their cars and started riding their bicycles to work.How much of the burden of the deadweight loss is incurred by the bicycle riders?

Accepted Answer

The direct deadweight loss is $50 millio...

Question 5

Who observed that "in this world nothing is certain but death and taxes"?

Accepted Answer

A)   Mark Twain
B)   P.T.Barnum
C)   Ben Franklin
D)   Richard NixonE) A) and D)
F) B) and C)

Question 6

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Accepted Answer

A)   housing credit programs.
B)   farm support programs.
C)   funding for the National Institutes of Health.
D)   the federal court system.E) A) and D)
F) B) and C)

Question 7

A tax that is higher for men than for women violates the criterion of

Accepted Answer

A)   horizontal equity.
B)   vertical equity.
C)   the ability-to-pay principle.
D)   the marriage tax.E) A) and D)
F) A) and C)

Question 8

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Accepted Answer

A) True 
 B)False  True

Question 9

State and local governments

Accepted Answer

A)   use a mix of taxes and fees to generate revenue.
B)   are required by federal mandate to levy income taxes.
C)   are required to tax property at a standard rate set by the federal government.
D)   cannot impose state excise taxes on products that are taxed by the federal government.E) C) and D)
F) None of the above

Question 10

In 1950 there were approximately 7 working age people for every elderly person;however,in 2050 there will be

Accepted Answer

A)   only 2.5 working people for every elderly person.
B)   only 5 working age people for every elderly person.
C)   10 working age people for every elderly person.
D)   14 working age people for every elderly person.E) A) and D)
F) C) and D)

Question 11

Which of the following statements is correct?

Accepted Answer

A)   The U.S.federal government collected a higher percentage of income in taxes in the early 1900s than in the early 2000s.
B)   The U.S.federal government collects a higher percentage of income in taxes than many European countries,including France and Germany.
C)   The U.S.federal government collects a lower percentage of income in taxes than many developing countries,including Mexico and India.
D)   The U.S.federal government collects a similar percentage of income in taxes as Brazil and Japan.E) B) and D)
F) None of the above

Question 12

The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Emily paid $9,000 in taxes.What were her marginal and average tax rates?

Accepted Answer

A)   20 percent and 13.8 percent,respectively
B)   20 percent and 15 percent,respectively
C)   10 percent and 13.8 percent respectively
D)   10 percent and 15 percent respectivelyE) B) and C)
F) A) and B)

Question 13

Table 12-7
 
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $120,000?

Accepted Answer

A)   25%
B)   35%
C)   45%
D)   60%E) C) and D)
F) A) and D)

Question 14

Table 12-14
 
-Refer to Table 12-14.A proportional tax is illustrated by tax

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and C)
F) B) and C)

Question 15

With a lump-sum tax,the

Accepted Answer

A)   marginal tax rate is always less than the average tax rate.
B)   average tax rate is always less than the marginal tax rate.
C)   marginal tax rate falls as income rises.
D)   marginal tax rate rises as income rises.E) None of the above
F) A) and B)

Question 16

Lump-sum taxes are rarely used in the real world because

Accepted Answer

A)   while lump-sum taxes have low administrative burdens,they have high deadweight losses.
B)   while lump-sum taxes have low deadweight losses,they have high administrative burdens.
C)   lump-sum taxes are often viewed as unfair because they take the same amount of money from both poor and rich.
D)   lump-sum taxes are very inefficient.E) A) and D)
F) C) and D)

Question 17

Goals of efficiency and equity in tax policy are

Accepted Answer

A)   complementary in most countries.
B)   necessary for application of the ability-to-pay principle.
C)   often in conflict with each other.
D)   easier to achieve when tax codes are complex.E) C) and D)
F) A) and C)

Question 18

What is the most efficient tax and why?

Accepted Answer

A lump-sum tax is the most eff...

Question 19

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Accepted Answer

A)   increases in life expectancy.
B)   people becoming eligible for Social Security benefits at an earlier age.
C)   increases in birth rates among teenagers and the poor.
D)   falling payroll tax receipts.E) All of the above
F) None of the above

Question 20

Sue earns income of $80,000 per year.Her average tax rate is 30 percent.Sue paid 20 percent in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income?

Accepted Answer

A)   20 percent
B)   24 percent
C)   30 percent
D)   36 percentE) All of the above
F) A) and B) D

Exam 12: The Design of the Tax System

According to the ability-to-pay principle,it is fair for people to pay taxes based on their ability to handle the financial burden.

Correct Answer
verified

Table 12-11 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 12-11.Which tax schedules are proportional?

Correct Answer
verified
C

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

Correct Answer
verified

Correct Answer
verified
The direct deadweight loss is $50 millio...
View Answer

Who observed that "in this world nothing is certain but death and taxes"?

Correct Answer
verified

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Correct Answer
verified

A tax that is higher for men than for women violates the criterion of

Correct Answer
verified

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct Answer
verified
True

State and local governments

Correct Answer
verified

In 1950 there were approximately 7 working age people for every elderly person;however,in 2050 there will be

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Emily paid $9,000 in taxes.What were her marginal and average tax rates?

Correct Answer
verified

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $120,000?

Correct Answer
verified

Table 12-14 -Refer to Table 12-14.A proportional tax is illustrated by tax

Correct Answer
verified

With a lump-sum tax,the

Correct Answer
verified

Lump-sum taxes are rarely used in the real world because

Correct Answer
verified

Goals of efficiency and equity in tax policy are

Correct Answer
verified

What is the most efficient tax and why?

Correct Answer
verified
A lump-sum tax is the most eff...
View Answer

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct Answer
verified

Sue earns income of $80,000 per year.Her average tax rate is 30 percent.Sue paid 20 percent in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income?

Correct Answer
verified
D

Exam 12: The Design of the Tax System

According to the ability-to-pay principle,it is fair for people to pay taxes based on their ability to handle the financial burden.

Correct AnswerverifiedShow Answer

Table 12-11 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 12-11.Which tax schedules are proportional?

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe direct deadweight loss is $50 millio...View AnswerShow Answer

Who observed that "in this world nothing is certain but death and taxes"?

Correct AnswerverifiedShow Answer

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Correct AnswerverifiedShow Answer

A tax that is higher for men than for women violates the criterion of

Correct AnswerverifiedShow Answer

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct AnswerverifiedTrue

State and local governments

Correct AnswerverifiedShow Answer

In 1950 there were approximately 7 working age people for every elderly person;however,in 2050 there will be

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Emily paid $9,000 in taxes.What were her marginal and average tax rates?

Correct AnswerverifiedShow Answer

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $120,000?

Correct AnswerverifiedShow Answer

Table 12-14 -Refer to Table 12-14.A proportional tax is illustrated by tax

Correct AnswerverifiedShow Answer

With a lump-sum tax,the

Correct AnswerverifiedShow Answer

Lump-sum taxes are rarely used in the real world because

Correct AnswerverifiedShow Answer

Goals of efficiency and equity in tax policy are

Correct AnswerverifiedShow Answer

What is the most efficient tax and why?

Correct AnswerverifiedA lump-sum tax is the most eff...View AnswerShow Answer

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year.Her average tax rate is 30 percent.Sue paid 20 percent in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income?

Correct AnswerverifiedD

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified
The direct deadweight loss is $50 millio...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

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
A lump-sum tax is the most eff...
View Answer

Correct Answer
verified

Correct Answer
verified
D