Question 1

Table 12-22 
-Refer to Table 12-22. A proportional tax is illustrated by tax

Accepted Answer

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

Question 2

Table 12-6
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. 
-Refer to Table 12-6. For this tax schedule, what is the total tax liability for an individual with $280,000 in taxable income?

Accepted Answer

A)   $105,700
B)   $108,900
C)   $111,600
D)   $117,300E) A) and D)
F) None of the above

Question 3

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. Assume that the government places a $2 tax on each slice of cheesecake and that the new equilibrium price is $7. What is the deadweight loss of the tax?

Accepted Answer

A)   zero
B)   $3
C)   $6
D)   $8E) None of the above
F) C) and D)

Question 4

Table 12-10 
-Refer to Table 12-10. If Si has $100,000 in taxable income, his marginal tax rate is

Accepted Answer

A)   25%.
B)   28%.
C)   33%.
D)   35%.E) C) and D)
F) B) and D)

Question 5

'The U.S. tax code gives preferential treatment to investors in municipal bonds. This is an example of

Accepted Answer

A)   a tax loophole.
B)   tax evasion.
C)   an administrative burden.
D)   tax enforcement.E) B) and C)
F) A) and D)

Question 6

Why do some policymakers support a consumption tax rather than an earnings tax?

Accepted Answer

A)   The average tax rate would be lower under a consumption tax.
B)   A consumption tax would encourage people to save earned income.
C)   A consumption tax would raise more revenues than an income tax.
D)   The marginal tax rate would be higher under an earnings tax.E) C) and D)
F) None of the above

Question 7

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Accepted Answer

Both have increased over time, but the p...

Question 8

Suppose the government levies a "fat tax" on naturally­sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Accepted Answer

A)   ability-to-pay principle.
B)   benefits principle.
C)   vertical-equity principle.
D)   horizontal-equity principle.E) All of the above
F) A) and D)

Question 9

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Accepted Answer

A) True 
 B)False

Question 10

A budget deficit

Accepted Answer

A)   occurs when government receipts are less than spending.
B)   occurs when government spending is less than receipts.
C)   occurs when government receipts are equal to spending.
D)   is the accumulation of years of government overspending.E) B) and C)
F) A) and B)

Question 11

Scenario 12-4
A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000.
-Refer to Scenario 12-4. The taxpayer faces

Accepted Answer

A)   an average tax rate of 22.5 percent when her income is $30,000.
B)   an average tax rate of 22.0 percent when her income is $50,000.
C)   a marginal tax rate of 10 percent when her income rises from $40,000 to $40,001.
D)   a marginal tax rate of 50 percent when her income rises from $60,000 to $60,001.E) B) and C)
F) None of the above

Question 12

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will and government spending, as a percentage of GDP, will
__________.

Accepted Answer

remain con...

Question 13

If a tax takes a constant fraction of income as income rises, it is

Accepted Answer

A)   regressive.
B)   proportional.
C)   progressive.
D)   based on the ability-to-pay principle.E) B) and C)
F) None of the above

Question 14

Suppose that in 2020 the average citizen's federal tax bill is $12,466, and total federal spending is $10,824 per person. In 2020, the federal government will have

Accepted Answer

A)   a budget surplus.
B)   a budget deficit.
C)   horizontal equity.
D)   vertical equity.E) A) and D)
F) None of the above

Question 15

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

Question 16

The single largest expenditure by state and local governments is on

Accepted Answer

A)   highways.
B)   police.
C)   public welfare.
D)   education.E) A) and D)
F) None of the above

Question 17

Which of the following is not a cost of taxes to taxpayers?

Accepted Answer

A)   the tax payment itself
B)   deadweight losses
C)   administrative burdens
D)   goods and services provided by the governmentE) A) and B)
F) A) and C)

Question 18

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)   must tax wages more heavily than interest and dividend income.E) All of the above
F) A) and C)

Question 19

Total taxes paid divided by total income is called the

Accepted Answer

A)   lump-sum tax liability.
B)   marginal tax rate.
C)   average tax rate.
D)   average consumption tax liability.E) A) and D)
F) A) and B)

Question 20

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. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. What is Regina's consumer surplus from cheesecake?

Accepted Answer

A)   zero
B)   $2
C)   $3
D)   $6E) B) and C)
F) None of the above

Exam 12: The Design of the Tax System

A budget deficit

Correct Answer
verified

Suppose that in 2020 the average citizen's federal tax bill is $12,466, and total federal spending is $10,824 per person. In 2020, the federal government will have

Correct Answer
verified

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Correct Answer
verified
Both have increased over time, but the p...
View Answer

Correct Answer
verified

If a tax takes a constant fraction of income as income rises, it is

Correct Answer
verified

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the total tax liability for an individual with $280,000 in taxable income?

Correct Answer
verified

State and local governments

Correct Answer
verified

Total taxes paid divided by total income is called the

Correct Answer
verified

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will and government spending, as a percentage of GDP, will __________.

Correct Answer
verified
remain con...
View Answer

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct Answer
verified

Why do some policymakers support a consumption tax rather than an earnings tax?

Correct Answer
verified

Suppose the government levies a "fat tax" on naturallysweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Correct Answer
verified

Correct Answer
verified

The single largest expenditure by state and local governments is on

Correct Answer
verified

The deadweight loss of a tax is

Correct Answer
verified

Which of the following is not a cost of taxes to taxpayers?

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his marginal tax rate is

Correct Answer
verified

Scenario 12-4 A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000. -Refer to Scenario 12-4. The taxpayer faces

Correct Answer
verified

'The U.S. tax code gives preferential treatment to investors in municipal bonds. This is an example of

Correct Answer
verified

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct Answer
verified

Exam 12: The Design of the Tax System

A budget deficit

Correct AnswerverifiedShow Answer

Suppose that in 2020 the average citizen's federal tax bill is $12,466, and total federal spending is $10,824 per person. In 2020, the federal government will have

Correct AnswerverifiedShow Answer

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Correct AnswerverifiedBoth have increased over time, but the p...View AnswerShow Answer

Correct AnswerverifiedShow Answer

If a tax takes a constant fraction of income as income rises, it is

Correct AnswerverifiedShow Answer

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the total tax liability for an individual with $280,000 in taxable income?

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

Total taxes paid divided by total income is called the

Correct AnswerverifiedShow Answer

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will and government spending, as a percentage of GDP, will __________.

Correct Answerverifiedremain con...View AnswerShow Answer

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct AnswerverifiedShow Answer

Why do some policymakers support a consumption tax rather than an earnings tax?

Correct AnswerverifiedShow Answer

Suppose the government levies a "fat tax" on naturally­sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The single largest expenditure by state and local governments is on

Correct AnswerverifiedShow Answer

The deadweight loss of a tax is

Correct AnswerverifiedShow Answer

Which of the following is not a cost of taxes to taxpayers?

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his marginal tax rate is

Correct AnswerverifiedShow Answer

Scenario 12-4 A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000. -Refer to Scenario 12-4. The taxpayer faces

Correct AnswerverifiedShow Answer

'The U.S. tax code gives preferential treatment to investors in municipal bonds. This is an example of

Correct AnswerverifiedShow Answer

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Both have increased over time, but the p...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
remain con...
View Answer

Correct Answer
verified

Correct Answer
verified

Suppose the government levies a "fat tax" on naturallysweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

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
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