Question 1

If tax revenues from a cigarette tax are used to pay for healthcare expenses related to lung cancer, the cigarette tax could be justified using the __________.

Accepted Answer

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

Question 2

In 1789, the average American paid approximately what percent of income in taxes?

Accepted Answer

A)  5%
B)  15%
C)  33%
D)  50%E) B) and C)
F) None of the above

Question 3

Taxes can create deadweight losses because they

Accepted Answer

A)  allow the government to fund private goods.
B)  create administrative burdens as people comply with tax laws.
C)  allow the government to fund public goods.
D)  Both b and c are correct.E) A) and B)
F) A) and C)

Question 4

As a person's or family's income rises, the marginal federal income tax rate __________.

Accepted Answer

The answer of As a person's or family's income rises,...

Question 5

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Accepted Answer

According to Figure 1, in 1913, the fede...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Accepted Answer

A)  progressive tax.
B)  regressive tax.
C)  distortion-free tax.
D)  proportional tax.E) A) and B)
F) B) and D)

Question 8

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Accepted Answer

A) True 
 B)False

Question 9

Table 12-11 
-Refer to Table 12-11. If Bud has taxable income of $78,000, his average tax rate is

Accepted Answer

A)  18.7%.
B)  19.3%.
C)  20.1%.
D)  34.0%.E) A) and C)
F) B) and C)

Question 10

An excise tax is a tax on a specific good, like gasoline.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the government levies a "fat tax" on naturally-sweetened 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) B) and C)

Question 12

The principle that people should pay taxes based on the benefits they receive from government services is called the

Accepted Answer

A)  pay principle.
B)  tax-benefit principle.
C)  government services principle.
D)  benefits principle.E) A) and D)
F) All of the above

Question 13

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Accepted Answer

A)  $4, and the deadweight loss comes from both Luke and Leia.
B)  $4, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.
C)  $2, and the deadweight loss comes from both Luke and Leia.
D)  $2, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.E) B) and C)
F) B) and D)

Question 14

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

Accepted Answer

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

Question 15

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Accepted Answer

A)  the ability-to-pay principle.
B)  the benefits principle.
C)  efficiency arguments.
D)  regressive tax arguments.E) None of the above
F) A) and B)

Question 16

An optimal tax is one that minimizes the

Accepted Answer

A)  external benefit.
B)  total deadweight loss from the tax.
C)  income taxes.
D)  horizontal equity.E) B) and D)
F) C) and D)

Question 17

Table 12-21
The dollar amounts in the last three columns are the taxes owed under the three different tax systems. 
-Refer to Table 12-21. Which of the three tax systems is regressive?

Accepted Answer

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

Question 18

A family's tax liability is the amount of money it owes in taxes.

Accepted Answer

A) True 
 B)False

Question 19

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2013?

Accepted Answer

A)  24.1%
B)  26.4%
C)  27.8%
D)  30.9%E) B) and C)
F) A) and B)

Question 20

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) None of the above

Exam 12: The Design of the Tax System

Taxes can create deadweight losses because they

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A family's tax liability is the amount of money it owes in taxes.

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An excise tax is a tax on a specific good, like gasoline.

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Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Correct AnswerverifiedAccording to Figure 1, in 1913, the fede...View AnswerShow Answer

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

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Table 12-21 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-21. Which of the three tax systems is regressive?

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

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Suppose the government levies a "fat tax" on naturally-sweetened 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

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

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An income tax in which the average tax rate is the same for all taxpayers would be considered a

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If tax revenues from a cigarette tax are used to pay for healthcare expenses related to lung cancer, the cigarette tax could be justified using the __________.

Correct AnswerverifiedShow Answer

As a person's or family's income rises, the marginal federal income tax rate __________.

Correct AnswerverifiedShow Answer

An optimal tax is one that minimizes the

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Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2013?

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

Correct AnswerverifiedShow Answer

The principle that people should pay taxes based on the benefits they receive from government services is called the

Correct AnswerverifiedShow Answer

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Correct AnswerverifiedShow Answer

In 1789, the average American paid approximately what percent of income in taxes?

Correct AnswerverifiedShow Answer

Table 12-11 -Refer to Table 12-11. If Bud has taxable income of $78,000, his average tax rate is

Correct AnswerverifiedShow Answer

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According to Figure 1, in 1913, the fede...
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