Question 1

The resources that a taxpayer devotes to complying with the tax laws are a type of

Accepted Answer

A)  marginal tax.
B)  administrative burden.
C)  deadweight loss.
D)  Both b and c are correct.E) None of the above
F) B) and D)

Question 2

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

Accepted Answer

A)  proportional.
B)  regressive.
C)  progressive.
D)  lump sum.E) None of the above
F) A) and B)

Question 3

A tax system based on the ability-to-pay principle claims that all citizens should

Accepted Answer

A)  pay taxes based on the benefits they receive from government services.
B)  pay the same amount in taxes.
C)  pay taxes based on consumption rather than income.
D)  make an equal sacrifice.E) C) and D)
F) A) and C)

Question 4

An efficient tax system is one that imposes small

Accepted Answer

A)  deadweight losses and administrative burdens.
B)  marginal rates and deadweight losses.
C)  administrative burdens and transfers of money.
D)  marginal rates and transfers of money.E) A) and B)
F) None of the above

Question 5

In 2010, the co-chairmen of President Obama's deficit reduction commission proposed curtailing or eliminating the mortgage interest deduction that millions of homeowner taxpayers receive every year. Economists who favor the proposal would argue that
(i) too much of the economy's capital stock is tied up in residential housing.
(ii) too little of the economy's capital stock is invested in corporate capital.
(iii) the misallocation of resources results in lower productivity and reduced real wages.

Accepted Answer

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

Question 6

What is the most efficient tax and why?

Accepted Answer

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

Question 7

Table 12-10 
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be

Accepted Answer

A)  $16,781.
B)  $41,309.
C)  $41,827.
D)  $47,600.E) A) and B)
F) B) and D)

Question 8

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Accepted Answer

A)  an excise tax which conforms to the benefits principle.
B)  an excise tax which violates the benefits principle.
C)  a lump-sum tax which conforms to the benefits principle.
D)  a lump-sum tax which violates the benefits principle.E) A) and B)
F) None of the above

Question 9

Table 12-2 
-Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Total consumer surplus

Accepted Answer

A)  falls by less than the tax revenue generated.
B)  falls by more than the tax revenue generated.
C)  falls by the same amount as the tax revenue generated.
D)  will not fall since Jennifer will no longer be in the market.E) B) and C)
F) B) and D)

Question 10

Table 12-10 
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Accepted Answer

A)  25%.
B)  28%.
C)  33%.
D)  35%.E) All of the above
F) A) and B)

Question 11

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 average tax rate when income is $60,000?

Accepted Answer

A)  21.7 percent
B)  25.0 percent
C)  46.7 percent
D)  50.0 percentE) None of the above
F) B) and C)

Question 12

If a government sells debt to help meet its expenditures, then the government has a

Accepted Answer

A)  budget surplus. Other things the same, the surplus rises if government expenditures rise.
B)  budget surplus. Other things the same, the surplus rises if government expenditures fall.
C)  budget deficit. Other things the same, the deficit rises if government expenditures rise.
D)  budget deficit. Other things the same the deficit rises if government expenditures fallE) B) and C)
F) A) and D)

Question 13

The largest budgetary expense for a typical state or local government is

Accepted Answer

A)  public order and safety.
B)  welfare.
C)  highways.
D)  education.E) A) and D)
F) B) and C)

Question 14

Suppose that the government collected taxes in the following fashion: people who earn less than $50,000 pay 25 percent in taxes, people who earn between $50,000 and $100,000 pay 35 percent in taxes, people who earn between $100,000 and $200,000 pay 30 percent in taxes, and people who earn more than $200,000 pay 28 percent in taxes. Which of the following statements is correct?

Accepted Answer

A)  The tax system is proportional for income levels less than $50,000 and regressive for income levels above $50,000.
B)  The tax system is regressive for income levels less than $100,000 and progressive for income levels above $100,000.
C)  The tax system is progressive for income levels less than $100,000 and regressive for income levels above $100,000.
D)  The tax system is progressive for income levels less than $50,000 and proportional for income levels above $100,000.E) A) and B)
F) A) and C)

Question 15

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 progressive?

Accepted Answer

A)  Tax System A
B)  Tax System B
C)  Tax System C
D)  All of the tax systems are progressive.E) All of the above
F) A) and B)

Question 16

One tax system is less efficient than another if it

Accepted Answer

A)  places a lower tax burden on lower-income families than on higher-income families.
B)  places a higher tax burden on lower-income families than on higher-income families.
C)  raises the same amount of revenue at a higher cost to taxpayers.
D)  raises less revenue at a lower cost to taxpayers.E) A) and D)
F) A) and C)

Question 17

Table 12-4 
-Refer to Table 12-4. What is the average tax rate for a person who makes $130,000?

Accepted Answer

A)  30%
B)  40%
C)  50%
D)  60%E) A) and B)
F) B) and C)

Question 18

Maurice faces a progressive federal income tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. In addition, he must pay 5 percent of his income in state income tax and 15.3 percent of his labor income in federal payroll taxes. Maurice earns $60,000 per year in salary and another $10,000 per year in non-labor income. What is his average tax rate?

Accepted Answer

A)  17.19 percent
B)  46.69 percent
C)  48.87 percent
D)  56.01 percentE) C) and D)
F) A) and D)

Question 19

The ability-to-pay principle claims that a person should pay taxes according to

Accepted Answer

A)  the level of public education that the person has received throughout his lifetime.
B)  how many government services that person will receive.
C)  how well that person can shoulder the tax burden.
D)  the level of debt that the person has.E) None of the above
F) A) and B)

Question 20

The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately

Accepted Answer

A)  80 percent.
B)  50 percent.
C)  40 percent.
D)  20 percent.E) B) and C)
F) None of the above

Exam 12: The Design of the Tax System

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Correct Answer
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The largest budgetary expense for a typical state or local government is

Correct Answer
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Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be

Correct Answer
verified

Correct Answer
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Table 12-2 -Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Total consumer surplus

Correct Answer
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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 average tax rate when income is $60,000?

Correct Answer
verified

Correct Answer
verified

The ability-to-pay principle claims that a person should pay taxes according to

Correct Answer
verified

A tax system based on the ability-to-pay principle claims that all citizens should

Correct Answer
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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 progressive?

Correct Answer
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One tax system is less efficient than another if it

Correct Answer
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An efficient tax system is one that imposes small

Correct Answer
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Correct Answer
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Table 12-4 -Refer to Table 12-4. What is the average tax rate for a person who makes $130,000?

Correct Answer
verified

What is the most efficient tax and why?

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

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Correct Answer
verified

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

Correct Answer
verified

If a government sells debt to help meet its expenditures, then the government has a

Correct Answer
verified

The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately

Correct Answer
verified

The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Correct AnswerverifiedShow Answer

The largest budgetary expense for a typical state or local government is

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-2 -Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Total consumer surplus

Correct AnswerverifiedShow Answer

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 average tax rate when income is $60,000?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ability-to-pay principle claims that a person should pay taxes according to

Correct AnswerverifiedShow Answer

A tax system based on the ability-to-pay principle claims that all citizens should

Correct AnswerverifiedShow Answer

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 progressive?

Correct AnswerverifiedShow Answer

One tax system is less efficient than another if it

Correct AnswerverifiedShow Answer

An efficient tax system is one that imposes small

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-4 -Refer to Table 12-4. What is the average tax rate for a person who makes $130,000?

Correct AnswerverifiedShow Answer

What is the most efficient tax and why?

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

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a government sells debt to help meet its expenditures, then the government has a

Correct AnswerverifiedShow Answer

The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately

Correct AnswerverifiedShow Answer

The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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