Question 1

Table 12-5
 
-Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)   20%
B)   30%
C)   40%
D)   50%E) A) and C)
F) B) and C)

Question 2

Table 12-16
The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes.
 
-Refer to Table 12-16.In this economy Tax A exhibits

Accepted Answer

A)   horizontal and vertical equity.
B)   horizontal equity but not vertical equity.
C)   vertical equity but not horizontal equity.
D)   neither horizontal nor vertical equity.E) A) and B)
F) B) and C) B

Question 3

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Accepted Answer

A) True 
 B)False

Question 4

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 progressive?

Accepted Answer

A)   Tax Schedule A only
B)   Tax Schedule A and Tax Schedule B
C)   Tax Schedule A, Tax Schedule B, and Tax Schedule C
D)   All four Tax Schedules are progressive.E) A) and B)
F) None of the above

Question 5

The two types of taxes that are most important to state and local governments as sources of revenue are

Accepted Answer

A)   individual income taxes and corporate income taxes.
B)   sales taxes and individual income taxes.
C)   sales taxes and property taxes.
D)   social insurance taxes and property taxes.E) B) and C)
F) C) and D)

Question 6

In addition to tax payments,the two other primary costs that a tax system inevitably imposes on taxpayers are

Accepted Answer

A)   deadweight losses and administrative burdens.
B)   deadweight losses and frustration with the political system.
C)   administrative burdens and tax-preparation costs.
D)   administrative burdens and the risk of punishment for failure to comply with tax laws.E) A) and B)
F) All of the above

Question 7

In choosing the form of a tax,there is often a tradeoff between

Accepted Answer

A)   allocative and productive efficiency.
B)   profits and revenues.
C)   efficiency and fairness.
D)   fairness and profits.E) A) and B)
F) All of the above

Question 8

A transfer payment is a government payment

Accepted Answer

A)   to companies that provide goods or services to government agencies.
B)   designed to transfer funds from one government agency to another.
C)   which transfers revenue from the federal government to state government.
D)   not made in exchange for a good or service.E) A) and B)
F) C) and D) D

Question 9

Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

Accepted Answer

A) True 
 B)False

Question 10

Table 12-8
 
-Refer to Table 12-8.If the government imposes a $2,000 lump-sum tax,the average tax rate for Marcia and Charles would be

Accepted Answer

A)   5 percent and 6.7 percent, respectively.
B)   8 percent and 6 percent, respectively.
C)   12 percent and 9 percent, respectively.
D)   13 percent and 10 percent, respectively.E) C) and D)
F) A) and B)

Question 11

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.For an individual who earned $80,000 of taxable income in 2009,what was the individual's average tax rate in 2009?

Accepted Answer

A)   12.7%
B)   15.0%
C)   16.1%
D)   16.9%E) C) and D)
F) A) and D)

Question 12

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

Accepted Answer

A)   consumption tax.
B)   value-added tax.
C)   deadweight loss.
D)   producer surplus.E) All of the above
F) None of the above C

Question 13

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Noah has taxable income of $43,000,his average tax rate is

Accepted Answer

A)   14.7%.
B)   16.3%.
C)   20.8%.
D)   24.0%.E) A) and B)
F) None of the above

Question 14

Table 12-15
 
-Refer to Table 12-15.In this tax system which of the following is possible?

Accepted Answer

A)   vertical and horizontal equity
B)   vertical but not horizontal equity
C)   horizontal but not vertical equity
D)   neither horizontal nor vertical equityE) B) and D)
F) B) and C)

Question 15

Which type of tax is used to finance the Social Security program in the United States?

Accepted Answer

A)   consumption tax
B)   income tax
C)   payroll tax
D)   property taxE) None of the above
F) B) and D)

Question 16

Which of the following statements is correct?

Accepted Answer

A)   The average tax rate gauges the sacrifice made by a taxpayer, whereas the marginal tax rate gauges the distortion of taxes on consumer decisions.
B)   The marginal tax rate gauges the sacrifice made by a taxpayer, whereas the average tax rate gauges the distortion of taxes on consumer decisions.
C)   The average tax rate measures how much the tax system discourages people from working.
D)   The marginal tax rate measures total taxes paid divided by total income.E) A) and C)
F) B) and C)

Question 17

Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country.What is the average income tax rate for an individual who earns $60,000 during the year?

Accepted Answer

A)   0%
B)   10%
C)   More than 10%
D)   The average tax rate cannot be determined without knowing the entire tax schedule.E) A) and D)
F) B) and C)

Question 18

Table 12-3
 
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.How much consumer surplus accrues to Anna and Clem individually?

Accepted Answer

A)   $125 and $20 respectively
B)   $105 and $30 respectively
C)   $85 and $40 respectively
D)   $65 and $50 respectivelyE) B) and C)
F) All of the above

Question 19

A tax levied on the total amount spent in retail stores is called

Accepted Answer

A)   a sales tax.
B)   an excise tax.
C)   a retail tax.
D)   an income tax.E) A) and D)
F) None of the above

Question 20

Many health economists believe that it will be very difficult to stem the rise in health care costs because

Accepted Answer

A)   government intervention is unpopular with most citizens, especially the elderly.
B)   improvements in medical technology have not kept pace with technological improvements in other sectors of the economy.
C)   increased competition will increase rather than reduce costs.
D)   medical advances are providing better ways to extend and improve human lives but at high costs.E) A) and C)
F) None of the above

Exam 12: The Design of the Tax System.

Table 12-5 -Refer to Table 12-5.What is the marginal tax rate for a person who makes $60,000?

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Table 12-16 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-16.In this economy Tax A exhibits

Correct AnswerverifiedB

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

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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 progressive?

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The two types of taxes that are most important to state and local governments as sources of revenue are

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In addition to tax payments,the two other primary costs that a tax system inevitably imposes on taxpayers are

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In choosing the form of a tax,there is often a tradeoff between

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A transfer payment is a government payment

Correct AnswerverifiedD

Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

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Table 12-8 -Refer to Table 12-8.If the government imposes a $2,000 lump-sum tax,the average tax rate for Marcia and Charles would be

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Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $80,000 of taxable income in 2009,what was the individual's average tax rate in 2009?

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

Correct AnswerverifiedC

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Noah has taxable income of $43,000,his average tax rate is

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Table 12-15 -Refer to Table 12-15.In this tax system which of the following is possible?

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Which type of tax is used to finance the Social Security program in the United States?

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Which of the following statements is correct?

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Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country.What is the average income tax rate for an individual who earns $60,000 during the year?

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Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.How much consumer surplus accrues to Anna and Clem individually?

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A tax levied on the total amount spent in retail stores is called

Correct AnswerverifiedShow Answer

Many health economists believe that it will be very difficult to stem the rise in health care costs because

Correct AnswerverifiedShow Answer

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B

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D

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C

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