Question 1

Table 12-3
 
-Refer to Table 12-3.If the government imposes a $2.00 tax on Delights,causing the price to increase from $5.00 to $7.00,why does a deadweight loss arise

Accepted Answer

A)  Jennifer will pay more tax as a percentage of her value of Delights than Tsering.
B)  Tsering must pay the $2.00 tax from his consumer surplus.
C)  Tsering will have to pay a higher price for Delights.
D)  Jennifer will leave the market.E) B) and D)
F) A) and C)

Question 2

What is the most common explanation for payments to senior citizens accounting for a larger share of federal government expenditures

Accepted Answer

A)  increases in life expectancy
B)  people becoming eligible for Old Age Security benefits at an earlier age
C)  increases in birth rates among teenagers and the poor
D)  falling payroll tax receiptsE) A) and B)
F) A) and C)

Question 3

Table 12-4 
-Refer to Table 12-4.What is the approximate average tax rate for a person who makes $60,000

Accepted Answer

A)  17%
B)  27%
C)  37%
D)  47%E) A) and C)
F) B) and C)

Question 4

Scenario 12-1
Suppose Jeremy and Kelsey receive great satisfaction from their consumption of turkey.Kelsey would be willing to purchase only one slice and would pay up to $5 for it.Jeremy would be willing to pay $8 for his first slice, $6 for his second slice, and $2 for his third slice.The current market price is $2 per slice.
-Refer to Scenario 12-1.If a tax of $2 is levied on each slice of turkey,what is the deadweight loss of the tax

Accepted Answer

A)  $0
B)  $3
C)  $6
D)  $8E) C) and D)
F) B) and C)

Question 5

Approximately what percentage of the federal government's receipts come from personal income taxes

Accepted Answer

A)  10
B)  25
C)  35
D)  48E) None of the above
F) All of the above

Question 6

On what basis can the benefits principle of taxation be used to argue that wealthy citizens should pay higher taxes than poorer ones

Accepted Answer

A)  Police services are more frequently used in poor neighbourhoods.
B)  The wealthy benefit more from services provided by government than the poor.
C)  The poor are more active in political processes.
D)  The poor places a greater dollar value on public goods than the rich.E) None of the above
F) A) and B)

Question 7

What is a Children's Fitness Tax Credit considered to be

Accepted Answer

A)  tax evasion
B)  a subsidy to the poor
C)  a deduction that benefits all members of society equally
D)  a tax loopholeE) None of the above
F) All of the above

Question 8

What do social services primarily consist of

Accepted Answer

A)  welfare programs for low-income people
B)  a government health plan for the poor
C)  the same services as Old Age Security
D)  pensions collected for the infirmE) A) and B)
F) All of the above

Question 9

What does the "flypaper theory" of taxation suggest

Accepted Answer

A)  The burden of a tax will seldom fall on its intended target and is, therefore, unfair.
B)  The benefits principle of taxation is not a viable option for policymakers.
C)  Tax loopholes are available to the wealthiest citizens.
D)  The burden of a tax will always fall on its intended target and is, therefore, equitable.E) A) and B)
F) C) and D)

Question 10

Tax evasion is legal,but tax avoidance is illegal.

Accepted Answer

A) True 
 B)False

Question 11

With a lump-sum tax,how is the average tax rate evaluated

Accepted Answer

A)  The average tax rate is always equal to zero.
B)  The average tax rate is always less than the marginal tax rate.
C)  The average tax rate falls as income rises.
D)  The average tax rate rises as income rises.E) A) and D)
F) B) and C)

Question 12

Why do taxes create deadweight losses

Accepted Answer

A)  They reduce profits of firms.
B)  They distort incentives.
C)  They cause prices to rise.
D)  They create revenue for the government.E) A) and D)
F) None of the above

Question 13

What does a person's tax liability refer to

Accepted Answer

A)  the percentage of income that a person must pay in taxes
B)  the amount of tax a person owes to the government
C)  the amount of tax the government is required to refund each person
D)  deductions that can be legally subtracted from a person's income each yearE) A) and B)
F) A) and C)

Question 14

"A $1000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person." What is this argument based on

Accepted Answer

A)  the horizontal equity principle
B)  the benefits principle
C)  a regressive tax argument
D)  the ability-to-pay principleE) A) and B)
F) A) and D)

Question 15

The Canadian federal government spends its revenues in a number of ways.What is the rank of the following spending categories from largest to smallest

Accepted Answer

A)  CHST, equalization, national defence, EI
B)  CHST, EI, Old Age Security, net interest
C)  Old Age Security, CHST, national defence, federal judicial system
D)  Old Age Security, EI, national defence, CHSTE) All of the above
F) C) and D)

Question 16

What principle holds that people should pay taxes based on the benefits they receive from government services

Accepted Answer

A)  the welfare principle
B)  the tax-benefit principle
C)  the government services principle
D)  the benefits principleE) A) and B)
F) A) and C)

Question 17

In 2013-2014,what was the total spending per person by the federal government

Accepted Answer

A)  $4750
B)  $5445
C)  $6410
D)  $7644E) A) and B)
F) A) and C)

Question 18

Why are lump-sum taxes rarely used in the real world

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 take the same amount of money from both poor and rich taxpayers.
D)  Lump-sum taxes are very inefficient.E) A) and B)
F) A) and C)

Question 19

What is one reason that deadweight losses are so difficult to avoid

Accepted Answer

A)  Taxes distort the decisions that people make.
B)  Income taxes are not paid by everyone.
C)  Consumption taxes must be universally applied to all commodities.
D)  Administrative burden and deadweight loss reflect a clear tradeoff to policymakers.E) B) and C)
F) C) and D)

Question 20

If a poor family has three children in public school and a rich family has two children in private school,what would the benefits principle suggest

Accepted Answer

A)  The poor family should pay more in taxes to pay for public education than the rich family.
B)  The rich family should pay more in taxes to pay for public education than the poor family.
C)  The benefits of private school exceed those of public school.
D)  Public schools should be financed by property taxes.E) B) and D)
F) A) and B)

Exam 12: The Design of the Tax System

Table 12-4 -Refer to Table 12-4.What is the approximate average tax rate for a person who makes $60,000

Correct Answer
verified

On what basis can the benefits principle of taxation be used to argue that wealthy citizens should pay higher taxes than poorer ones

Correct Answer
verified

Table 12-3 -Refer to Table 12-3.If the government imposes a $2.00 tax on Delights,causing the price to increase from $5.00 to $7.00,why does a deadweight loss arise

Correct Answer
verified

Why do taxes create deadweight losses

Correct Answer
verified

What does the "flypaper theory" of taxation suggest

Correct Answer
verified

The Canadian federal government spends its revenues in a number of ways.What is the rank of the following spending categories from largest to smallest

Correct Answer
verified

Correct Answer
verified

What is one reason that deadweight losses are so difficult to avoid

Correct Answer
verified

"A $1000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person." What is this argument based on

Correct Answer
verified

Approximately what percentage of the federal government's receipts come from personal income taxes

Correct Answer
verified

Tax evasion is legal,but tax avoidance is illegal.

Correct Answer
verified

What principle holds that people should pay taxes based on the benefits they receive from government services

Correct Answer
verified

What is the most common explanation for payments to senior citizens accounting for a larger share of federal government expenditures

Correct Answer
verified

In 2013-2014,what was the total spending per person by the federal government

Correct Answer
verified

What is a Children's Fitness Tax Credit considered to be

Correct Answer
verified

Why are lump-sum taxes rarely used in the real world

Correct Answer
verified

With a lump-sum tax,how is the average tax rate evaluated

Correct Answer
verified

If a poor family has three children in public school and a rich family has two children in private school,what would the benefits principle suggest

Correct Answer
verified

What do social services primarily consist of

Correct Answer
verified

What does a person's tax liability refer to

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-4 -Refer to Table 12-4.What is the approximate average tax rate for a person who makes $60,000

Correct AnswerverifiedShow Answer

On what basis can the benefits principle of taxation be used to argue that wealthy citizens should pay higher taxes than poorer ones

Correct AnswerverifiedShow Answer

Table 12-3 -Refer to Table 12-3.If the government imposes a $2.00 tax on Delights,causing the price to increase from $5.00 to $7.00,why does a deadweight loss arise

Correct AnswerverifiedShow Answer

Why do taxes create deadweight losses

Correct AnswerverifiedShow Answer

What does the "flypaper theory" of taxation suggest

Correct AnswerverifiedShow Answer

The Canadian federal government spends its revenues in a number of ways.What is the rank of the following spending categories from largest to smallest

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is one reason that deadweight losses are so difficult to avoid

Correct AnswerverifiedShow Answer

"A $1000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person." What is this argument based on

Correct AnswerverifiedShow Answer

Approximately what percentage of the federal government's receipts come from personal income taxes

Correct AnswerverifiedShow Answer

Tax evasion is legal,but tax avoidance is illegal.

Correct AnswerverifiedShow Answer

What principle holds that people should pay taxes based on the benefits they receive from government services

Correct AnswerverifiedShow Answer

What is the most common explanation for payments to senior citizens accounting for a larger share of federal government expenditures

Correct AnswerverifiedShow Answer

In 2013-2014,what was the total spending per person by the federal government

Correct AnswerverifiedShow Answer

What is a Children's Fitness Tax Credit considered to be

Correct AnswerverifiedShow Answer

Why are lump-sum taxes rarely used in the real world

Correct AnswerverifiedShow Answer

With a lump-sum tax,how is the average tax rate evaluated

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school,what would the benefits principle suggest

Correct AnswerverifiedShow Answer

What do social services primarily consist of

Correct AnswerverifiedShow Answer

What does a person's tax liability refer to

Correct AnswerverifiedShow Answer

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