Question 1

Table 12-7
 
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

Accepted Answer

A)   9.25%
B)   20%
C)   25%
D)   40%E) B) and C)
F) B) and D)

Question 2

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 D)
F) B) and C)

Question 3

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 4

A person's marginal tax rate equals

Accepted Answer

A)   her tax obligation divided by her average tax rate.
B)   the increase in taxes she would pay as a percentage of the rise in her income.
C)   her tax obligation divided by her income.
D)   the increase in taxes if her average tax rate were to rise by 1%.E) B) and C)
F) A) and D)

Question 5

Taxes create deadweight losses because they

Accepted Answer

A)   reduce profits of firms.
B)   distort incentives.
C)   cause prices to rise.
D)   create revenue for the government.E) A) and B)
F) C) and D)

Question 6

Which tax system requires higher-income taxpayers to have lower tax rates,even though they pay a larger amount of tax when compared to lower-income taxpayers?

Accepted Answer

A)   A proportional tax
B)   A progressive tax
C)   A regressive tax
D)   A lump-sum taxE) A) and B)
F) A) and C)

Question 7

Table 12-7
 
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)   20%
B)   23%
C)   40%
D)   45%E) B) and C)
F) A) and D)

Question 8

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Accepted Answer

A)   It would not cause deadweight loss.
B)   It imposes a minimal administrative burden on taxpayers.
C)   It is more equitable.
D)   It is more efficient.E) C) and D)
F) A) and C)

Question 9

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

Accepted Answer

A)   Because the average tax rate would be lower under a consumption tax.
B)   Because a consumption tax would encourage people to save earned income.
C)   Because a consumption tax would raise more revenues than an income tax.
D)   Because the marginal tax rate would be higher under an earnings tax.E) A) and B)
F) All of the above

Question 10

Horizontal equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Accepted Answer

A) True 
 B)False

Question 11

State and local governments

Accepted Answer

A)   are funded entirely by their own tax base.
B)   receive the majority of their tax revenues from corporate income taxes.
C)   are generally not responsible for collecting sales taxes.
D)   receive some of their funds from the federal government.E) A) and B)
F) A) and C)

Question 12

Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.How much tax revenue is collected?

Accepted Answer

A)   $0
B)   $2
C)   $3
D)   $6E) A) and B)
F) A) and C)

Question 13

Table 12-3
 
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.How much consumer surplus accrues to Allyn and Greg individually?

Accepted Answer

A)   $37 and $17 respectively
B)   $47 and $27 respectively
C)   $49 and $35 respectively
D)   $85 and $65 respectivelyE) A) and C)
F) A) and B)

Question 14

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the average income tax rate for an individual who earns $40,000 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) All of the above
F) A) and C)

Question 15

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2.Suppose the government levies a tax of $3 on a movie ticket and that,as a result,the price of a movie ticket increases to $8.What is the deadweight loss from the tax?

Accepted Answer

A)   $0
B)   $1
C)   $2
D)   $3E) A) and B)
F) All of the above

Question 16

Which of the following is not an administrative burden of our tax system?

Accepted Answer

A)   Government resources used to enforce tax laws
B)   Keeping tax records throughout the year
C)   Paying the taxes owed
D)   Time spent in April filling out formsE) A) and B)
F) None of the above

Question 17

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What is his average tax rate in 2002?

Accepted Answer

A)   18%
B)   20.5%
C)   21%
D)   28%E) C) and D)
F) B) and C)

Question 18

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 marginal tax rate when income is $60,000?

Accepted Answer

A)   10 percent
B)   20 percent
C)   30 percent
D)   50 percentE) B) and D)
F) A) and C)

Question 19

Sue earns income of $80,000 per year.Her average tax rate is 50 percent.Sue paid $5,000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000?

Accepted Answer

A)   6.25 percent and 50.00 percent,respectively
B)   10.00 percent and 70.00 percent,respectively
C)   16.67 percent and 60.00 percent,respectively
D)   16.67 percent and 70.00 percent,respectivelyE) B) and C)
F) A) and B)

Question 20

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

Exam 12: The Design of the Tax System

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

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

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 marginal tax rate when income is $60,000?

Correct Answer
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A budget deficit

Correct Answer
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State and local governments

Correct Answer
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Which of the following is not an administrative burden of our tax system?

Correct Answer
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Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What is his average tax rate in 2002?

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

Correct Answer
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Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.How much consumer surplus accrues to Allyn and Greg individually?

Correct Answer
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Taxes create deadweight losses because they

Correct Answer
verified

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Correct Answer
verified

Correct Answer
verified

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the average income tax rate for an individual who earns $40,000 during the year?

Correct Answer
verified

Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.How much tax revenue is collected?

Correct Answer
verified

Horizontal equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct Answer
verified

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Correct Answer
verified

Which tax system requires higher-income taxpayers to have lower tax rates,even though they pay a larger amount of tax when compared to lower-income taxpayers?

Correct Answer
verified

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

Correct Answer
verified

A person's marginal tax rate equals

Correct Answer
verified

Sue earns income of $80,000 per year.Her average tax rate is 50 percent.Sue paid $5,000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000?

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Correct AnswerverifiedShow Answer

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

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 marginal tax rate when income is $60,000?

Correct AnswerverifiedShow Answer

A budget deficit

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

Which of the following is not an administrative burden of our tax system?

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Charles is a single person whose taxable income is $35,000 a year.What is his average tax rate in 2002?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.How much consumer surplus accrues to Allyn and Greg individually?

Correct AnswerverifiedShow Answer

Taxes create deadweight losses because they

Correct AnswerverifiedShow Answer

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government,the tax does not have a deadweight loss.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the average income tax rate for an individual who earns $40,000 during the year?

Correct AnswerverifiedShow Answer

Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.How much tax revenue is collected?

Correct AnswerverifiedShow Answer

Horizontal equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Correct AnswerverifiedShow Answer

Which tax system requires higher-income taxpayers to have lower tax rates,even though they pay a larger amount of tax when compared to lower-income taxpayers?

Correct AnswerverifiedShow Answer

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

Correct AnswerverifiedShow Answer

A person's marginal tax rate equals

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year.Her average tax rate is 50 percent.Sue paid $5,000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000?

Correct AnswerverifiedShow Answer

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