Question 1

Table 12-6
 
-Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

Accepted Answer

A)   25%
B)   28%
C)   40%
D)   60%

Question 2

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Accepted Answer

Although most Americans agree that equit...

Question 3

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.Suppose one goal of the tax system was to achieve vertical equity.While people may disagree about what is "equitable," based on the marginal tax rates given for the two years,which of the following statements is true?

Accepted Answer

A)   Vertical equity is possible in both years.
B)   Vertical equity is possible in 2009 but not in 2010.
C)   Vertical equity is not possible in 2009 but is possible in 2010.
D)   Vertical equity is not possible in either year.

Question 4

A lump-sum tax

Accepted Answer

A)   is most frequently used to tax real property.
B)   does not distort incentives.
C)   distorts incentives more than any other type of tax.
D)   is the most fair tax.

Question 5

If a tax takes a smaller fraction of income as income rises,it is

Accepted Answer

A)   proportional.
B)   regressive.
C)   progressive.
D)   based on the ability-to-pay principle.

Question 6

Mark,Kerry,Greg,and Carlos each like Boston Red Sox baseball games.The single-game ticket price for an infield box seat is $50.Mark values a ticket at $70,Kerry at $65,Greg at $60,and Carlos at $55.Suppose that if the government taxes tickets at $10 each the selling price rises to $60.A consequence of the tax is that

Accepted Answer

A)   consumer surplus shrinks by $50 and tax revenues increase by $30,so there is a deadweight loss of $20.
B)   consumer surplus shrinks by $35 and tax revenues increase by $30,so there is a deadweight loss of $5.
C)   consumer surplus shrinks by $20 and tax revenues increase by $20,so there is no deadweight loss.
D)   consumer surplus shrinks by $15 and tax revenues increase by $20,so there is no deadweight loss.

Question 7

One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Accepted Answer

A) True 
 B)False

Question 8

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 9

Pat calculates that for every extra dollar she earns,she owes the government 33 cents.Her total income now is $35,000,on which she pays taxes of $7,000.Determine her average tax rate and her marginal tax rate.

Accepted Answer

A)   Her average tax rate is 33% and her marginal tax rate is 20%.
B)   Her average tax rate is 20% and her marginal tax rate is 33%.
C)   Her average tax rate is 20% and her marginal tax rate is 20%.
D)   Her average tax rate is 33% and her marginal tax rate is 33%.

Question 10

Which of the following statements is not correct?

Accepted Answer

A)   A gasoline tax can be an example of a tax that uses the benefits principle.
B)   A progressive tax attempts to achieve vertical equity.
C)   A progressive tax can be an example of the ability-to-pay principle.
D)   A regressive tax attempts to achieve vertical equity.

Question 11

Vertical and horizontal equity are widely accepted and applying them to evaluate a tax system is always straightforward.

Accepted Answer

A) True 
 B)False

Question 12

Table 12-1
 
-Refer to Table 12-1.If Betina has $170,000 in taxable income,her marginal tax rate is

Accepted Answer

A)   25%.
B)   28%.
C)   33%.
D)   35%.

Question 13

Suppose that Deon places a $150 value on a new MP-3 player,and Juanita places a $140 value on it.The cost of the MP-3 player is $130.Suppose the government levies a $15 tax on MP-3 players,which raises the price to $145.What is the deadweight loss created by the tax?

Accepted Answer

Before the tax,the total surplus was $30...

Question 14

Because the marginal tax rate rises as income rises,

Accepted Answer

A)   higher income families,in general,pay a larger percentage of their income in taxes.
B)   lower income families,in general,pay a larger percentage of their income in taxes.
C)   a disproportionately large share of the tax burden falls upon the poor.
D)   higher income families pay the same percentage of their income in taxes as lower-income families.

Question 15

Temporary Assistance for Needy Families (TANF) falls into which spending category?

Accepted Answer

A)   Medicare
B)   income security
C)   guaranteed social eligibility
D)   Social Security

Question 16

Which of the following is not a way that a corporate tax on the income of U.S.car companies will affect markets?

Accepted Answer

A)   The price of cars will rise.
B)   The wages of auto workers will fall.
C)   Owners of car companies (stockholders) will receive less profit.
D)   Less deadweight loss will occur since corporations are entities and not people who respond to incentives.

Question 17

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.

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.Suppose the government imposes a tax of $12 on skiing,which raises the price of a weekend ski pass to $57.The deadweight loss associated with the tax is

Accepted Answer

A)   $5.
B)   $12.
C)   $36.
D)   $41.

Question 19

Table 12-6
 
-Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Accepted Answer

A)   30%
B)   40%
C)   50%
D)   60%

Question 20

The government's health plan for the elderly is called

Accepted Answer

A)   Medicaid.
B)   Medicare.
C)   Social Security.
D)   TANF.

Exam 12: The Design of the Tax System

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

Correct Answer
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Correct Answer
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Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her marginal tax rate is

Correct Answer
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A lump-sum tax

Correct Answer
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One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Correct Answer
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Because the marginal tax rate rises as income rises,

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Temporary Assistance for Needy Families (TANF) falls into which spending category?

Correct Answer
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Suppose that Deon places a $150 value on a new MP-3 player,and Juanita places a $140 value on it.The cost of the MP-3 player is $130.Suppose the government levies a $15 tax on MP-3 players,which raises the price to $145.What is the deadweight loss created by the tax?

Correct Answer
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Before the tax,the total surplus was $30...
View Answer

Which of the following is not a way that a corporate tax on the income of U.S.car companies will affect markets?

Correct Answer
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Income taxes and property taxes generate the highest tax revenue for state and local governments.

Correct Answer
verified

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Correct Answer
verified
Although most Americans agree that equit...
View Answer

Correct Answer
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Pat calculates that for every extra dollar she earns,she owes the government 33 cents.Her total income now is $35,000,on which she pays taxes of $7,000.Determine her average tax rate and her marginal tax rate.

Correct Answer
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Table 12-6 -Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Correct Answer
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Correct Answer
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If a tax takes a smaller fraction of income as income rises,it is

Correct Answer
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The government's health plan for the elderly is called

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Vertical and horizontal equity are widely accepted and applying them to evaluate a tax system is always straightforward.

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-6 -Refer to Table 12-6.What is the marginal tax rate for a person who makes $50,000?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her marginal tax rate is

Correct AnswerverifiedShow Answer

A lump-sum tax

Correct AnswerverifiedShow Answer

One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Correct AnswerverifiedShow Answer

Because the marginal tax rate rises as income rises,

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Temporary Assistance for Needy Families (TANF) falls into which spending category?

Correct AnswerverifiedShow Answer

Suppose that Deon places a $150 value on a new MP-3 player,and Juanita places a $140 value on it.The cost of the MP-3 player is $130.Suppose the government levies a $15 tax on MP-3 players,which raises the price to $145.What is the deadweight loss created by the tax?

Correct AnswerverifiedBefore the tax,the total surplus was $30...View AnswerShow Answer

Which of the following is not a way that a corporate tax on the income of U.S.car companies will affect markets?

Correct AnswerverifiedShow Answer

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Correct AnswerverifiedShow Answer

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Correct AnswerverifiedAlthough most Americans agree that equit...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Pat calculates that for every extra dollar she earns,she owes the government 33 cents.Her total income now is $35,000,on which she pays taxes of $7,000.Determine her average tax rate and her marginal tax rate.

Correct AnswerverifiedShow Answer

Table 12-6 -Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a tax takes a smaller fraction of income as income rises,it is

Correct AnswerverifiedShow Answer

The government's health plan for the elderly is called

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Vertical and horizontal equity are widely accepted and applying them to evaluate a tax system is always straightforward.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Before the tax,the total surplus was $30...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Although most Americans agree that equit...
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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