Question 1

Which of the following statements is correct?

Accepted Answer

A)  Both tax avoidance and tax evasion are legal.
B)  Both tax avoidance and tax evasion are illegal.
C)  Tax avoidance is legal, whereas tax evasion is illegal.
D)  Tax avoidance is illegal, whereas tax evasion is legal.E) B) and C)
F) A) and C)

Question 2

In 2014, the largest source of receipts for state and local governments was corporate income taxes.

Accepted Answer

A) True 
 B)False

Question 3

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

Accepted Answer

A)  more than 50 percent.
B)  exactly 50 percent.
C)  higher than her average tax rate.
D)  lower than her average tax rate.E) None of the above
F) A) and B)

Question 4

Table 12-23
The dollar amounts in the last three columns are the taxes owed under the three different tax systems. 
-Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Accepted Answer

A)  Tax System A
B)  Tax System B
C)  Tax System C
D)  All of the systems exhibit vertical equity.E) None of the above
F) A) and C)

Question 5

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) None of the above
F) A) and B)

Question 6

The marginal tax rate for a lump-sum tax

Accepted Answer

A)  is always positive.
B)  is always negative.
C)  is zero.
D)  can take on any value but must be greater than the average tax rate.E) None of the above
F) All of the above

Question 7

Table 12-22 
-Refer to Table 12-22. A progressive tax is illustrated by tax

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) A) and B)
F) A) and C)

Question 8

Table 12-22 
-Refer to Table 12-22. A proportional tax is illustrated by tax

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) C) and D)
F) A) and B)

Question 9

In order to determine tax incidence, one must

Accepted Answer

A)  consider issues of equity.
B)  also determine the legal liability of the tax.
C)  evaluate where the tax burden eventually falls.
D)  use the "flypaper theory" of taxation.E) None of the above
F) B) and D)

Question 10

A tax imposed at every stage of production is a

Accepted Answer

A)  value-added tax.
B)  lump sum tax.
C)  corrective tax.
D)  regressive tax.E) B) and C)
F) A) and D)

Question 11

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. What is total consumer surplus after the tax is levied?

Accepted Answer

A)  $2
B)  $3
C)  $4
D)  $5E) A) and B)
F) C) and D)

Question 12

Which of the following is a characteristic of a more efficient tax system?

Accepted Answer

A)  The system minimizes deadweight loss.
B)  The system raises the same amount of revenue at a lower cost.
C)  The system minimizes administrative burdens.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 13

A payroll tax is also referred to as a social insurance tax.

Accepted Answer

A) True 
 B)False

Question 14

What are the two largest categories of federal tax receipts?

Accepted Answer

individual income taxes (43 pe...

Question 15

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

Accepted Answer

A)  23.8%.
B)  24.3%.
C)  25.9%.
D)  28.0%.E) All of the above
F) A) and C)

Question 16

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will __________ and government spending, as a percentage of GDP, will __________.

Accepted Answer

remain con...

Question 17

​The largest source of federal revenue in the United States is:

Accepted Answer

A)  ​Social insurance tax
B)  the corporate income tax
C)  ​the individual income tax
D)  Foreign aid to the U.S.E) B) and C)
F) A) and B)

Question 18

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Accepted Answer

A)  30 percent, and the average tax rate is 50 percent.
B)  30 percent, and the average tax rate is 43 percent.
C)  50 percent, and the average tax rate is 40 percent.
D)  50 percent, and the average tax rate is 43 percent.E) B) and D)
F) B) and C)

Question 19

If revenue from a cigarette tax is used to pay for healthcare for people with lung cancer, the cigarette tax may be justified on the basis of

Accepted Answer

A)  the benefits principle.
B)  the ability-to-pay principle.
C)  vertical equity.
D)  horizontal equity.E) B) and D)
F) None of the above

Question 20

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

Exam 12: The Design of the Tax System

If revenue from a cigarette tax is used to pay for healthcare for people with lung cancer, the cigarette tax may be justified on the basis of

Correct Answer
verified

A payroll tax is also referred to as a social insurance tax.

Correct Answer
verified

In order to determine tax incidence, one must

Correct Answer
verified

The marginal tax rate for a lump-sum tax

Correct Answer
verified

In 2014, the largest source of receipts for state and local governments was corporate income taxes.

Correct Answer
verified

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

Correct Answer
verified

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

Correct Answer
verified

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 12-22 -Refer to Table 12-22. A progressive tax is illustrated by tax

Correct Answer
verified

A tax imposed at every stage of production is a

Correct Answer
verified

The largest source of federal revenue in the United States is:

Correct Answer
verified

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Correct Answer
verified

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct Answer
verified

Which of the following is a characteristic of a more efficient tax system?

Correct Answer
verified

Correct Answer
verified

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will and government spending, as a percentage of GDP, will .

Correct Answer
verified
remain con...
View Answer

What are the two largest categories of federal tax receipts?

Correct Answer
verified
individual income taxes (43 pe...
View Answer

Exam 12: The Design of the Tax System

If revenue from a cigarette tax is used to pay for healthcare for people with lung cancer, the cigarette tax may be justified on the basis of

Correct AnswerverifiedShow Answer

A payroll tax is also referred to as a social insurance tax.

Correct AnswerverifiedShow Answer

In order to determine tax incidence, one must

Correct AnswerverifiedShow Answer

The marginal tax rate for a lump-sum tax

Correct AnswerverifiedShow Answer

In 2014, the largest source of receipts for state and local governments was corporate income taxes.

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

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

Correct AnswerverifiedShow 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 12-22 -Refer to Table 12-22. A progressive tax is illustrated by tax

Correct AnswerverifiedShow Answer

A tax imposed at every stage of production is a

Correct AnswerverifiedShow Answer

​The largest source of federal revenue in the United States is:

Correct AnswerverifiedShow Answer

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Correct AnswerverifiedShow Answer

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a more efficient tax system?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will __________ and government spending, as a percentage of GDP, will __________.

Correct Answerverifiedremain con...View AnswerShow Answer

What are the two largest categories of federal tax receipts?

Correct Answerverifiedindividual income taxes (43 pe...View AnswerShow 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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Correct Answer
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Correct Answer
verified

The largest source of federal revenue in the United States is:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

The United States federal government has a large budget deficit. Long-term projections suggest that under current law, taxes, as a percentage of GDP, will and government spending, as a percentage of GDP, will .

Correct Answer
verified
remain con...
View Answer

Correct Answer
verified
individual income taxes (43 pe...
View Answer