Question 1

The largest source of revenue for the federal government is the

Accepted Answer

A)   individual income tax.
B)   property tax.
C)   sales tax.
D)   corporate income tax.E) A) and B)
F) A) and C)

Question 2

Taxes on specific goods such as gasoline and alcoholic beverages are called

Accepted Answer

A)   excise taxes.
B)   payroll taxes.
C)   sales taxes.
D)   social insurance taxes.E) A) and D)
F) B) and D)

Question 3

If your income is $40,000 and your income tax liability is $5,000,your

Accepted Answer

A)   marginal tax rate is 8 percent.
B)   average tax rate is 8 percent.
C)   marginal tax rate is 12.5 percent.
D)   average tax rate is 12.5 percent.E) B) and C)
F) A) and C)

Question 4

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 5

Use Table A to complete Table B.

Accepted Answer

The answer of Use Table A to complete Table B.
...

Question 6

State and local governments

Accepted Answer

A)   use a mix of taxes and fees to generate revenue.
B)   are required by federal mandate to levy income taxes.
C)   are required to tax property at a standard rate set by the federal government.
D)   cannot impose state excise taxes on products that are taxed by the federal government.E) B) and C)
F) A) and B)

Question 7

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Accepted Answer

A)   $4, and the deadweight loss comes from both Jack and Dianne.
B)   $4, and the deadweight loss comes only from Jack because he does not buy a sundae after the tax.
C)   $2, and the deadweight loss comes from both Jack and Dianne.
D)   $2, and the deadweight loss comes only from Jack because he does not buy a sundae after the tax.E) A) and B)
F) A) and C)

Question 8

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 average tax rate when income is $60,000?

Accepted Answer

A)   21.7 percent
B)   25.0 percent
C)   46.7 percent
D)   50.0 percentE) A) and B)
F) B) and D)

Question 9

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Accepted Answer

A)   $1.
B)   $2.
C)   $3.
D)   $4.E) A) and C)
F) A) and B)

Question 10

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Accepted Answer

A) True 
 B)False

Question 11

Taxes on specific goods such as cigarettes,gasoline,and alcoholic beverages are called

Accepted Answer

A)   sales taxes.
B)   excise taxes.
C)   social insurance taxes.
D)   consumption taxes.E) A) and D)
F) A) and C)

Question 12

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 13

Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Accepted Answer

A)   20 percent
B)   30 percent
C)   50 percent
D)   70 percentE) None of the above
F) B) and C)

Question 14

Table 12-1
 
-Refer to Table 12-1.If Damian has $33,000 in taxable income,his marginal tax rate is

Accepted Answer

A)   10%.
B)   15%.
C)   25%.
D)   28%.E) All of the above
F) A) and C)

Question 15

Scenario 12-2
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-2.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9.What is Regina's consumer surplus from cheesecake?

Accepted Answer

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

Question 16

List the three most important expenditure programs of the federal government.How do they differ from the three most important expenditure programs of state and local governments? Explain why it makes more sense for the federal government to purchase "national defense" rather than state governments.

Accepted Answer

The three most important expenditure pro...

Question 17

A tax system with little deadweight loss and a small administrative burden would be described as

Accepted Answer

A)   equitable.
B)   communistic.
C)   capitalistic.
D)   efficient.E) A) and D)
F) B) and C)

Question 18

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 $35,000 in taxable income in both years,which of the following describes the change in the individual's marginal tax rate between the two years?

Accepted Answer

A)   The marginal tax rate increased from 2009 to 2010.
B)   The marginal tax rate decreased from 2009 to 2010.
C)   The marginal tax rate remained constant from 2009 to 2010.
D)   The change in the marginal tax rate cannot be determined for the two tax schedules shown.E) A) and B)
F) All of the above

Question 19

A budget surplus occurs when government receipts fall short of government spending.

Accepted Answer

A) True 
 B)False

Question 20

Goals of efficiency and equity in tax policy are

Accepted Answer

A)   complementary in most countries.
B)   necessary for application of the ability-to-pay principle.
C)   often in conflict with each other.
D)   easier to achieve when tax codes are complex.E) B) and D)
F) A) and B)

Exam 12: The Design of the Tax System.

List the three most important expenditure programs of the federal government.How do they differ from the three most important expenditure programs of state and local governments? Explain why it makes more sense for the federal government to purchase "national defense" rather than state governments.

Correct Answer
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The three most important expenditure pro...
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Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his marginal tax rate is

Correct Answer
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If your income is $40,000 and your income tax liability is $5,000,your

Correct Answer
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Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Correct Answer
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Taxes on specific goods such as cigarettes,gasoline,and alcoholic beverages are called

Correct Answer
verified

Taxes on specific goods such as gasoline and alcoholic beverages are called

Correct Answer
verified

Lump-sum taxes are equitable but not efficient.

Correct Answer
verified

Use Table A to complete Table B.

Correct Answer
verified

Correct Answer
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Goals of efficiency and equity in tax policy are

Correct Answer
verified

A tax system with little deadweight loss and a small administrative burden would be described as

Correct Answer
verified

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Correct Answer
verified

State and local governments

Correct Answer
verified

The largest source of revenue for the federal government is the

Correct Answer
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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 $35,000 in taxable income in both years,which of the following describes the change in the individual's marginal tax rate between the two years?

Correct Answer
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Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Correct Answer
verified

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 average tax rate when income is $60,000?

Correct Answer
verified

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Correct Answer
verified

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Correct Answer
verified

A budget surplus occurs when government receipts fall short of government spending.

Correct Answer
verified

Exam 12: The Design of the Tax System.

List the three most important expenditure programs of the federal government.How do they differ from the three most important expenditure programs of state and local governments? Explain why it makes more sense for the federal government to purchase "national defense" rather than state governments.

Correct AnswerverifiedThe three most important expenditure pro...View AnswerShow Answer

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his marginal tax rate is

Correct AnswerverifiedShow Answer

If your income is $40,000 and your income tax liability is $5,000,your

Correct AnswerverifiedShow Answer

Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Correct AnswerverifiedShow Answer

Taxes on specific goods such as cigarettes,gasoline,and alcoholic beverages are called

Correct AnswerverifiedShow Answer

Taxes on specific goods such as gasoline and alcoholic beverages are called

Correct AnswerverifiedShow Answer

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

Use Table A to complete Table B.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Goals of efficiency and equity in tax policy are

Correct AnswerverifiedShow Answer

A tax system with little deadweight loss and a small administrative burden would be described as

Correct AnswerverifiedShow Answer

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

The largest source of revenue for the federal government is the

Correct AnswerverifiedShow Answer

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 $35,000 in taxable income in both years,which of the following describes the change in the individual's marginal tax rate between the two years?

Correct AnswerverifiedShow Answer

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

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 average tax rate when income is $60,000?

Correct AnswerverifiedShow Answer

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Correct AnswerverifiedShow Answer

Suppose Jack values an ice cream sundae at $4.Dianne values an ice cream sundae at $6.The pre-tax price of an ice cream sundae is $2.The government imposes a "fat tax" of $3 on each ice cream sundae,and the price rises to $5.The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

A budget surplus occurs when government receipts fall short of government spending.

Correct AnswerverifiedShow Answer

Correct Answer
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The three most important expenditure pro...
View Answer

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