Question 1

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Accepted Answer

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

Question 2

Approximately what percent of the federal government's receipts come from individual income taxes?

Accepted Answer

A)  8
B)  15
C)  43
D)  67E) All of the above
F) A) and C)

Question 3

Tax evasion is illegal,but tax avoidance is legal.

Accepted Answer

A) True 
 B)False

Question 4

In designing a tax system,policymakers have two objectives that are often conflicting.They are

Accepted Answer

A)  maximizing revenue and minimizing costs to taxpayers.
B)  efficiency and minimizing costs to taxpayers.
C)  efficiency and equity.
D)  maximizing revenue and reducing the national debt.E) None of the above
F) B) and D)

Question 5

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

Question 6

Under a progressive tax system,the marginal tax rate could be equal to the average tax rate only when a taxpayer

Accepted Answer

A)  has a very high income.
B)  has a very low income.
C)  is self-employed.
D)  invests in a retirement plan.E) A) and B)
F) None of the above

Question 7

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from largest to the smallest.

Accepted Answer

A)  corporate income taxes, social security taxes, personal income taxes, import taxes
B)  estate taxes, corporate income taxes, excise taxes, individual income taxes
C)  corporate income taxes, payroll taxes, individual income taxes, excise taxes
D)  individual income taxes, payroll taxes, corporate income taxes, excise taxesE) None of the above
F) A) and B)

Question 8

A budget deficit occurs when government receipts exceed government spending.

Accepted Answer

A) True 
 B)False

Question 9

Table 12-2
United States Income Tax Rates for a Single Individual, 2002 and 2003.
 
-Refer to Table 12-2.Surbhi is a single person whose taxable income is $150,000 a year.What is her total tax due in 2003?

Accepted Answer

A)  $22,740.65
B)  $33,526.75
C)  $39,553
D)  $52,500E) None of the above
F) A) and D)

Question 10

Table 12-2
United States Income Tax Rates for a Single Individual, 2002 and 2003.
 
-Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What happened to his average tax rate between 2002 and 2003?

Accepted Answer

A)  It increased.
B)  It decreased.
C)  It did not change.
D)  We do not have enough information to answer this question.E) None of the above
F) A) and D)

Question 11

Which of the following is not a cost of taxes to taxpayers?

Accepted Answer

A)  the tax payment itself
B)  deadweight losses
C)  administrative burdens
D)  goods and services provided by the governmentE) A) and D)
F) B) and C)

Question 12

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.E) A) and C)
F) All of the above

Question 13

When the government levies a tax on a corporation,

Accepted Answer

A)  all the burden of the tax ultimately falls on the corporation's owners.
B)  the corporation is more like a tax collector than a taxpayer.
C)  output must increase to compensate for reduced profits.
D)  less deadweight loss will occur since corporations are entities and not people who respond to incentives.E) A) and B)
F) B) and D)

Question 14

Lump-sum taxes are rarely used in the real world because

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 are often viewed as unfair because they take the same amount of money from both poor and rich.
D)  lump-sum taxes are very inefficient.E) A) and B)
F) A) and C)

Question 15

Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake. Joan would be willing to purchase only one slice and would pay up to $6 for it. Jim would be willing to pay $9 for his first slice, $7 for his second slice, and $3 for his third slice. The current market price is $3 per slice.
-Refer to Scenario 12-1.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $7.How much tax revenue will be generated from sales to Jim and Joan?

Accepted Answer

A)  zero
B)  $4
C)  $8
D)  $12E) All of the above
F) B) and C)

Question 16

Which of the following tax systems could not be structured to satisfy conditions of vertical equity?

Accepted Answer

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

Question 17

Today the typical American pays what percent of her income in taxes,including property taxes,personal income taxes,corporate income taxes,payroll taxes,and sales taxes?

Accepted Answer

A)  5 percent
B)  18 percent
C)  33 percent
D)  50 percentE) A) and C)
F) None of the above

Question 18

Part of the administrative burden of a tax is

Accepted Answer

A)  the money people pay to the government in taxes.
B)  reducing the size of the market because of the tax.
C)  the hassle of filling out tax forms that is imposed on taxpayers who comply with the tax.
D)  the cost of administering programs that use tax revenue.E) A) and C)
F) C) and D)

Question 19

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 20

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Accepted Answer

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

Exam 12: The Design of the Tax System

Lump-sum taxes are rarely used in the real world because

Correct Answer
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A budget deficit occurs when government receipts exceed government spending.

Correct Answer
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Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What happened to his average tax rate between 2002 and 2003?

Correct Answer
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When the government levies a tax on a corporation,

Correct Answer
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Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

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
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Correct Answer
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The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from largest to the smallest.

Correct Answer
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Part of the administrative burden of a tax is

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 tax systems could not be structured to satisfy conditions of vertical equity?

Correct Answer
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Under a progressive tax system,the marginal tax rate could be equal to the average tax rate only when a taxpayer

Correct Answer
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Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Surbhi is a single person whose taxable income is $150,000 a year.What is her total tax due in 2003?

Correct Answer
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Approximately what percent of the federal government's receipts come from individual income taxes?

Correct Answer
verified

Lump-sum taxes are equitable but not efficient.

Correct Answer
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The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct Answer
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Which of the following is not a cost of taxes to taxpayers?

Correct Answer
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In designing a tax system,policymakers have two objectives that are often conflicting.They are

Correct Answer
verified

Today the typical American pays what percent of her income in taxes,including property taxes,personal income taxes,corporate income taxes,payroll taxes,and sales taxes?

Correct Answer
verified

Tax evasion is illegal,but tax avoidance is legal.

Correct Answer
verified

Exam 12: The Design of the Tax System

Lump-sum taxes are rarely used in the real world because

Correct AnswerverifiedShow Answer

A budget deficit occurs when government receipts exceed government spending.

Correct AnswerverifiedShow Answer

Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What happened to his average tax rate between 2002 and 2003?

Correct AnswerverifiedShow Answer

When the government levies a tax on a corporation,

Correct AnswerverifiedShow Answer

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

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

Correct AnswerverifiedShow Answer

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from largest to the smallest.

Correct AnswerverifiedShow Answer

Part of the administrative burden of a tax is

Correct AnswerverifiedShow Answer

Because the marginal tax rate rises as income rises,

Correct AnswerverifiedShow Answer

Which of the following tax systems could not be structured to satisfy conditions of vertical equity?

Correct AnswerverifiedShow Answer

Under a progressive tax system,the marginal tax rate could be equal to the average tax rate only when a taxpayer

Correct AnswerverifiedShow Answer

Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Surbhi is a single person whose taxable income is $150,000 a year.What is her total tax due in 2003?

Correct AnswerverifiedShow Answer

Approximately what percent of the federal government's receipts come from individual income taxes?

Correct AnswerverifiedShow Answer

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct AnswerverifiedShow Answer

Which of the following is not a cost of taxes to taxpayers?

Correct AnswerverifiedShow Answer

In designing a tax system,policymakers have two objectives that are often conflicting.They are

Correct AnswerverifiedShow Answer

Today the typical American pays what percent of her income in taxes,including property taxes,personal income taxes,corporate income taxes,payroll taxes,and sales taxes?

Correct AnswerverifiedShow Answer

Tax evasion is illegal,but tax avoidance is legal.

Correct AnswerverifiedShow Answer

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