Question 1

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Accepted Answer

A) True 
 B)False

Question 2

The deadweight loss of an income tax is determined by the

Accepted Answer

A)   amount of total tax revenue to the government.
B)   marginal tax rate.
C)   average tax rate.
D)   ability-to-pay principle.E) A) and B)
F) A) and C)

Question 3

A tax on the wages that a firm pays its workers is called

Accepted Answer

A)   an income tax.
B)   an excise tax.
C)   a consumption tax.
D)   a payroll tax.E) A) and B)
F) C) and D)

Question 4

Medicare is the

Accepted Answer

A)   government's health plan for the elderly.
B)   government's health plan for the poor.
C)   another name for Social Security.
D)   Both a and c are correct.E) B) and C)
F) A) and D)

Question 5

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) A) and B)
F) All of the above

Question 6

The federal budget deficit in 2009 was nearly eight times larger than the deficit in 2007.The primary reason for the dramatic increase in the deficit was

Accepted Answer

A)   the recession experienced during this time.
B)   severe budget tightening by members of Congress.
C)   the shift in political power from Republicans to Democrats.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 7

Table 12-12
United States Income Tax Rates for a Single Individual,2009 and 2010.
 
-Refer to Table 12-12.What type of tax structure does the United States have in 2010 for single individuals?

Accepted Answer

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

Question 8

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.How much tax revenue is collected from these four skiers?

Accepted Answer

A)   $0.
B)   $12.
C)   $36.
D)   $48.E) B) and C)
F) All of the above

Question 9

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Accepted Answer

A)   tax evasion
B)   a political payoff
C)   a tax loophole
D)   compensation for the benefit of societyE) C) and D)
F) B) and D)

Question 10

Of all the taxes collected in the U.S.economy,what percentage is collected by the federal government?

Accepted Answer

The answer of Of all the taxes collected in the...

Question 11

If all taxpayers pay the same percentage of income in taxes,the tax system is progressive.

Accepted Answer

A) True 
 B)False

Question 12

Medicare has been the focus of many proposed reforms over the last several years because

Accepted Answer

A)   health care costs have risen more rapidly than the cost of other goods and services produced in the economy.
B)   nationalized health care systems are more efficient than private health care systems.
C)   cures for many major diseases are likely to be found in the next few years.
D)   government health care research has found that limiting access to doctors will increase the general health of the population.E) A) and B)
F) C) and D)

Question 13

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

Question 14

Economists define a business's "value added" as

Accepted Answer

A)   the amount the firm pays for goods and services less the revenue from the sale of goods and services.
B)   the revenue from the sale of goods and services less the amount the firm pays for goods and services.
C)   the total value of the goods and services created by the firm.
D)   the value that consumers place on the goods and services created by the firm.E) None of the above
F) B) and C)

Question 15

One advantage of a lump-sum tax over other taxes is that it

Accepted Answer

A)   is both equitable and efficient.
B)   doesn't cause deadweight loss.
C)   would place a larger tax burden on the rich.
D)   would raise more revenues.E) C) and D)
F) B) and D)

Question 16

Individual Retirement Accounts and 401(k) plans make the current U.S.tax system

Accepted Answer

A)   less like European tax systems than it otherwise would be.
B)   more like a payroll tax than it otherwise would be.
C)   more like an income tax than it otherwise would be.
D)   more like a consumption tax than it otherwise would be.E) A) and D)
F) A) and B)

Question 17

Which of the following statements is correct?

Accepted Answer

A)   A general sales tax on food is regressive when low-income taxpayers spend a larger proportion of their income on food than high-income taxpayers.
B)   A general sales tax on food is regressive when middle income taxpayers spend a smaller proportion of their income on food than high-income taxpayers.
C)   A general sales tax on food is regressive when high-income taxpayers spend a larger proportion of their income on food than middle income taxpayers.
D)   A general sales tax on food is regressive when high-income taxpayers spend a larger proportion of their income on food than low-income taxpayers.E) None of the above
F) A) and B)

Question 18

Which of the following contributes to the projected rise in government spending on Social Security and Medicare as a percentage of GDP?

Accepted Answer

A)   increasing life expectancies
B)   increasing health care costs
C)   increasing fertility rates
D)   Both a and b are correct.E) None of the above
F) A) and B)

Question 19

Which of the following is not true about government spending on national defense?

Accepted Answer

A)   It is the second-largest spending category for the U.S.federal government.
B)   It includes salaries of military personnel.
C)   It fluctuates over time as the political climate changes.
D)   It is not financed with tax revenue.E) A) and B)
F) A) and C)

Question 20

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.How much consumer surplus accrues to Anna and Clem individually?

Accepted Answer

A)   $125 and $20 respectively
B)   $105 and $30 respectively
C)   $85 and $40 respectively
D)   $65 and $50 respectivelyE) B) and D)
F) C) and D)

Exam 12: The Design of the Tax System

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Correct Answer
verified

The deadweight loss of an income tax is determined by the

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Individual Retirement Accounts and 401(k) plans make the current U.S.tax system

Correct Answer
verified

Medicare has been the focus of many proposed reforms over the last several years because

Correct Answer
verified

Correct Answer
verified

If all taxpayers pay the same percentage of income in taxes,the tax system is progressive.

Correct Answer
verified

Economists define a business's "value added" as

Correct Answer
verified

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.How much consumer surplus accrues to Anna and Clem individually?

Correct Answer
verified

The federal budget deficit in 2009 was nearly eight times larger than the deficit in 2007.The primary reason for the dramatic increase in the deficit was

Correct Answer
verified

Of all the taxes collected in the U.S.economy,what percentage is collected by the federal government?

Correct Answer
verified

One advantage of a lump-sum tax over other taxes is that it

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.What type of tax structure does the United States have in 2010 for single individuals?

Correct Answer
verified

A tax on the wages that a firm pays its workers is called

Correct Answer
verified

Medicare is the

Correct Answer
verified

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Correct Answer
verified

Which of the following is not true about government spending on national defense?

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

Which of the following contributes to the projected rise in government spending on Social Security and Medicare as a percentage of GDP?

Correct Answer
verified

Exam 12: The Design of the Tax System

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Correct AnswerverifiedShow Answer

The deadweight loss of an income tax is determined by the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Individual Retirement Accounts and 401(k) plans make the current U.S.tax system

Correct AnswerverifiedShow Answer

Medicare has been the focus of many proposed reforms over the last several years because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If all taxpayers pay the same percentage of income in taxes,the tax system is progressive.

Correct AnswerverifiedShow Answer

Economists define a business's "value added" as

Correct AnswerverifiedShow Answer

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.How much consumer surplus accrues to Anna and Clem individually?

Correct AnswerverifiedShow Answer

The federal budget deficit in 2009 was nearly eight times larger than the deficit in 2007.The primary reason for the dramatic increase in the deficit was

Correct AnswerverifiedShow Answer

Of all the taxes collected in the U.S.economy,what percentage is collected by the federal government?

Correct AnswerverifiedShow Answer

One advantage of a lump-sum tax over other taxes is that it

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.What type of tax structure does the United States have in 2010 for single individuals?

Correct AnswerverifiedShow Answer

A tax on the wages that a firm pays its workers is called

Correct AnswerverifiedShow Answer

Medicare is the

Correct AnswerverifiedShow Answer

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Correct AnswerverifiedShow Answer

Which of the following is not true about government spending on national defense?

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

Which of the following contributes to the projected rise in government spending on Social Security and Medicare as a percentage of GDP?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified