Question 1

Medicaid is

Accepted Answer

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

Question 2

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Accepted Answer

A)   10%
B)   40%
C)   50%
D)   67%E) A) and B)
F) A) and C)

Question 3

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

Question 4

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

Question 5

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the marginal income tax rate for an individual who earns $40,000 during the year?

Accepted Answer

A)   0%
B)   10%
C)   More than 10%
D)   The marginal tax rate cannot be determined without knowing the entire tax schedule.E) B) and C)
F) None of the above

Question 6

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.What is the deadweight loss of the tax?

Accepted Answer

A)   $3
B)   $6
C)   $8
D)   $9E) A) and C)
F) A) and D)

Question 7

According to long-run projections,under current law,

Accepted Answer

A)   federal government spending as a percentage of GDP will rise gradually but substantially in the next several decades.
B)   federal taxes as a percentage of GDP will rise gradually but substantially in the next several decades.
C)   the federal government's budget deficit will gradually be eliminated in the next several decades.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 8

As of 2005,the largest source of receipts for state and local governments was individual income taxes.

Accepted Answer

A) True 
 B)False

Question 9

The two taxes that together provide the U.S.federal government with approximately 80 percent of its revenue are

Accepted Answer

A)   individual income taxes and property taxes.
B)   individual income taxes and corporate income taxes.
C)   individual income taxes and payroll taxes.
D)   sales taxes and payroll taxes.E) None of the above
F) All of the above

Question 10

Table 12-15
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-15.Which of the three tax systems is progressive?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   All of the tax systems are progressive.E) A) and B)
F) C) and D)

Question 11

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) A) and B)
F) B) and C)

Question 12

Table 12-17
 
-Refer to Table 12-17.A regressive tax is illustrated by tax

Accepted Answer

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

Question 13

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2.Suppose the government levies a tax of $1 on each movie ticket and that,as a result,the price of a movie ticket increases to $6.00.If Bob and Lisa both purchase a movie ticket,what is total consumer surplus for Bob and Lisa?

Accepted Answer

A)   $0.00
B)   $0.50
C)   $5.00
D)   $6.00E) A) and B)
F) None of the above

Question 16

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2.What is total consumer surplus for Bob and Lisa?

Accepted Answer

A)   $0
B)   $2
C)   $5
D)   $7E) A) and B)
F) None of the above

Question 17

If your income is $50,000,your income tax liability is $10,000,and you paid $0.25 in taxes on the last dollar you earned,your

Accepted Answer

A)   marginal tax rate is 20 percent.
B)   average tax rate is 5 percent.
C)   marginal tax rate is 25 percent.
D)   average tax rate is 25 percent.E) A) and B)
F) A) and C)

Question 18

One of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity is determining

Accepted Answer

A)   whether or not a taxpayer falls within the highest income quintile.
B)   the level of transfer payments made to low-income groups.
C)   the source of income for taxpayers.
D)   what differences are relevant to a family's ability to pay.E) C) and D)
F) A) and C)

Question 19

State and local government spending on public welfare includes

Accepted Answer

A)   trash removal.
B)   transfer payments to the poor.
C)   libraries.
D)   road repairs.E) A) and B)
F) A) and C)

Question 20

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) B) and D)

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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Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5. -Refer to Scenario 12-2.What is total consumer surplus for Bob and Lisa?

Correct Answer
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Correct Answer
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According to long-run projections,under current law,

Correct Answer
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If your income is $50,000,your income tax liability is $10,000,and you paid $0.25 in taxes on the last dollar you earned,your

Correct Answer
verified

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

Correct Answer
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Correct Answer
verified

State and local government spending on public welfare includes

Correct Answer
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To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Correct Answer
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Medicaid is

Correct Answer
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The deadweight loss of an income tax is determined by the

Correct Answer
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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
verified

The two taxes that together provide the U.S.federal government with approximately 80 percent of its revenue are

Correct Answer
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Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-15.Which of the three tax systems is progressive?

Correct Answer
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As of 2005,the largest source of receipts for state and local governments was individual income taxes.

Correct Answer
verified

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the marginal income tax rate for an individual who earns $40,000 during the year?

Correct Answer
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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

Table 12-17 -Refer to Table 12-17.A regressive tax is illustrated by tax

Correct Answer
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The U.S.federal government collects approximately what percentage of the taxes in the economy?

Correct Answer
verified

One of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity is determining

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

Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5. -Refer to Scenario 12-2.What is total consumer surplus for Bob and Lisa?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to long-run projections,under current law,

Correct AnswerverifiedShow Answer

If your income is $50,000,your income tax liability is $10,000,and you paid $0.25 in taxes on the last dollar you earned,your

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

State and local government spending on public welfare includes

Correct AnswerverifiedShow Answer

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Correct AnswerverifiedShow Answer

Medicaid is

Correct AnswerverifiedShow Answer

The deadweight loss of an income tax is determined by the

Correct AnswerverifiedShow 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

The two taxes that together provide the U.S.federal government with approximately 80 percent of its revenue are

Correct AnswerverifiedShow Answer

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-15.Which of the three tax systems is progressive?

Correct AnswerverifiedShow Answer

As of 2005,the largest source of receipts for state and local governments was individual income taxes.

Correct AnswerverifiedShow Answer

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the marginal income tax rate for an individual who earns $40,000 during the year?

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

Table 12-17 -Refer to Table 12-17.A regressive tax is illustrated by tax

Correct AnswerverifiedShow Answer

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Correct AnswerverifiedShow Answer

One of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity is determining

Correct AnswerverifiedShow Answer

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