Question 1

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What happened to her marginal 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) B) and C)
F) A) and D)

Question 2

Table 12-1
 
-Refer to Table 12-1.If Barb has $126,000 in taxable income,her marginal tax rate is

Accepted Answer

A)   25%.
B)   28%.
C)   33%.
D)   35%.E) B) and D)
F) None of the above

Question 3

Table 12-15
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-A lump-sum tax

Accepted Answer

A)   is also a proportional tax.
B)   entails larger deadweight losses than other types of taxes.
C)   is the most efficient tax possible.
D)   is the most equitable tax possible.E) C) and D)
F) A) and B)

Question 4

Many economists believe that the U.S.tax system would be made more efficient if the basis of taxation were changed so that people paid taxes,more so than they do now,based on

Accepted Answer

A)   their saving rather than their income.
B)   their spending rather than their income.
C)   their income rather than their wealth.
D)   their wealth rather than their spending.E) B) and D)
F) All of the above

Question 5

If Nebraska imposed a tax on milk of 10 cents per gallon,it would

Accepted Answer

A)   be an excise tax.
B)   be an income tax.
C)   reduce tax revenue.
D)   cause the supply of milk to rise.E) C) and D)
F) B) and D)

Question 6

The single largest expenditure by state and local governments is on

Accepted Answer

A)   highways.
B)   police.
C)   public welfare.
D)   education.E) A) and B)
F) A) and C)

Question 7

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

Accepted Answer

A)   National defense
B)   Social Security
C)   Income security
D)   Farm support programsE) All of the above
F) None of the above

Question 8

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

Question 9

When compared to nonpoor countries,poor countries usually have

Accepted Answer

A)   very high tax burdens.
B)   similar tax burdens.
C)   relatively low tax burdens.
D)   no taxes because of high poverty levels.E) A) and D)
F) B) and C)

Question 10

Table 12-15
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Suppose an excise tax is imposed on luxury boats and yachts.Economists argue that such a tax

Accepted Answer

A)   is sure to be vertically equitable,since buyers of luxury boats and yachts are wealthy.
B)   entails no deadweight loss as long as buyers of boats and yachts can easily substitute one luxury good for another.
C)   violates the benefits principle of taxation.
D)   may burden workers in the luxury-boat-and-yacht industry more than it burdens the buyers of luxury boats and yachts.E) A) and D)
F) All of the above

Question 11

An advantage of a consumption tax over the present tax system is that a consumption tax

Accepted Answer

A)   raises more revenues.
B)   would save the government millions in administrative costs.
C)   places more of the tax burden on the wealthy.
D)   does not discourage saving.E) A) and B)
F) C) and D)

Question 12

A tax on all forms of income will

Accepted Answer

A)   lower the effective rate of interest on savings.
B)   have no effect on savings.
C)   enhance social welfare because the benefits will outweigh the costs.
D)   enhance the incentives to save.E) C) and D)
F) B) and C)

Question 13

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Accepted Answer

A) True 
 B)False

Question 14

In 2007,approximately what percentage of federal government receipts came from individual income taxes?

Accepted Answer

A)   15%
B)   30%
C)   45%
D)   60%E) C) and D)
F) A) and D)

Question 15

Country A's tax system is more efficient than Country B's tax system if

Accepted Answer

A)   Country A collects less tax revenue than Country B,and the cost to taxpayers is the same in both countries.
B)   Country A collects more tax revenue than Country B,even though the cost to taxpayers is greater in Country A than in Country B.
C)   the same amount of revenue is raised in both countries,but the cost to taxpayers is smaller in Country A than in Country B.
D)   the same amount of revenue is raised in both countries,but the taxes are collected in a shorter amount of time in Country A than in Country B.E) None of the above
F) A) and B)

Question 16

When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax,the tax

Accepted Answer

A)   is considered horizontally equitable.
B)   burden is minimized.
C)   satisfies the benefits principle.
D)   is considered vertically equitable.E) B) and C)
F) All of the above

Question 17

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.Which of the following statements is correct?

Accepted Answer

A)   Jim will bear the full burden of the deadweight loss.
B)   Joan will bear the full burden of the deadweight loss.
C)   Both Joan and Jim will share the burden of the deadweight loss.
D)   There will be no deadweight loss.E) A) and D)
F) A) and C)

Question 18

Table 12-4
 
-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Total consumer surplus

Accepted Answer

A)   falls by less than the tax revenue generated.
B)   falls by more than the tax revenue generated.
C)   falls by the same amount as the tax revenue generated.
D)   will not fall since Jennifer will no longer be in the market.E) All of the above
F) A) and B)

Question 19

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her marginal tax rate in 2003?

Accepted Answer

A)   15%
B)   27%
C)   30%
D)   35%E) A) and C)
F) A) and D)

Question 20

Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

Correct Answer
verified

A tax on all forms of income will

Correct Answer
verified

When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax,the tax

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2002 and 2003?

Correct Answer
verified

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Correct Answer
verified

When compared to nonpoor countries,poor countries usually have

Correct Answer
verified

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Suppose an excise tax is imposed on luxury boats and yachts.Economists argue that such a tax

Correct Answer
verified

An advantage of a consumption tax over the present tax system is that a consumption tax

Correct Answer
verified

Table 12-4 -Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Total consumer surplus

Correct Answer
verified

The single largest expenditure by state and local governments is on

Correct Answer
verified

Table 12-1 -Refer to Table 12-1.If Barb has $126,000 in taxable income,her marginal tax rate is

Correct Answer
verified

If Nebraska imposed a tax on milk of 10 cents per gallon,it would

Correct Answer
verified

Many economists believe that the U.S.tax system would be made more efficient if the basis of taxation were changed so that people paid taxes,more so than they do now,based on

Correct Answer
verified

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -A lump-sum tax

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Country A's tax system is more efficient than Country B's tax system if

Correct Answer
verified

Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her marginal tax rate in 2003?

Correct Answer
verified

In 2007,approximately what percentage of federal government receipts came from individual income taxes?

Correct Answer
verified

Exam 12: The Design of the Tax System

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

Correct AnswerverifiedShow Answer

A tax on all forms of income will

Correct AnswerverifiedShow Answer

When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax,the tax

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2002 and 2003?

Correct AnswerverifiedShow Answer

The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Correct AnswerverifiedShow Answer

When compared to nonpoor countries,poor countries usually have

Correct AnswerverifiedShow Answer

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Suppose an excise tax is imposed on luxury boats and yachts.Economists argue that such a tax

Correct AnswerverifiedShow Answer

An advantage of a consumption tax over the present tax system is that a consumption tax

Correct AnswerverifiedShow Answer

Table 12-4 -Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $5.00 to $7.00.Total consumer surplus

Correct AnswerverifiedShow Answer

The single largest expenditure by state and local governments is on

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Barb has $126,000 in taxable income,her marginal tax rate is

Correct AnswerverifiedShow Answer

If Nebraska imposed a tax on milk of 10 cents per gallon,it would

Correct AnswerverifiedShow Answer

Many economists believe that the U.S.tax system would be made more efficient if the basis of taxation were changed so that people paid taxes,more so than they do now,based on

Correct AnswerverifiedShow Answer

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -A lump-sum tax

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Country A's tax system is more efficient than Country B's tax system if

Correct AnswerverifiedShow Answer

Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her marginal tax rate in 2003?

Correct AnswerverifiedShow Answer

In 2007,approximately what percentage of federal government receipts came from individual income taxes?

Correct AnswerverifiedShow Answer

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