Question 1

In 2011, state and local government education spending was more than five times highway spending.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following are taxed?

Accepted Answer

A)   both corporate profits and dividends shareholders receive
B)   corporate profits but not dividends shareholders receive
C)   dividends shareholders receive but not corporate profits
D)   neither corporate profits nor dividends shareholders receiveE) A) and B)
F) All of the above

Question 3

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. How much tax revenue is collected?

Accepted Answer

A)   $0
B)   $1
C)   $2
D)   $4E) B) and C)
F) All of the above

Question 4

Federal government spending on Social Security, Medicare, and Medicaid as a percentage of GDP rose from

Accepted Answer

A)   10 percent in 1950 to more than 50 percent today.
B)   10 percent in 1950 to more than 20 percent today.
C)   1 percent in 1950 to more than 10 percent today.
D)   1 percent in 1950 to more than 20 percent today.E) All of the above
F) A) and D)

Question 5

Most people in the United States believe that our tax system should be both and .

Accepted Answer

efficient;...

Question 6

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 7

In 2011, what percentage of federal government receipts came from corporate income taxes?

Accepted Answer

A)   7%
B)   12%
C)   25%
D)   43%E) A) and C)
F) B) and C)

Question 8

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 their

Accepted Answer

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

Question 9

A transfer payment is a government payment

Accepted Answer

A)   to companies that provide goods or services to government agencies.
B)   designed to transfer funds from one government agency to another.
C)   which transfers revenue from the federal government to state government.
D)   not made in exchange for a good or service.E) B) and C)
F) C) and D)

Question 10

Deadweight losses arise because a tax causes some individuals to change their behavior.

Accepted Answer

A) True 
 B)False

Question 11

A lump sum tax can never have horizontal equity.

Accepted Answer

A) True 
 B)False

Question 12

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Accepted Answer

A)   15 percent
B)   32 percent
C)   40 percent
D)   55 percentE) A) and C)
F) None of the above D

Question 13

Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country. What is the average income tax rate for an individual who earns $60,000 during the year?

Accepted Answer

A)   0%
B)   10%
C)   More than 10%
D)   The average tax rate cannot be determined without knowing the entire tax schedule.E) B) and C)
F) A) and B)

Question 14

Suppose the country of Mankiwland has a new king, King Gregory. For the purpose of efficiency King Gregory's chief economic advisor would encourage him to design his country's tax system to minimize

Accepted Answer

A)   (i)  only
B)   (i)  and (ii)  only
C)   (iii)  and (iv)  only
D)   (i) , (ii) , (iii) , and (iv) E) A) and B)
F) All of the above

Question 15

Define the deadweight loss of a tax.

Accepted Answer

The deadweight loss of a tax i...

Question 16

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Accepted Answer

A) True 
 B)False

Question 17

In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal government?

Accepted Answer

A)   5%
B)   12%
C)   36%
D)   44%E) A) and D)
F) B) and D)

Question 18

Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-7. 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) C) and D)
F) B) and C)

Question 19

When interest income from savings is taxed, people will save

Accepted Answer

A)   more to make up for what is lost in taxes.
B)   the same amount as they would have without the tax.
C)   less than they would without the tax.
D)   None of the above is correct since the government would not tax interest on savings.E) A) and D)
F) None of the above C

Question 20

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Accepted Answer

A)   Everyone can easily compute the amount of tax owed.
B)   There is no benefit to hiring an accountant to do your taxes.
C)   Everyone owes the same amount of tax, regardless of earnings.
D)   The government can easily forecast tax revenues.E) C) and D)
F) A) and B)

Exam 12: The Design of the Tax System

In 2011, state and local government education spending was more than five times highway spending.

Correct Answer
verified

Which of the following are taxed?

Correct Answer
verified

Correct Answer
verified

Federal government spending on Social Security, Medicare, and Medicaid as a percentage of GDP rose from

Correct Answer
verified

Most people in the United States believe that our tax system should be both and .

Correct Answer
verified
efficient;...
View Answer

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct Answer
verified

In 2011, what percentage of federal government receipts came from corporate income taxes?

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 their

Correct Answer
verified
B

A transfer payment is a government payment

Correct Answer
verified

Deadweight losses arise because a tax causes some individuals to change their behavior.

Correct Answer
verified

A lump sum tax can never have horizontal equity.

Correct Answer
verified

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Correct Answer
verified
D

Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country. What is the average income tax rate for an individual who earns $60,000 during the year?

Correct Answer
verified

Suppose the country of Mankiwland has a new king, King Gregory. For the purpose of efficiency King Gregory's chief economic advisor would encourage him to design his country's tax system to minimize

Correct Answer
verified

Define the deadweight loss of a tax.

Correct Answer
verified
The deadweight loss of a tax i...
View Answer

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Correct Answer
verified

In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal government?

Correct Answer
verified

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. 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
verified

When interest income from savings is taxed, people will save

Correct Answer
verified
C

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Correct Answer
verified

Exam 12: The Design of the Tax System

In 2011, state and local government education spending was more than five times highway spending.

Correct AnswerverifiedShow Answer

Which of the following are taxed?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Federal government spending on Social Security, Medicare, and Medicaid as a percentage of GDP rose from

Correct AnswerverifiedShow Answer

Most people in the United States believe that our tax system should be both and .

Correct Answerverifiedefficient;...View AnswerShow Answer

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct AnswerverifiedShow Answer

In 2011, what percentage of federal government receipts came from corporate income taxes?

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 their

Correct AnswerverifiedB

A transfer payment is a government payment

Correct AnswerverifiedShow Answer

Deadweight losses arise because a tax causes some individuals to change their behavior.

Correct AnswerverifiedShow Answer

A lump sum tax can never have horizontal equity.

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Correct AnswerverifiedD

Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country. What is the average income tax rate for an individual who earns $60,000 during the year?

Correct AnswerverifiedShow Answer

Suppose the country of Mankiwland has a new king, King Gregory. For the purpose of efficiency King Gregory's chief economic advisor would encourage him to design his country's tax system to minimize

Correct AnswerverifiedShow Answer

Define the deadweight loss of a tax.

Correct AnswerverifiedThe deadweight loss of a tax i...View AnswerShow Answer

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Correct AnswerverifiedShow Answer

In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal government?

Correct AnswerverifiedShow Answer

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. 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

When interest income from savings is taxed, people will save

Correct AnswerverifiedC

Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
efficient;...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The deadweight loss of a tax i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified