Question 1

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 D)
F) A) and B)

Question 2

A country is using a proportional tax when

Accepted Answer

A)   its marginal tax rate equals its average tax rate.
B)   its marginal tax rate is less than its average tax rate.
C)   its marginal tax rate is greater than its average tax rate.
D)   it uses a lump-sum tax.E) C) and D)
F) All of the above

Question 3

A person's tax obligation divided by her income is called her

Accepted Answer

A)   marginal social tax rate.
B)   marginal private tax rate.
C)   marginal tax rate.
D)   average tax rate.E) B) and C)
F) B) and D)

Question 4

Vertical equity is not consistent with a regressive tax structure.

Accepted Answer

A) True 
 B)False

Question 5

The largest category of federal spending is national defense.

Accepted Answer

A) True 
 B)False

Question 6

Taxes can create deadweight losses because they

Accepted Answer

A)   allow the government to fund private goods.
B)   create administrative burdens as people comply with tax laws.
C)   allow the government to fund public goods.
D)   Both b and c are correct.E) A) and D)
F) None of the above

Question 7

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 8

Deadweight losses occur in markets in which

Accepted Answer

A)   firms decide to downsize.
B)   the government imposes a tax.
C)   profits fall because of low consumer demand.
D)   equilibrium prices fall.E) B) and C)
F) None of the above

Question 9

Table 12-16
The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes.
 
-Refer to Table 12-16.In this economy Tax B exhibits

Accepted Answer

A)   horizontal and vertical equity.
B)   horizontal equity but not vertical equity.
C)   vertical equity but not horizontal equity.
D)   neither horizontal nor vertical equity.E) A) and C)
F) None of the above

Question 10

Because taxes distort incentives,they typically result in

Accepted Answer

A)   deadweight losses.
B)   reductions in consumer surplus.
C)   reductions in producer surplus.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 11

The notion that similar taxpayers should pay similar amounts of taxes is known as

Accepted Answer

A)   vertical equity.
B)   the benefits principle.
C)   horizontal equity.
D)   taxpayer efficiency.E) All of the above
F) A) and C)

Question 12

Special tax treatment given to specific types of behavior are called

Accepted Answer

A)   tax avoidance.
B)   tax evasion.
C)   tax loopholes.
D)   tax burden.E) A) and B)
F) A) and C)

Question 13

The top 1% of income earners

Accepted Answer

A)   makes 18.8 percent of all income and pays 28.3 percent of all taxes
B)   makes 27.6 percent of all income and pays 18.1 percent of all taxes.
C)   makes 55.1 percent of all income and pays 68.7 percent of all taxes.
D)   makes 68.7 percent of all income and pays 55.1 percent of all taxes.E) C) and D)
F) None of the above

Question 14

Table 12-1
 
-Refer to Table 12-1.If Agatha has $80,000 in taxable income,her marginal tax rate is

Accepted Answer

A)   15%.
B)   25%.
C)   28%.
D)   33%.E) A) and B)
F) None of the above

Question 15

As a share of total spending,state and local government expenditure on education in 2007 was

Accepted Answer

A)   6 percent.
B)   18 percent.
C)   34 percent.
D)   42 percent.E) B) and C)
F) B) and D)

Question 16

In order to determine tax incidence,one must

Accepted Answer

A)   consider issues of equity.
B)   also determine the legal liability of the tax.
C)   evaluate where the tax burden eventually falls.
D)   use the "flypaper theory" of taxation.E) B) and C)
F) A) and B)

Question 17

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

Question 18

Many health economists believe that President Obama's 2010 healthcare reform bill and other measures proposed by policymakers to reduce the growth of healthcare costs will have only a limited impact because

Accepted Answer

A)   providing universal coverage is very expensive.
B)   the main source of higher costs is medical advances which extend and improve lives.
C)   lawsuits do not create a costly burden on the healthcare system.
D)   encouraging competition does not usually result in lower costs.E) A) and D)
F) A) and B)

Question 19

Which of the following statements is correct?

Accepted Answer

A)   Both tax avoidance and tax evasion are legal.
B)   Both tax avoidance and tax evasion are illegal.
C)   Tax avoidance is legal, whereas tax evasion is illegal.
D)   Tax avoidance is illegal, whereas tax evasion is legal.E) C) and D)
F) A) and B)

Question 20

In 1950 there were approximately 7 working age people for every elderly person; however,in 2050 there will be

Accepted Answer

A)   only 2.5 working people for every elderly person.
B)   only 5 working age people for every elderly person.
C)   10 working age people for every elderly person.
D)   14 working age people for every elderly person.E) A) and D)
F) A) and C)

Exam 12: The Design of the Tax System.

In 1950 there were approximately 7 working age people for every elderly person; however,in 2050 there will be

Correct Answer
verified

Deadweight losses occur in markets in which

Correct Answer
verified

The notion that similar taxpayers should pay similar amounts of taxes is known as

Correct Answer
verified

A person's tax obligation divided by her income is called her

Correct Answer
verified

The largest category of federal spending is national defense.

Correct Answer
verified

A lump-sum tax minimizes deadweight loss.

Correct Answer
verified

Table 12-1 -Refer to Table 12-1.If Agatha has $80,000 in taxable income,her marginal tax rate is

Correct Answer
verified

Taxes can create deadweight losses because they

Correct Answer
verified

A country is using a proportional tax when

Correct Answer
verified

Correct Answer
verified

As a share of total spending,state and local government expenditure on education in 2007 was

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Special tax treatment given to specific types of behavior are called

Correct Answer
verified

Vertical equity is not consistent with a regressive tax structure.

Correct Answer
verified

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

Correct Answer
verified

Many health economists believe that President Obama's 2010 healthcare reform bill and other measures proposed by policymakers to reduce the growth of healthcare costs will have only a limited impact because

Correct Answer
verified

The top 1% of income earners

Correct Answer
verified

In order to determine tax incidence,one must

Correct Answer
verified

Table 12-16 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-16.In this economy Tax B exhibits

Correct Answer
verified

Because taxes distort incentives,they typically result in

Correct Answer
verified

Exam 12: The Design of the Tax System.

In 1950 there were approximately 7 working age people for every elderly person; however,in 2050 there will be

Correct AnswerverifiedShow Answer

Deadweight losses occur in markets in which

Correct AnswerverifiedShow Answer

The notion that similar taxpayers should pay similar amounts of taxes is known as

Correct AnswerverifiedShow Answer

A person's tax obligation divided by her income is called her

Correct AnswerverifiedShow Answer

The largest category of federal spending is national defense.

Correct AnswerverifiedShow Answer

A lump-sum tax minimizes deadweight loss.

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Agatha has $80,000 in taxable income,her marginal tax rate is

Correct AnswerverifiedShow Answer

Taxes can create deadweight losses because they

Correct AnswerverifiedShow Answer

A country is using a proportional tax when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As a share of total spending,state and local government expenditure on education in 2007 was

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Special tax treatment given to specific types of behavior are called

Correct AnswerverifiedShow Answer

Vertical equity is not consistent with a regressive tax structure.

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

Many health economists believe that President Obama's 2010 healthcare reform bill and other measures proposed by policymakers to reduce the growth of healthcare costs will have only a limited impact because

Correct AnswerverifiedShow Answer

The top 1% of income earners

Correct AnswerverifiedShow Answer

In order to determine tax incidence,one must

Correct AnswerverifiedShow Answer

Table 12-16 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-16.In this economy Tax B exhibits

Correct AnswerverifiedShow Answer

Because taxes distort incentives,they typically result in

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