Question 1

Table 12-1 
-Refer to Table 12-1. 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. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)  $75
B)  $105
C)  $185
D)  $215E) All of the above
F) A) and B)

Question 2

As the economy's income has grown, the government has

Accepted Answer

A)  grown at about the same pace.
B)  grown at a faster pace.
C)  grown at a slower pace.
D)  shrunk.E) A) and B)
F) A) and C)

Question 3

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

Question 4

Table 12-8
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. 
-Refer to Table 12-8. For an individual with $200,000 in taxable income, which tax schedule has the lowest average marginal tax rate?

Accepted Answer

A)  Tax Schedule A
B)  Tax Schedule B
C)  Tax Schedule C
D)  Tax Schedule DE) All of the above
F) B) and D)

Question 5

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Accepted Answer

A) True 
 B)False

Question 6

Table 12-6
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. 
-Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with $212,000 in taxable income?

Accepted Answer

A)  0%
B)  1%
C)  2%
D)  45%E) B) and C)
F) A) and D)

Question 7

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

Question 8

Wilma values a decorative garden rock at $15, while Fred values it at $10. The price of a decorative garden rock is $9. If the government imposes a $2 tax per decorative garden rock and the price of the rock rises to $11, what part of the deadweight loss comes from Wilma, and what part comes from Fred?

Accepted Answer

A)  none comes from Wilma; $1 comes from Fred
B)  none comes from Wilma; $3 comes from Fred
C)  $2 comes from Wilma; $1 comes from Fred
D)  $4 comes from Wilma; $3 comes from FredE) None of the above
F) A) and D)

Question 9

Table 12-21
The dollar amounts in the last three columns are the taxes owed under the three different tax systems. 
-Refer to Table 12-21. Which of the three tax systems is regressive?

Accepted Answer

A)  Tax System A
B)  Tax System B
C)  Tax System C
D)  None of the systems are regressive.E) All of the above
F) B) and D)

Question 10

Most economists believe that a corporate income tax affects the stockholders of a corporation but not its employees or customers.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an important reason for the projected increase in government spending as a percentage of GDP over the next several decades?

Accepted Answer

A)  the increase in life expectancy resulting from advances in healthcare
B)  an increase in the average number of children per family.
C)  the increase in the number of jobs lost each year to foreign countries as a result of outsourcing
D)  the reduction in the number of high-cost medical proceduresE) C) and D)
F) A) and D)

Question 12

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the __________.

Accepted Answer

The answer of If tax revenues from a tax on...

Question 13

Table 12-25 
-Refer to Table 12-25. Which plan illustrates a progressive tax?

Accepted Answer

Plan C illustrates a progressi...

Question 14

The ability-to-pay principle claims that a person should pay taxes according to

Accepted Answer

A)  the level of public education that the person has received throughout his lifetime.
B)  how many government services that person will receive.
C)  how well that person can shoulder the tax burden.
D)  the level of debt that the person has.E) None of the above
F) B) and C)

Question 15

In the United States, the payroll tax is also called a

Accepted Answer

A)  dividend income tax.
B)  social insurance tax.
C)  value added tax.
D)  capital gains tax.E) A) and B)
F) A) and C)

Question 16

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What happened to his marginal tax rate between 2012 and 2013?

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) A) and B)
F) None of the above

Question 17

Table 12-13
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 12-13. In this economy Tax C 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 B)
F) A) and C)

Question 18

One reason that deadweight losses are so difficult to avoid is that

Accepted Answer

A)  taxes affect the decisions that people make.
B)  income taxes are not paid by everyone.
C)  consumption taxes must be universally applied to all commodities.
D)  the administrative burden is hard to calculate.E) A) and B)
F) A) and C)

Question 19

Table 12-10 
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

Accepted Answer

A)  23.8%.
B)  24.3%.
C)  25.9%.
D)  28.0%.E) None of the above
F) A) and B)

Question 20

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with $212,000 in taxable income?

Correct Answer
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If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the __________.

Correct Answer
verified

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
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Table 12-8 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-8. For an individual with $200,000 in taxable income, which tax schedule has the lowest average marginal tax rate?

Correct Answer
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As the economy's income has grown, the government has

Correct Answer
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Table 12-13 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 12-13. In this economy Tax C exhibits

Correct Answer
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Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct Answer
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A transfer payment is a government payment

Correct Answer
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Table 12-25 -Refer to Table 12-25. Which plan illustrates a progressive tax?

Correct Answer
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Plan C illustrates a progressi...
View Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What happened to his marginal tax rate between 2012 and 2013?

Correct Answer
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Correct Answer
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One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

Correct Answer
verified

In the United States, the payroll tax is also called a

Correct Answer
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Table 12-21 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-21. Which of the three tax systems is regressive?

Correct Answer
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The ability-to-pay principle claims that a person should pay taxes according to

Correct Answer
verified

One reason that deadweight losses are so difficult to avoid is that

Correct Answer
verified

Table 12-1 -Refer to Table 12-1. 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. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct Answer
verified

Most economists believe that a corporate income tax affects the stockholders of a corporation but not its employees or customers.

Correct Answer
verified

Which of the following is an important reason for the projected increase in government spending as a percentage of GDP over the next several decades?

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with $212,000 in taxable income?

Correct AnswerverifiedShow Answer

If tax revenues from a tax on fried foods are used to pay for healthcare expenses related to cardio-vascular diseases, the fried foods tax could be justified using the __________.

Correct AnswerverifiedShow Answer

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

Table 12-8 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-8. For an individual with $200,000 in taxable income, which tax schedule has the lowest average marginal tax rate?

Correct AnswerverifiedShow Answer

As the economy's income has grown, the government has

Correct AnswerverifiedShow Answer

Table 12-13 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 12-13. In this economy Tax C exhibits

Correct AnswerverifiedShow Answer

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct AnswerverifiedShow Answer

A transfer payment is a government payment

Correct AnswerverifiedShow Answer

Table 12-25 -Refer to Table 12-25. Which plan illustrates a progressive tax?

Correct AnswerverifiedPlan C illustrates a progressi...View AnswerShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Harry is a single person whose taxable income is $35,000 a year. What happened to his marginal tax rate between 2012 and 2013?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

Correct AnswerverifiedShow Answer

In the United States, the payroll tax is also called a

Correct AnswerverifiedShow Answer

Table 12-21 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-21. Which of the three tax systems is regressive?

Correct AnswerverifiedShow Answer

The ability-to-pay principle claims that a person should pay taxes according to

Correct AnswerverifiedShow Answer

One reason that deadweight losses are so difficult to avoid is that

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1. 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. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct AnswerverifiedShow Answer

Most economists believe that a corporate income tax affects the stockholders of a corporation but not its employees or customers.

Correct AnswerverifiedShow Answer

Which of the following is an important reason for the projected increase in government spending as a percentage of GDP over the next several decades?

Correct AnswerverifiedShow Answer

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Plan C illustrates a progressi...
View Answer

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