Question 1

Table 12-7
 
-Refer to Table 12-7.What is the average tax rate for a person who makes $120,000?

Accepted Answer

A)   25%
B)   35%
C)   45%
D)   60%E) A) and B)
F) B) and C)

Question 2

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

Accepted Answer

A)   $11,581.
B)   $16,181.
C)   $20,000.
D)   $24,881.E) A) and B)
F) All of the above

Question 3

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Livi has taxable income of $78,000,her tax liability is

Accepted Answer

A)   $7,800.
B)   $9,900.
C)   $10,200.
D)   $15,020.E) A) and C)
F) B) and C)

Question 4

The concept that people should pay taxes based on the benefits they receive from government services is called

Accepted Answer

A)   the ability-to-pay principle.
B)   the benefits principle.
C)   horizontal equity.
D)   vertical equity.E) A) and C)
F) B) and C)

Question 5

State and local governments generate revenue from all of the following sources except

Accepted Answer

A)   sales taxes.
B)   the federal government.
C)   corporate income taxes.
D)   customs duties.E) C) and D)
F) All of the above

Question 6

The government finances the budget deficit by

Accepted Answer

A)   borrowing from the public.
B)   borrowing solely from the Federal Reserve Bank.
C)   printing currency in the amount of the budget deficit.
D)   requiring that budget surpluses occur every other year to pay off the deficits.E) B) and C)
F) B) and D)

Question 7

According to the ability-to-pay principle,it is fair for people to pay taxes based on the amount of government services that they receive.

Accepted Answer

A) True 
 B)False

Question 8

If a poor family has three children in public school and a rich family has two children in private school,the ability-to-pay principle would suggest that

Accepted Answer

A)   the poor family should pay more in taxes to pay for public education than the rich family.
B)   the rich family should pay more in taxes to pay for public education than the poor family.
C)   the benefits of private school exceed those of public school.
D)   public schools should be financed by property taxes.E) A) and D)
F) C) and D)

Question 9

Suppose Tyler values a basketball at $20.Jacqui values a basketball at $16.The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball,and the price rises to $17.The deadweight loss from the tax is

Accepted Answer

A)   $1.
B)   $2.
C)   $3.
D)   $6.E) A) and B)
F) A) and C)

Question 10

A tax imposed at every stage of production is a

Accepted Answer

A)   value-added tax.
B)   lump sum tax.
C)   corrective tax.
D)   regressive tax.E) None of the above
F) B) and D)

Question 11

The U.S.tax burden is high compared to many European countries,but is low compared to many other nations in the world.

Accepted Answer

A) True 
 B)False

Question 12

The two types of taxes that are most important to state and local governments as sources of revenue are

Accepted Answer

A)   individual income taxes and corporate income taxes.
B)   sales taxes and individual income taxes.
C)   sales taxes and property taxes.
D)   social insurance taxes and property taxes.E) B) and C)
F) A) and D)

Question 13

The government raises revenue through taxation to pay for the services it provides.

Accepted Answer

A) True 
 B)False

Question 14

Public schools,which educate most students through high school,are paid for primarily by

Accepted Answer

A)   state governments.
B)   local governments.
C)   the federal government.
D)   taxpayers directly.E) B) and C)
F) A) and D)

Question 15

The projected government spending on Social Security,Medicare,and Medicaid as a percentage of GDP is expected to increase from

Accepted Answer

A)   less than one percent in 1950 to over 50 percent in 2070.
B)   less than one percent in 1950 to almost 20 percent in 2070.
C)   10 percent in 1950 to over 50 percent in 2070.
D)   20 percent in 1950 to almost 40 percent in 2070.E) None of the above
F) A) and B)

Question 16

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Mateo has taxable income of $165,000,his average tax rate is

Accepted Answer

A)   26.6%.
B)   26.9%.
C)   27.3%.
D)   28.5%.E) None of the above
F) B) and C)

Question 17

Over the past 100 years,as the U.S.economy's income has grown,

Accepted Answer

A)   tax rates have decreased,while tax revenues have increased.
B)   tax rates have increased,while tax revenues have decreased.
C)   both tax rates and tax revenues have increased.
D)   both tax rates and tax revenues have decreased.E) B) and C)
F) All of the above

Question 18

Table 12-12
United States Income Tax Rates for a Single Individual,2009 and 2010.
 
-Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What is his average tax rate in 2010?

Accepted Answer

A)   15.3%
B)   17.6%
C)   21.3%
D)   24.8%E) A) and B)
F) All of the above

Question 19

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

Accepted Answer

The answer of Most people in the United States believe...

Question 20

Of the following countries,which country's government collects the least amount of tax revenue as a percentage of that country's total income?

Accepted Answer

A)   France
B)   United States
C)   Canada
D)   SwedenE) None of the above
F) A) and B)

Exam 12: The Design of the Tax System

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

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According to the ability-to-pay principle,it is fair for people to pay taxes based on the amount of government services that they receive.

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

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Public schools,which educate most students through high school,are paid for primarily by

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Over the past 100 years,as the U.S.economy's income has grown,

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The government raises revenue through taxation to pay for the services it provides.

Correct AnswerverifiedShow Answer

The concept that people should pay taxes based on the benefits they receive from government services is called

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The government finances the budget deficit by

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The two types of taxes that are most important to state and local governments as sources of revenue are

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The U.S.tax burden is high compared to many European countries,but is low compared to many other nations in the world.

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Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What is his average tax rate in 2010?

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Suppose Tyler values a basketball at $20.Jacqui values a basketball at $16.The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball,and the price rises to $17.The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school,the ability-to-pay principle would suggest that

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State and local governments generate revenue from all of the following sources except

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The projected government spending on Social Security,Medicare,and Medicaid as a percentage of GDP is expected to increase from

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Table 12-7 -Refer to Table 12-7.What is the average tax rate for a person who makes $120,000?

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Of the following countries,which country's government collects the least amount of tax revenue as a percentage of that country's total income?

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Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Livi has taxable income of $78,000,her tax liability is

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A tax imposed at every stage of production is a

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Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Mateo has taxable income of $165,000,his average tax rate is

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

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