Question 1

Briefly describe why taxes create deadweight loss.

Accepted Answer

When the government imposes a ...

Question 2

The administrative burden of any tax system is part of the inefficiency it creates.

Accepted Answer

A) True 
 B)False

Question 3

A budget surplus occurs when government receipts fall short of government spending.

Accepted Answer

A) True 
 B)False

Question 4

One tax system is less efficient than another if it

Accepted Answer

A)  places a lower tax burden on lower-income families than on higher-income families.
B)  places a higher tax burden on lower-income families than on higher-income families.
C)  raises the same amount of revenue at a higher cost to taxpayers.
D)  raises less revenue at a lower cost to taxpayers.E) None of the above
F) C) and D)

Question 5

Give an example of a tax system where the marginal tax rate would equal the average tax rate.

Accepted Answer

The marginal tax rate would equal the av...

Question 6

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Accepted Answer

A lump-sum tax is the most efficient tax...

Question 7

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Accepted Answer

The marginal tax rate would be 20 percen...

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A budget surplus occurs when government receipts exceed government spending.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 12-2
Suppose Regina and Ben receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $13 for it. Ben would be willing to pay $17 for his first slice, $14 for his second slice, and $10 for his third slice. The current market price is $10 per slice.
-Refer to Scenario 12-2. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $14. How much tax revenue will be generated from sales to Regina and Ben?

Accepted Answer

A)  $0
B)  $17
C)  $3
D)  $14E) C) and D)
F) All of the above

Question 11

Scenario 12-3
A taxpayer faces the following tax rates on her income:
​
 20 percent of the first  $40,000\$ 40,000$40,000  of her income;
30 percent of all her income above  $40,000\$ 40,000$40,000 .
-Refer to Scenario 12-3. The taxpayer faces

Accepted Answer

A)  an average tax rate of 30 percent when her income is $40,000.
B)  an average tax rate of 23 percent when her income is $60,000.
C)  a marginal tax rate of 30 percent when her income rises from $20,000 to $20,001.
D)  a marginal tax rate of 50 percent when her income rises from $40,000 to $60,000. E) B) and D)
F) B) and C)

Question 12

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

Question 13

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

Question 14

​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Accepted Answer

A) True 
 B)False

Question 15

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Accepted Answer

A) True 
 B)False

Question 16

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Accepted Answer

A)  an excise tax that conforms to the benefits principle.
B)  an excise tax that violates the benefits principle.
C)  a lump-sum tax that conforms to the benefits principle.
D)  a lump-sum tax that violates the benefits principle.E) B) and D)
F) B) and C)

Question 17

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Accepted Answer

According to Figure 1, in 1913, the fede...

Question 18

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

Question 20

The tax that generates the most revenue for state and local government is the

Accepted Answer

A)  corporate income tax.
B)  sales tax.
C)  individual income tax.
D)  property tax.E) A) and D)
F) None of the above

Exam 12: The Design of the Tax System

Correct Answer
verified

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct Answer
verified
The marginal tax rate would be 20 percen...
View Answer

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

Correct Answer
verified

The administrative burden of any tax system is part of the inefficiency it creates.

Correct Answer
verified

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

Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

A budget surplus occurs when government receipts fall short of government spending.

Correct Answer
verified

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Correct Answer
verified
According to Figure 1, in 1913, the fede...
View Answer

Give an example of a tax system where the marginal tax rate would equal the average tax rate.

Correct Answer
verified
The marginal tax rate would equal the av...
View Answer

The tax that generates the most revenue for state and local government is the

Correct Answer
verified

Briefly describe why taxes create deadweight loss.

Correct Answer
verified
When the government imposes a ...
View Answer

One tax system is less efficient than another if it

Correct Answer
verified

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Correct Answer
verified

Scenario 12-3 A taxpayer faces the following tax rates on her income: 20 percent of the first $\$ 40,000$ of her income; 30 percent of all her income above $\$ 40,000$ . -Refer to Scenario 12-3. The taxpayer faces

Correct Answer
verified

A budget surplus occurs when government receipts exceed government spending.

Correct Answer
verified

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Correct Answer
verified

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Correct Answer
verified
A lump-sum tax is the most efficient tax...
View Answer

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

Correct Answer
verified

A country is using a proportional tax when

Correct Answer
verified

Exam 12: The Design of the Tax System

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct AnswerverifiedThe marginal tax rate would be 20 percen...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The administrative burden of any tax system is part of the inefficiency it creates.

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

​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A budget surplus occurs when government receipts fall short of government spending.

Correct AnswerverifiedShow Answer

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Correct AnswerverifiedAccording to Figure 1, in 1913, the fede...View AnswerShow Answer

Give an example of a tax system where the marginal tax rate would equal the average tax rate.

Correct AnswerverifiedThe marginal tax rate would equal the av...View AnswerShow Answer

The tax that generates the most revenue for state and local government is the

Correct AnswerverifiedShow Answer

Briefly describe why taxes create deadweight loss.

Correct AnswerverifiedWhen the government imposes a ...View AnswerShow Answer

One tax system is less efficient than another if it

Correct AnswerverifiedShow Answer

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Correct AnswerverifiedShow Answer

Scenario 12-3 A taxpayer faces the following tax rates on her income: ​ 20 percent of the first $40,000\$ 40,000$40,000 of her income; 30 percent of all her income above $40,000\$ 40,000$40,000 . -Refer to Scenario 12-3. The taxpayer faces

Correct AnswerverifiedShow Answer

A budget surplus occurs when government receipts exceed government spending.

Correct AnswerverifiedShow Answer

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Correct AnswerverifiedShow Answer

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Correct AnswerverifiedA lump-sum tax is the most efficient tax...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A country is using a proportional tax when

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The marginal tax rate would be 20 percen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
According to Figure 1, in 1913, the fede...
View Answer

Correct Answer
verified
The marginal tax rate would equal the av...
View Answer

Correct Answer
verified

Correct Answer
verified
When the government imposes a ...
View Answer

Correct Answer
verified

Correct Answer
verified

Scenario 12-3 A taxpayer faces the following tax rates on her income: 20 percent of the first $\$ 40,000$ of her income; 30 percent of all her income above $\$ 40,000$ . -Refer to Scenario 12-3. The taxpayer faces

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A lump-sum tax is the most efficient tax...
View Answer

Correct Answer
verified

Correct Answer
verified