Question 1

Which of the following types of taxes achieves vertical equity: a proportional tax, regressive tax, and/or progressive tax?

Accepted Answer

proportion...

Question 2

A tax levied on the total amount spent in retail stores is called

Accepted Answer

A)  a sales tax.
B)  an excise tax.
C)  a retail tax.
D)  an income tax.E) B) and C)
F) A) and D)

Question 3

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 4

In the United States, the marginal tax rate on individual federal income tax

Accepted Answer

A)  decreases as income increases.
B)  increases as income increases.
C)  is constant at all income levels.
D)  applies only to payroll taxes.E) A) and B)
F) B) and D)

Question 5

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Accepted Answer

Social Security and Medicare payments wi...

Question 6

​A lump-sum tax does not produce a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 7

Part of the administrative burden of a tax is

Accepted Answer

A)  the money people pay to the government in taxes.
B)  reducing the size of the market because of the tax.
C)  the hassle and expense of filling out tax forms that is imposed on taxpayers who comply with the tax.
D)  the cost of administering programs that use tax revenue.E) None of the above
F) A) and C)

Question 8

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 9

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 10

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Accepted Answer

Horizontal equity is the idea that taxpa...

Question 11

Define the average tax rate.

Accepted Answer

The average tax rate...

Question 12

Suppose a country imposes a lump-sum tax of $5,000 on each individual in the country. What is the marginal income tax rate for an individual who earns $40,000 during the year?

Accepted Answer

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

Question 13

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) All of the above

Question 14

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Accepted Answer

A) True 
 B)False

Question 15

The deadweight loss associated with a tax on a commodity is generated by

Accepted Answer

A)  the consumers who still choose to consume the commodity but pay a higher price that reflects the tax.
B)  the consumers who choose to not consume the commodity that is taxed.
C)  all citizens who are able to use services provided by government.
D)  the consumers who are unable to avoid paying the tax.E) A) and B)
F) All of the above

Question 16

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 17

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

Accepted Answer

Social Security, une...

Question 18

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 19

A family's tax liability is the amount of money it owes in taxes.

Accepted Answer

A) True 
 B)False

Question 20

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

​A lump-sum tax does not produce a deadweight loss.

Correct AnswerverifiedShow Answer

Suppose a country imposes a lump-sum tax of $5,000 on each individual in the country. What is the marginal income tax rate for an individual who earns $40,000 during the year?

Correct AnswerverifiedShow Answer

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Correct AnswerverifiedHorizontal equity is the idea that taxpa...View AnswerShow Answer

Part of the administrative burden of a tax is

Correct AnswerverifiedShow Answer

The deadweight loss associated with a tax on a commodity is generated by

Correct AnswerverifiedShow Answer

A tax levied on the total amount spent in retail stores is called

Correct AnswerverifiedShow Answer

Which of the following types of taxes achieves vertical equity: a proportional tax, regressive tax, and/or progressive tax?

Correct Answerverifiedproportion...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Correct AnswerverifiedShow Answer

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Correct AnswerverifiedSocial Security and Medicare payments wi...View AnswerShow Answer

In the United States, the marginal tax rate on individual federal income tax

Correct AnswerverifiedShow Answer

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A family's tax liability is the amount of money it owes in taxes.

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

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Correct AnswerverifiedShow Answer

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct AnswerverifiedShow Answer

Define the average tax rate.

Correct AnswerverifiedThe average tax rate...View AnswerShow Answer

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

Correct AnswerverifiedSocial Security, une...View AnswerShow Answer

A lump-sum tax does not produce a deadweight loss.

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Horizontal equity is the idea that taxpa...
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proportion...
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Social Security and Medicare payments wi...
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The average tax rate...
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Social Security, une...
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