Question 1

If we want to gauge the sacrifice made by a taxpayer,we should use the

Accepted Answer

A)   average tax rate.
B)   marginal tax rate.
C)   lump-sum tax rate.
D)   sales tax rate.E) All of the above
F) A) and D)

Question 2

Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country.What is the average 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 average tax rate cannot be determined without knowing the entire tax schedule.E) C) and D)
F) All of the above

Question 3

Table 12-6
 
-Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Accepted Answer

A)   30%
B)   40%
C)   50%
D)   60%E) B) and C)
F) A) and D)

Question 4

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 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) All of the above
F) None of the above

Question 5

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Accepted Answer

A)   housing credit programs.
B)   farm support programs.
C)   funding for the National Institutes of Health.
D)   the federal court system.E) None of the above
F) C) and D)

Question 6

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 7

According to the benefits principle,it is fair for people to pay taxes based on the benefits they receive from the government.

Accepted Answer

A) True 
 B)False

Question 8

One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that in 2012 the average citizen's federal tax bill is $14,888 per person,and total federal spending is $13,997 per person.In 2012,the federal government will have

Accepted Answer

A)   a per person budget surplus of $891.
B)   a per person budget deficit of $891.
C)   horizontal equity.
D)   vertical equity.E) None of the above
F) C) and D)

Question 10

Federal government spending on income security rose from 13 percent to 15 percent of total federal spending between 2006 and 2009.The most likely cause of this increase is

Accepted Answer

A)   the recession and consequent increase in the number of unemployed citizens.
B)   the shift in power from Republicans to Democrats.
C)   wasteful spending due to an abundance of resources.
D)   an increase in life expectancies.E) A) and C)
F) All of the above

Question 11

In many cases,tax loopholes are designed by Congress to

Accepted Answer

A)   give special treatment to specific types of behavior.
B)   reduce the overall administrative burden of the tax system.
C)   raise revenues for special projects.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 12

Tax evasion is illegal,but tax avoidance is legal.

Accepted Answer

A) True 
 B)False

Question 13

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

Accepted Answer

A)   national defense
B)   Social Security
C)   income security
D)   farm support programsE) None of the above
F) B) and C)

Question 14

Table 12-7
 
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

Accepted Answer

A)   9.25%
B)   20%
C)   25%
D)   40%E) B) and C)
F) A) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Table 12-13
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-13 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) B) and D)
F) A) and C)

Question 17

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

Accepted Answer

A)   18.5%.
B)   20.2%.
C)   21.8%.
D)   25.0%.E) A) and B)
F) All of the above

Question 18

Which of the following is not an administrative burden of our tax system?

Accepted Answer

A)   government resources used to enforce tax laws
B)   keeping tax records throughout the year
C)   paying the taxes owed
D)   time spent in April filling out formsE) A) and B)
F) None of the above

Question 19

In 2009,the average American paid approximately how much to the federal government in taxes?

Accepted Answer

A)   $1,900
B)   $4,500
C)   $6,800
D)   $8,500E) A) and C)
F) A) and B)

Question 20

A mortgage interest deduction would be considered

Accepted Answer

A)   tax evasion.
B)   a subsidy to the poor.
C)   a deduction that benefits all members of society equally.
D)   a tax loophole.E) All of the above
F) B) and D)

Exam 12: The Design of the Tax System.

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

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Table 12-13 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-13 Which of the three tax systems is regressive?

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

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Table 12-6 -Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

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According to the benefits principle,it is fair for people to pay taxes based on the benefits they receive from the government.

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One reason for the projected increase,over the next several decades,in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Correct AnswerverifiedShow Answer

In many cases,tax loopholes are designed by Congress to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most analysts expect the largest federal spending category to continue to grow in importance for many years into the future.What category of spending is this?

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Tax evasion is illegal,but tax avoidance is legal.

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A mortgage interest deduction would be considered

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Federal government spending on income security rose from 13 percent to 15 percent of total federal spending between 2006 and 2009.The most likely cause of this increase is

Correct AnswerverifiedShow Answer

Part of the administrative burden of a tax is

Correct AnswerverifiedShow Answer

The "other" category of federal spending consists of many less expensive functions of government,including all of the following except

Correct AnswerverifiedShow Answer

If we want to gauge the sacrifice made by a taxpayer,we should use the

Correct AnswerverifiedShow Answer

In 2009,the average American paid approximately how much to the federal government in taxes?

Correct AnswerverifiedShow Answer

Suppose that in 2012 the average citizen's federal tax bill is $14,888 per person,and total federal spending is $13,997 per person.In 2012,the federal government will have

Correct AnswerverifiedShow Answer

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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Which of the following is not an administrative burden of our tax system?

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Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $37,000?

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