Question 1

When the government taxes labor earnings we can expect people to

Accepted Answer

A)   work more so they can keep the same standard of living.
B)   work less and enjoy more leisure.
C)   quit their present job and find one that pays better.
D)   stop working altogether and go on welfare.E) B) and D)
F) B) and C)

Question 2

Who pays a corporate income tax?

Accepted Answer

A)   owners of the corporation
B)   customers of the corporation
C)   workers of the corporation
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 3

Table 12-24 
-Refer to Table 12-24. Would the tax system be justified due to the benefits principle?

Accepted Answer

Based only on the information ...

Question 4

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 D)
F) A) and C)

Question 5

The benefits principle is used to justify

Accepted Answer

A)   sales taxes.
B)   gasoline taxes.
C)   "sin" taxes on cigarettes and alcoholic beverages.
D)   personal income taxes.E) None of the above
F) A) and D)

Question 6

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

Question 7

In 2011, what were the two largest sources of federal tax revenues, and what were the two largest expenses of the federal government?

Accepted Answer

In 2011, individual income taxes and soc...

Question 8

When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax, the tax

Accepted Answer

A)   is considered horizontally equitable.
B)   burden is minimized.
C)   satisfies the benefits principle.
D)   is considered vertically equitable.E) A) and B)
F) A) and C)

Question 9

A payroll tax is also referred to as a social insurance tax.

Accepted Answer

A) True 
 B)False

Question 10

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 11

The U.S. federal government collects about one-half of the taxes in our economy.

Accepted Answer

A) True 
 B)False

Question 12

Table 12-12 
-Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and Charles would be

Accepted Answer

A)   5 percent and 6.7 percent, respectively.
B)   8 percent and 6 percent, respectively.
C)   12 percent and 9 percent, respectively.
D)   13 percent and 10 percent, respectively.E) A) and B)
F) All of the above

Question 13

Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $11. Athos values a lesson at $16, Porthos at $14, and Aramis at $12. Suppose that if the government taxes fencing lessons at $2 each, the price will rise to $13. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)   $4 and tax revenues increase by $6, so there is a deadweight loss of $2.
B)   $6 and tax revenues increase by $6, so there is no deadweight loss.
C)   $5 and tax revenues increase by $6, so there is no deadweight loss.
D)   $5 and tax revenues increase by $4, so there is a deadweight loss of $1.E) A) and B)
F) All of the above

Question 14

Leonard, Sheldon, Raj, and Penny each like to attend comic-book conventions. The price of a ticket to a convention is $50. Leonard values a ticket at $70, Sheldon at $65, Raj at $60, and Penny at $55. Suppose that if the government taxes tickets at $5 each, the price will rise to $55. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)   $50 and tax revenues increase by $20, so there is a deadweight loss of $30.
B)   $30 and tax revenues increase by $20, so there is a deadweight loss of $10.
C)   $20 and tax revenues increase by $20, so there is no deadweight loss.
D)   $50 and tax revenues increase by $20, so there is no deadweight loss.E) A) and D)
F) All of the above

Question 15

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Accepted Answer

A)   The price of cars will rise.
B)   The wages of auto workers will fall.
C)   Owners of car companies (stockholders)  will receive less profit.
D)   Less deadweight loss will occur since corporations are entities and not people who respond to incentives.E) A) and C)
F) All of the above

Question 16

Table 12-11 
-Refer to Table 12-11. If Al has taxable income of $165,000, his marginal tax rate is

Accepted Answer

A)   16%.
B)   24%.
C)   34%.
D)   36%.E) B) and C)
F) None of the above

Question 17

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 oneach scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Accepted Answer

A)   $4, and the deadweight loss comes from both Luke and Leia.
B)   $4, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.
C)   $2, and the deadweight loss comes from both Luke and Leia.
D)   $2, and the deadweight loss comes only from Luke because he does not buy gelato after the tax.E) C) and D)
F) A) and B)

Question 18

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Accepted Answer

A)   30 percent, and the average tax rate is 50 percent.
B)   30 percent, and the average tax rate is 43 percent.
C)   50 percent, and the average tax rate is 40 percent.
D)   50 percent, and the average tax rate is 43 percent.E) A) and B)
F) A) and C)

Question 19

Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Accepted Answer

A)   12.7%
B)   15.0%
C)   16.1%
D)   16.9%E) All of the above
F) A) and D)

Question 20

Which of the following is an example of an excise tax?

Accepted Answer

A)   a tax on the wages that a firm pays its workers
B)   a tax on tobacco
C)   a tax on corporate profits
D)   the portion of federal income taxes earmarked to pay for Social Security and MedicareE) B) and C)
F) A) and D)

Exam 12: The Design of the Tax System

Who pays a corporate income tax?

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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Table 12-24 -Refer to Table 12-24. Would the tax system be justified due to the benefits principle?

Correct Answer
verified
Based only on the information ...
View Answer

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

Correct Answer
verified

A payroll tax is also referred to as a social insurance tax.

Correct Answer
verified

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 Answer
verified

Table 12-11 -Refer to Table 12-11. If Al has taxable income of $165,000, his marginal tax rate is

Correct Answer
verified

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 oneach scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Correct Answer
verified

The benefits principle is used to justify

Correct Answer
verified

The U.S. federal government collects about one-half of the taxes in our economy.

Correct Answer
verified

When the government taxes labor earnings we can expect people to

Correct Answer
verified

In 2011, what were the two largest sources of federal tax revenues, and what were the two largest expenses of the federal government?

Correct Answer
verified
In 2011, individual income taxes and soc...
View Answer

Correct Answer
verified

When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax, the tax

Correct Answer
verified

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Correct Answer
verified

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Correct Answer
verified

Correct Answer
verified

Table 12-12 -Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and Charles would be

Correct Answer
verified

Which of the following is an example of an excise tax?

Correct Answer
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Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Correct Answer
verified

Exam 12: The Design of the Tax System

Who pays a corporate income tax?

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

Table 12-24 -Refer to Table 12-24. Would the tax system be justified due to the benefits principle?

Correct AnswerverifiedBased only on the information ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A payroll tax is also referred to as a social insurance 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

Table 12-11 -Refer to Table 12-11. If Al has taxable income of $165,000, his marginal tax rate is

Correct AnswerverifiedShow Answer

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 oneach scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

The benefits principle is used to justify

Correct AnswerverifiedShow Answer

The U.S. federal government collects about one-half of the taxes in our economy.

Correct AnswerverifiedShow Answer

When the government taxes labor earnings we can expect people to

Correct AnswerverifiedShow Answer

In 2011, what were the two largest sources of federal tax revenues, and what were the two largest expenses of the federal government?

Correct AnswerverifiedIn 2011, individual income taxes and soc...View AnswerShow Answer

Correct AnswerverifiedShow Answer

When a tax is justified on the basis that the taxpayers who pay the tax receive specific government services from payment of the tax, the tax

Correct AnswerverifiedShow Answer

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Correct AnswerverifiedShow Answer

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-12 -Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and Charles would be

Correct AnswerverifiedShow Answer

Which of the following is an example of an excise tax?

Correct AnswerverifiedShow Answer

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Correct AnswerverifiedShow Answer

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Based only on the information ...
View Answer

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In 2011, individual income taxes and soc...
View Answer

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