Question 1

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.Because total consumer surplus has

Accepted Answer

A)   fallen by more than the tax revenue, the tax has a deadweight loss
B)   fallen by less than the tax revenue, the tax has no dead weight loss.
C)   fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
D)   increased by less than the tax revenue, the tax has a deadweight loss.E) All of the above
F) C) and D)

Question 2

In the 1980s,President Ronald Reagan argued that high tax rates distorted economic incentives to work and save.In the 1990s,President Bill Clinton argued that the rich were not paying their fair share of taxes.Which of the following statements best summarizes the economic theories behind the differing philosophies?

Accepted Answer

A)   President Reagan was concerned about vertical equity, whereas President Clinton was concerned about horizontal equity.
B)   President Reagan was concerned about average tax rates, whereas President Clinton was concerned about horizontal equity.
C)   President Reagan was concerned about marginal tax rates, whereas President Clinton was concerned about vertical equity.
D)   None of the above is correct.E) C) and D)
F) A) and C)

Question 3

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

Question 4

Table 12-17
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-17.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) A) and D)
F) A) and C)

Question 5

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Accepted Answer

A)   increases in life expectancy.
B)   people becoming eligible for Social Security benefits at an earlier age.
C)   increases in birth rates among teenagers and the poor.
D)   falling payroll tax receipts.E) A) and C)
F) A) and B)

Question 6

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 progressive?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   All of the tax systems are progressive.E) A) and D)
F) A) and B)

Question 7

Table 12-11
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 12-11.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) B) and C)
F) A) and D)

Question 8

Suppose that in 2020 the average citizen's federal tax bill is $12,466,and total federal spending is $10,824 per person.In 2020,the federal government will have

Accepted Answer

A)   a budget surplus.
B)   a budget deficit.
C)   horizontal equity.
D)   vertical equity.E) B) and C)
F) A) and D)

Question 9

Scenario 12-4. A taxpayer faces the following tax rates on her income:
 
-Refer to Scenario 12-4.At what level of income would the taxpayer's marginal tax rate be 30 percent and her average tax rate be 25 percent?

Accepted Answer

A)   $42,000
B)   $57,000
C)   $60,000
D)   $80,000E) None of the above
F) B) and C)

Question 10

Vertical equity states that taxpayers with a greater ability to pay taxes should

Accepted Answer

A)   contribute a decreasing proportion of each increment in income to taxes.
B)   contribute a larger amount than those with a lesser ability to pay.
C)   be less subject to administrative burdens of a tax.
D)   be less subject to tax distortions that lead to deadweight losses.E) A) and B)
F) C) and D)

Question 11

The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Karen paid $6,000 in taxes.What were her marginal and average tax rates?

Accepted Answer

A)   20 percent and 12 percent, respectively
B)   20 percent and 15 percent, respectively
C)   10 percent and 12 percent respectively
D)   10 percent and 15 percent respectivelyE) A) and B)
F) A) and D)

Question 12

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 2009?

Accepted Answer

A)   17.6%
B)   20.5%
C)   21.3%
D)   26.2%E) B) and C)
F) B) and D)

Question 13

If all taxpayers pay the same percentage of income in taxes,the tax system is progressive.

Accepted Answer

A) True 
 B)False

Question 14

Table 12-1
 
-Refer to Table 12-1.If Betina has $170,000 in taxable income,her average tax rate is

Accepted Answer

A)   23.8%.
B)   24.3%.
C)   25.9%.
D)   28.0%.E) All of the above
F) A) and C)

Question 15

Suppose that in 2012 the average citizen's federal tax bill is $11,888 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 $2,109.
B)   a per person budget deficit of $2,109.
C)   horizontal equity.
D)   vertical equity.E) C) and D)
F) B) and C)

Question 16

One reason that deadweight losses are so difficult to avoid is that

Accepted Answer

A)   taxes affect the decisions that people make.
B)   income taxes are not paid by everyone.
C)   consumption taxes must be universally applied to all commodities.
D)   the administrative burden is hard to calculate.E) B) and C)
F) A) and D)

Question 17

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Accepted Answer

A)   a progressive tax
B)   a proportional tax
C)   a regressive tax
D)   a lump-sum taxE) All of the above
F) B) and C)

Question 18

Scenario 12-1
Skip places a $20 value on a bottle of wine, and Walt places a $17 value on it. The equilibrium price for a bottle of wine is $15.
-Refer to Scenario 12-1.Suppose the government levies a tax of $3 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $18.How much tax revenue is collected?

Accepted Answer

A)   $0
B)   $2
C)   $3
D)   $6E) B) and C)
F) A) and B)

Question 19

Zoe,Chloe,and Brody each like to read novels.The current bestseller costs $11.Zoe values it at $16,Chloe at $14,and Brody at $12.Suppose that if the government taxes books at $2 each,the selling price will rise to $13.A consequence of the tax is that

Accepted Answer

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

Question 20

Temporary Assistance for Needy Families (TANF) falls into which spending category?

Accepted Answer

A)   Medicare
B)   income security
C)   guaranteed social eligibility
D)   Social SecurityE) All of the above
F) None of the above

Exam 12: The Design of the Tax System.

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 2009?

Correct Answer
verified

Correct Answer
verified

Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her average tax rate is

Correct Answer
verified

Table 12-11 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 12-11.For an individual with $200,000 in taxable income,which tax schedule has the lowest average marginal tax rate?

Correct Answer
verified

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct Answer
verified

Correct Answer
verified

Zoe,Chloe,and Brody each like to read novels.The current bestseller costs $11.Zoe values it at $16,Chloe at $14,and Brody at $12.Suppose that if the government taxes books at $2 each,the selling price will rise to $13.A consequence of the tax is that

Correct Answer
verified

Table 12-17 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-17.Which of the three tax systems is regressive?

Correct Answer
verified

One reason that deadweight losses are so difficult to avoid is that

Correct Answer
verified

Correct Answer
verified

Scenario 12-4. A taxpayer faces the following tax rates on her income: -Refer to Scenario 12-4.At what level of income would the taxpayer's marginal tax rate be 30 percent and her average tax rate be 25 percent?

Correct Answer
verified

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Correct Answer
verified

Suppose that in 2020 the average citizen's federal tax bill is $12,466,and total federal spending is $10,824 per person.In 2020,the federal government will have

Correct Answer
verified

Vertical equity states that taxpayers with a greater ability to pay taxes should

Correct Answer
verified

When the government taxes labor earnings we can expect people to

Correct Answer
verified

If all taxpayers pay the same percentage of income in taxes,the tax system is progressive.

Correct Answer
verified

Temporary Assistance for Needy Families (TANF) falls into which spending category?

Correct Answer
verified

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 progressive?

Correct Answer
verified

Suppose that in 2012 the average citizen's federal tax bill is $11,888 per person,and total federal spending is $13,997 per person.In 2012,the federal government will have

Correct Answer
verified

The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Karen paid $6,000 in taxes.What were her marginal and average tax rates?

Correct Answer
verified

Exam 12: The Design of the Tax System.

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 2009?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Betina has $170,000 in taxable income,her average tax rate is

Correct AnswerverifiedShow Answer

Table 12-11 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 12-11.For an individual with $200,000 in taxable income,which tax schedule has the lowest average marginal tax rate?

Correct AnswerverifiedShow Answer

The most common explanation for Social Security payments accounting for a larger share of federal government expenditures is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Zoe,Chloe,and Brody each like to read novels.The current bestseller costs $11.Zoe values it at $16,Chloe at $14,and Brody at $12.Suppose that if the government taxes books at $2 each,the selling price will rise to $13.A consequence of the tax is that

Correct AnswerverifiedShow Answer

Table 12-17 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-17.Which of the three tax systems is regressive?

Correct AnswerverifiedShow Answer

One reason that deadweight losses are so difficult to avoid is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Scenario 12-4. A taxpayer faces the following tax rates on her income: -Refer to Scenario 12-4.At what level of income would the taxpayer's marginal tax rate be 30 percent and her average tax rate be 25 percent?

Correct AnswerverifiedShow Answer

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Correct AnswerverifiedShow Answer

Suppose that in 2020 the average citizen's federal tax bill is $12,466,and total federal spending is $10,824 per person.In 2020,the federal government will have

Correct AnswerverifiedShow Answer

Vertical equity states that taxpayers with a greater ability to pay taxes should

Correct AnswerverifiedShow Answer

When the government taxes labor earnings we can expect people to

Correct AnswerverifiedShow Answer

If all taxpayers pay the same percentage of income in taxes,the tax system is progressive.

Correct AnswerverifiedShow Answer

Temporary Assistance for Needy Families (TANF) falls into which spending category?

Correct AnswerverifiedShow Answer

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 progressive?

Correct AnswerverifiedShow Answer

Suppose that in 2012 the average citizen's federal tax bill is $11,888 per person,and total federal spending is $13,997 per person.In 2012,the federal government will have

Correct AnswerverifiedShow Answer

The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Karen paid $6,000 in taxes.What were her marginal and average tax rates?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified