Question 1

The marginal tax rate for a lump-sum tax

Accepted Answer

A)   is always positive.
B)   is always negative.
C)   is zero.
D)   can take on any value but must be greater than the average tax rate.E) B) and D)
F) None of the above

Question 2

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Accepted Answer

A)   police services are more frequently used in poor neighborhoods.
B)   the wealthy benefit more from services provided by government than the poor.
C)   the poor are more active in political processes.
D)   the poor receive welfare payments.E) B) and C)
F) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A)   National defense and health care are the two largest spending categories for the federal government.
B)   Welfare programs and highways are the two largest spending categories for state and local governments.
C)   Sales taxes and property taxes are the two most important revenue sources for state and local governments.
D)   Corporate income taxes are the largest source of revenue for the federal government.E) A) and B)
F) A) and C)

Question 5

As tax laws become more complex,

Accepted Answer

A)   the administrative burden of taxes will increase.
B)   compliance costs are likely to decrease.
C)   the government will collect more in tax revenue.
D)   the amount of tax revenue lost to tax evasion will decrease.E) B) and D)
F) All of the above

Question 6

If revenue from a gasoline tax is used to build and maintain public roads,the gasoline tax may be justified on the basis of

Accepted Answer

A)   the benefits principle.
B)   the ability-to-pay principle.
C)   vertical equity.
D)   horizontal equity.E) C) and D)
F) B) and D)

Question 7

Medicare has been the focus of many proposed reforms over the last several years because

Accepted Answer

A)   health care costs have risen more rapidly than the cost of other goods and services produced in the economy.
B)   nationalized health care systems are more efficient than private health care systems.
C)   cures for many major diseases are likely to be found in the next few years.
D)   government health care research has found that limiting access to doctors will increase the general health of the population.E) A) and B)
F) A) and C)

Question 8

Among the major spending categories for state and local governments,which of the following statements is correct?

Accepted Answer

A)   The biggest single expenditure is education.
B)   The public welfare category does not include the costs of administering some federal programs.
C)   As a general rule, spending on public schools and public universities exceeds that spent on all other services combined.
D)   Local services such as libraries, police, trash removal, fire protection, and park maintenance, are a very small share of expenditures overall.E) A) and D)
F) A) and C)

Question 9

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
 
-Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her average tax rate between 2009 and 2010?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) All of the above
F) C) and D)

Question 10

Deadweight losses represent the

Accepted Answer

A)   inefficiency that taxes create.
B)   shift in benefit from producers to consumers.
C)   part of consumer and producer surplus that is now revenue to the government.
D)   increase in revenue to the government.E) A) and D)
F) None of the above

Question 11

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.Which tax schedule could be considered a lump-sum tax?

Accepted Answer

A)   Tax Schedule B only
B)   Tax Schedule B and Tax Schedule C
C)   Tax Schedule D only
D)   None of the tax schedules could be considered a lump-sum tax.E) C) and D)
F) None of the above

Question 12

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Accepted Answer

A)   progressive tax.
B)   regressive tax.
C)   distortion-free tax.
D)   proportional tax.E) B) and D)
F) None of the above

Question 13

A person's average tax rate equals her

Accepted Answer

A)   tax obligation divided by her marginal tax rate.
B)   increase in taxes if her income were to rise by $1.
C)   tax obligation divided by her income.
D)   increase in taxes if her marginal tax rate were to rise 1%.E) A) and D)
F) All of the above

Question 14

Specific spending programs that are included under the general category of income security include

Accepted Answer

A)   health programs.
B)   Medicare.
C)   Social Security.
D)   Food Stamps.E) A) and B)
F) All of the above

Question 15

Scenario 12-2
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-2.How much total consumer surplus do Regina and Roger collectively receive from consuming cheesecake?

Accepted Answer

A)   $3
B)   $6
C)   $9
D)   $13E) None of the above
F) B) and D)

Question 16

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

Accepted Answer

A)   5 percent
B)   18 percent
C)   33 percent
D)   50 percentE) B) and D)
F) B) and C)

Question 17

An optimal tax is one that minimizes the

Accepted Answer

A)   external benefit.
B)   total deadweight loss from the tax.
C)   income taxes.
D)   horizontal equity.E) A) and D)
F) B) and C)

Question 18

Tax systems that impose recordkeeping requirements on taxpayers are said to have

Accepted Answer

A)   an auditing burden.
B)   a lower incidence of compliance.
C)   an administrative burden.
D)   a certification requirement.E) C) and D)
F) A) and B)

Question 19

The largest source of income for the federal government is

Accepted Answer

A)   individual income taxes.
B)   corporate taxes.
C)   tariffs.
D)   "sin" taxes on alcohol and cigarettes.E) B) and C)
F) C) and D)

Question 20

Which of the following is not true about government spending on national defense?

Accepted Answer

A)   It is the second-largest spending category for the U.S. federal government.
B)   It includes salaries of military personnel.
C)   It fluctuates over time as the political climate changes.
D)   It is not financed with tax revenue.E) All of the above
F) A) and D)

Exam 12: The Design of the Tax System.

Medicare has been the focus of many proposed reforms over the last several years because

Correct Answer
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The largest source of income for the federal government is

Correct Answer
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Specific spending programs that are included under the general category of income security include

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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Deadweight losses represent the

Correct Answer
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A person's average tax rate equals her

Correct Answer
verified

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

Correct Answer
verified

Among the major spending categories for state and local governments,which of the following statements is correct?

Correct Answer
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Correct Answer
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If revenue from a gasoline tax is used to build and maintain public roads,the gasoline tax may be justified on the basis of

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her average tax rate between 2009 and 2010?

Correct Answer
verified

The marginal tax rate for a lump-sum tax

Correct Answer
verified

Tax systems that impose recordkeeping requirements on taxpayers are said to have

Correct Answer
verified

As tax laws become more complex,

Correct Answer
verified

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Correct Answer
verified

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Correct Answer
verified

Which of the following is not true about government spending on national defense?

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

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.Which tax schedule could be considered a lump-sum tax?

Correct Answer
verified

An optimal tax is one that minimizes the

Correct Answer
verified

Exam 12: The Design of the Tax System.

Medicare has been the focus of many proposed reforms over the last several years because

Correct AnswerverifiedShow Answer

The largest source of income for the federal government is

Correct AnswerverifiedShow Answer

Specific spending programs that are included under the general category of income security include

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Deadweight losses represent the

Correct AnswerverifiedShow Answer

A person's average tax rate equals her

Correct AnswerverifiedShow Answer

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

Correct AnswerverifiedShow Answer

Among the major spending categories for state and local governments,which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If revenue from a gasoline tax is used to build and maintain public roads,the gasoline tax may be justified on the basis of

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her average tax rate between 2009 and 2010?

Correct AnswerverifiedShow Answer

The marginal tax rate for a lump-sum tax

Correct AnswerverifiedShow Answer

Tax systems that impose recordkeeping requirements on taxpayers are said to have

Correct AnswerverifiedShow Answer

As tax laws become more complex,

Correct AnswerverifiedShow Answer

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Correct AnswerverifiedShow Answer

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Correct AnswerverifiedShow Answer

Which of the following is not true about government spending on national defense?

Correct AnswerverifiedShow Answer

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

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.Which tax schedule could be considered a lump-sum tax?

Correct AnswerverifiedShow Answer

An optimal tax is one that minimizes the

Correct AnswerverifiedShow Answer

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