Question 1

Taxes create deadweight loss when they

Accepted Answer

A)   distort behavior.
B)   cause the price of the product to increase.
C)   don't raise sufficient government revenue.
D)   cannot be computed easily.E) A) and B)
F) A) and C)

Question 2

The largest category of federal government spending is growing because

Accepted Answer

A)   the U.S.must spend more on national defense due to the war against terror.
B)   the elderly population is increasing due to rising life expectancies.
C)   expenditures on space exploration have increased dramatically.
D)   health care costs are rising faster than any other service in the U.S.E) A) and D)
F) C) and D)

Question 3

A person's tax liability refers to

Accepted Answer

A)   the percentage of income that a person must pay in taxes.
B)   the amount of tax a person owes to the government.
C)   the amount of tax the government is required to refund to each person.
D)   deductions that can be legally subtracted from a person's income each year.E) A) and B)
F) B) and C)

Question 4

In 2007,state and local government education spending was more than five times highway spending.

Accepted Answer

A) True 
 B)False

Question 5

When taxes are imposed on a commodity,

Accepted Answer

A)   there is never a deadweight loss.
B)   some consumers alter their consumption by not purchasing the taxed commodity.
C)   tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption.
D)   the taxes do not distort incentives.E) B) and C)
F) A) and B)

Question 6

Suppose that in 2015 the average citizen's federal tax bill is $11,987,and total federal spending is $12,294 per person.In 2015,the federal government will have

Accepted Answer

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

Question 7

The top 1% of income earners

Accepted Answer

A)   makes 18.8 percent of all income and pays 28.3 percent of all taxes
B)   makes 27.6 percent of all income and pays 18.1 percent of all taxes.
C)   makes 55.1 percent of all income and pays 68.7 percent of all taxes.
D)   makes 68.7 percent of all income and pays 55.1 percent of all taxes.E) All of the above
F) B) and C)

Question 8

As a person's or family's income rises,the marginal federal income tax rate __________.

Accepted Answer

The answer of As a person's or family's income rises,the...

Question 9

Rank the following state and local government expenditure categories from smallest to largest.

Accepted Answer

A)   education,public welfare,highways
B)   education,highways,public welfare
C)   highways,public welfare,education
D)   public welfare,education,highways.E) B) and D)
F) A) and D)

Question 10

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Accepted Answer

A)   national defense and income security (welfare) programs
B)   national defense and Medicare
C)   Social Security and public schools
D)   Social Security and MedicareE) B) and C)
F) A) and D)

Question 11

Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Accepted Answer

A) True 
 B)False

Question 12

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Accepted Answer

A)   the ability-to-pay principle.
B)   the equity principle.
C)   the benefits principle.
D)   regressive.E) None of the above
F) A) and B)

Question 13

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

Question 14

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 15

Table 12-4
 
-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $4.00 to $6.00.Total consumer surplus will fall from

Accepted Answer

A)   $6 to $3.
B)   $7 to $4.
C)   $6 to $2.
D)   $5 to $3.E) A) and B)
F) A) and C)

Question 16

Refer to Table 12-2.Does the tax system achieve vertical equity?

Accepted Answer

Yes.People with high...

Question 17

A payroll tax is a tax on

Accepted Answer

A)   the wages that a firm pays its workers.
B)   earned and unearned income.
C)   specific goods like gasoline and cigarettes.
D)   corporate profits.E) B) and C)
F) A) and D)

Question 18

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

Question 19

The resources that a taxpayer devotes to complying with the tax laws are a type of

Accepted Answer

A)   consumption tax.
B)   value-added tax.
C)   deadweight loss.
D)   producer surplus.E) All of the above
F) A) and B)

Question 20

Define the average tax rate.

Accepted Answer

The average tax rate...

Exam 12: The Design of the Tax System

Rank the following state and local government expenditure categories from smallest to largest.

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Suppose that in 2015 the average citizen's federal tax bill is $11,987,and total federal spending is $12,294 per person.In 2015,the federal government will have

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Table 12-4 -Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $4.00 to $6.00.Total consumer surplus will fall from

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?

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When taxes are imposed on a commodity,

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Refer to Table 12-2.Does the tax system achieve vertical equity?

Correct AnswerverifiedYes.People with high...View AnswerShow Answer

As a person's or family's income rises,the marginal federal income tax rate __________.

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The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct AnswerverifiedShow Answer

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Correct AnswerverifiedShow Answer

The revenue that the federal government collects from payroll taxes is earmarked to pay for

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

A payroll tax is a tax on

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?

Correct AnswerverifiedShow Answer

Taxes create deadweight loss when they

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The top 1% of income earners

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In 2007,state and local government education spending was more than five times highway spending.

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Define the average tax rate.

Correct AnswerverifiedThe average tax rate...View AnswerShow Answer

The largest category of federal government spending is growing because

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Most people agree that taxes should impose as small a cost on society as possible and that the burden of taxes should be distributed fairly.

Correct AnswerverifiedShow Answer

A person's tax liability refers to

Correct AnswerverifiedShow Answer

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Yes.People with high...
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The average tax rate...
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