Question 1

Sue earns income of $80,000 per year.Her average tax rate is 50 percent.Sue paid $5,000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000?

Accepted Answer

A)   6.25 percent and 50.00 percent, respectively
B)   10.00 percent and 70.00 percent, respectively
C)   16.67 percent and 60.00 percent, respectively
D)   16.67 percent and 70.00 percent, respectivelyE) C) and D)
F) All of the above

Question 2

Which of the following statements is not correct?

Accepted Answer

A)   A gasoline tax can be an example of a tax that uses the benefits principle.
B)   A progressive tax attempts to achieve vertical equity.
C)   A progressive tax can be an example of the ability-to-pay principle.
D)   A regressive tax attempts to achieve vertical equity.E) All of the above
F) A) and C)

Question 3

When the marginal tax rate exceeds the average tax rate,the tax is

Accepted Answer

A)   proportional.
B)   regressive.
C)   non-egalitarian.
D)   progressive.E) B) and C)
F) All of the above

Question 4

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Mateo has taxable income of $165,000,his marginal tax rate is

Accepted Answer

A)   16%.
B)   24%.
C)   34%.
D)   36%.E) A) and D)
F) B) and C)

Question 5

Nancy paid a tax of $0.50 on the last dollar she earned in 1999.Nancy's marginal tax rate in 1999 was

Accepted Answer

A)   more than 50 percent.
B)   exactly 50 percent.
C)   higher than her average tax rate.
D)   lower than her average tax rate.E) A) and B)
F) All of the above

Question 6

A value-added tax or VAT is a tax on

Accepted Answer

A)   retail purchases only.
B)   wholesale purchases only.
C)   pollution.
D)   all stages of production of a good.E) None of the above
F) A) and C)

Question 7

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) All of the above
F) None of the above

Question 8

Less economically developed countries such as India and Pakistan usually have low tax burdens.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Mateo has taxable income of $165,000,his average tax rate is

Accepted Answer

A)   26.6%.
B)   26.9%.
C)   27.3%.
D)   28.5%.E) C) and D)
F) A) and B)

Question 11

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 12

Table 12-3
 
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing.Suppose the government imposes a tax of $12 on skiing,which raises the price of a weekend ski pass to $57.What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)   $41.
B)   $95.
C)   $144.
D)   $185.E) None of the above
F) B) and D)

Question 13

Public schools,which educate most students through high school,are paid for primarily by

Accepted Answer

A)   state governments.
B)   local governments.
C)   the federal government.
D)   taxpayers directly.E) None of the above
F) All of the above

Question 14

Country A's tax system is more efficient than Country B's tax system if

Accepted Answer

A)   Country A collects less tax revenue than Country B, and the cost to taxpayers is the same in both countries.
B)   Country A collects more tax revenue than Country B, even though the cost to taxpayers is greater in Country A than in Country B.
C)   the same amount of revenue is raised in both countries, but the cost to taxpayers is smaller in Country A than in Country B.
D)   the same amount of revenue is raised in both countries, but the taxes are collected in a shorter amount of time in Country A than in Country B.E) A) and D)
F) All of the above

Question 15

If a government sells debt to help meet its expenditures,then the government has a

Accepted Answer

A)   budget surplus. Other things the same, the surplus rises if government expenditures rise.
B)   budget surplus. Other things the same, the surplus rises if government expenditures fall.
C)   budget deficit. Other things the same, the deficit rises if government expenditures rise.
D)   budget deficit. Other things the same the deficit rises if government expenditures fallE) A) and B)
F) C) and D)

Question 16

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Livi has taxable income of $78,000,her average tax rate is

Accepted Answer

A)   18.7%.
B)   19.3%.
C)   20.1%.
D)   34.0%.E) A) and B)
F) A) and D)

Question 17

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

Question 18

Suppose an excise tax is imposed on luxury boats and yachts.Economists argue that such a tax

Accepted Answer

A)   is sure to be vertically equitable, since buyers of luxury boats and yachts are wealthy.
B)   entails no deadweight loss as long as buyers of boats and yachts can easily substitute one luxury good for another.
C)   violates the benefits principle of taxation.
D)   may burden workers in the luxury-boat-and-yacht industry more than it burdens the buyers of luxury boats and yachts.E) A) and D)
F) A) and C)

Question 19

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Accepted Answer

A) True 
 B)False

Question 20

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System.

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Mateo has taxable income of $165,000,his marginal tax rate is

Correct Answer
verified

The largest category of federal government spending is growing because

Correct Answer
verified

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

Correct Answer
verified

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Mateo has taxable income of $165,000,his average tax rate is

Correct Answer
verified

If a government sells debt to help meet its expenditures,then the government has a

Correct Answer
verified

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

Correct Answer
verified

Sue earns income of $80,000 per year.Her average tax rate is 50 percent.Sue paid $5,000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000?

Correct Answer
verified

Public schools,which educate most students through high school,are paid for primarily by

Correct Answer
verified

Suppose an excise tax is imposed on luxury boats and yachts.Economists argue that such a tax

Correct Answer
verified

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Correct Answer
verified

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Correct Answer
verified

Nancy paid a tax of $0.50 on the last dollar she earned in 1999.Nancy's marginal tax rate in 1999 was

Correct Answer
verified

When the marginal tax rate exceeds the average tax rate,the tax is

Correct Answer
verified

A value-added tax or VAT is a tax on

Correct Answer
verified

Country A's tax system is more efficient than Country B's tax system if

Correct Answer
verified

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Livi has taxable income of $78,000,her average tax rate is

Correct Answer
verified

Less economically developed countries such as India and Pakistan usually have low tax burdens.

Correct Answer
verified

Correct Answer
verified

Exam 12: The Design of the Tax System.

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Mateo has taxable income of $165,000,his marginal tax rate is

Correct AnswerverifiedShow Answer

The largest category of federal government spending is growing because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Mateo has taxable income of $165,000,his average tax rate is

Correct AnswerverifiedShow Answer

If a government sells debt to help meet its expenditures,then the government has a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year.Her average tax rate is 50 percent.Sue paid $5,000 in taxes on the first $30,000 she earned.What was the marginal tax rate on the first $30,000 she earned,and what was the marginal tax rate on the remaining $50,000?

Correct AnswerverifiedShow Answer

Public schools,which educate most students through high school,are paid for primarily by

Correct AnswerverifiedShow Answer

Suppose an excise tax is imposed on luxury boats and yachts.Economists argue that such a tax

Correct AnswerverifiedShow Answer

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Correct AnswerverifiedShow Answer

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Individual income taxes generate roughly 25% of the tax revenue for the federal government.

Correct AnswerverifiedShow Answer

Nancy paid a tax of $0.50 on the last dollar she earned in 1999.Nancy's marginal tax rate in 1999 was

Correct AnswerverifiedShow Answer

When the marginal tax rate exceeds the average tax rate,the tax is

Correct AnswerverifiedShow Answer

A value-added tax or VAT is a tax on

Correct AnswerverifiedShow Answer

Country A's tax system is more efficient than Country B's tax system if

Correct AnswerverifiedShow Answer

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Livi has taxable income of $78,000,her average tax rate is

Correct AnswerverifiedShow Answer

Less economically developed countries such as India and Pakistan usually have low tax burdens.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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