Question 1

The U.S.income tax

Accepted Answer

A)  discourages saving.
B)  encourages saving.
C)  has no effect on saving.
D)  will reduce the administrative burden of taxation.E) B) and C)
F) C) and D)

Question 2

Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake. Joan would be willing to purchase only one slice and would pay up to $6 for it. Jim would be willing to pay $9 for his first slice, $7 for his second slice, and $3 for his third slice. The current market price is $3 per slice.
-Refer to Scenario 12-1.Assume that the government places a $2 tax on each slice of cheesecake and that the new equilibrium price is $5.What is the deadweight loss of the tax?

Accepted Answer

A)  zero
B)  $3
C)  $6
D)  $8E) A) and D)
F) B) and D)

Question 3

The most efficient tax possible is a

Accepted Answer

A)  marginal income tax.
B)  lump-sum tax.
C)  consumption tax.
D)  corporate profit tax.E) C) and D)
F) A) and B)

Question 4

The U.S.federal government collects what percent of the taxes in the economy?

Accepted Answer

A)  10
B)  40
C)  50
D)  67E) A) and B)
F) B) and D)

Question 5

Kyle places a $10 value on a glass of red wine,and Keith places an $8 value on it.If there is no tax on glasses of red wine,the price of a glass of red wine reflects the cost of making it.The equilibrium price for a glass of red wine is $6.Suppose the government levies a tax of $2 on each glass of red wine,and the equilibrium price of a glass of red wine increases to $8.What is total consumer surplus after the tax is levied?

Accepted Answer

A)  $0
B)  $2
C)  $4
D)  $6E) A) and B)
F) A) and C)

Question 6

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Accepted Answer

A) True 
 B)False

Question 7

Economists play an important role is the complex debates over tax policy by

Accepted Answer

A)  identifying efficiency as the most important goal of tax policy.
B)  identifying equity as the most important goal of tax policy.
C)  shedding light on the tradeoff between efficiency and equity in tax policy.
D)  None of the above is correct.E) A) and B)
F) None of the above

Question 8

Which of the following countries has adopted a flat tax rate on personal income?

Accepted Answer

A)  Unites States
B)  England
C)  Estonia
D)  ChinaE) B) and C)
F) None of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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 C)
F) None of the above

Question 12

A tax levied on the total amount spent in retail stores is called

Accepted Answer

A)  a sales tax.
B)  an excise tax.
C)  a retail tax.
D)  an income tax.E) B) and C)
F) None of the above

Question 13

From 1950 to today,government spending on Social Security,Medicare,and Medicaid as a percentage of GDP has

Accepted Answer

A)  decreased from about eight percent to less than one percent.
B)  increased from less than one percent to about eight percent.
C)  remained constant at less than one percent.
D)  remained constant at about eight percent.E) A) and D)
F) B) and C)

Question 14

Medicare is the

Accepted Answer

A)  government's health plan for the elderly.
B)  government's health plan for the poor.
C)  another name for Social Security.
D)  Both a and c are correct.E) A) and D)
F) All of the above

Question 15

Deadweight losses are associated with

Accepted Answer

A)  taxes that distort the incentives that people face.
B)  taxes that target expenditures on survivor's benefits for Social Security.
C)  taxes that have no efficiency losses.
D)  lump-sum taxes.E) B) and C)
F) A) and C)

Question 16

Which of the following statements is correct?

Accepted Answer

A)  The average tax rate gauges the sacrifice made by a taxpayer, whereas the marginal tax rate gauges the distortion of taxes on consumer decisions.
B)  The marginal tax rate gauges the sacrifice made by a taxpayer, whereas the average tax rate gauges the distortion of taxes on consumer decisions.
C)  The average tax rate measures how much the tax system discourages people from working.
D)  The marginal tax rate measures total taxes paid divided by total income.E) B) and C)
F) A) and D)

Question 17

The deadweight loss associated with a tax on a commodity is generated by

Accepted Answer

A)  the consumers who still choose to consume the commodity but pay a higher price that reflects the tax.
B)  the consumers who choose to not consume the commodity that is taxed.
C)  all citizens who are able to use services provided by government.
D)  the consumers who are unable to avoid paying the tax.E) A) and B)
F) All of the above

Question 18

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, park maintenance, etc.collectively are a very small share of expenditures.E) A) and D)
F) A) and B)

Question 19

For state and local governments,education accounts for what percent of spending?

Accepted Answer

A)  25 percent
B)  34 percent
C)  50 percent
D)  75 percentE) None of the above
F) B) and D)

Question 20

Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake. Joan would be willing to purchase only one slice and would pay up to $6 for it. Jim would be willing to pay $9 for his first slice, $7 for his second slice, and $3 for his third slice. The current market price is $3 per slice.
-Refer to Scenario 12-1.How much consumer surplus does Joan receive from consuming her slice of cheesecake?

Accepted Answer

A)  $3
B)  $6
C)  $9
D)  $12E) C) and D)
F) A) and C)

Exam 12: The Design of the Tax System

For state and local governments,education accounts for what percent of spending?

Correct Answer
verified

The U.S.income tax

Correct Answer
verified

A tax levied on the total amount spent in retail stores is called

Correct Answer
verified

Economists play an important role is the complex debates over tax policy by

Correct Answer
verified

The U.S.federal government collects what percent of the taxes in the economy?

Correct Answer
verified

Medicare is the

Correct Answer
verified

The most efficient tax possible is a

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

Which of the following countries has adopted a flat tax rate on personal income?

Correct Answer
verified

Deadweight losses are associated with

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct Answer
verified

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

Correct Answer
verified

The deadweight loss associated with a tax on a commodity is generated by

Correct Answer
verified

Correct Answer
verified

From 1950 to today,government spending on Social Security,Medicare,and Medicaid as a percentage of GDP has

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

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

Correct Answer
verified

Exam 12: The Design of the Tax System

For state and local governments,education accounts for what percent of spending?

Correct AnswerverifiedShow Answer

The U.S.income tax

Correct AnswerverifiedShow Answer

A tax levied on the total amount spent in retail stores is called

Correct AnswerverifiedShow Answer

Economists play an important role is the complex debates over tax policy by

Correct AnswerverifiedShow Answer

The U.S.federal government collects what percent of the taxes in the economy?

Correct AnswerverifiedShow Answer

Medicare is the

Correct AnswerverifiedShow Answer

The most efficient tax possible is a

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

Which of the following countries has adopted a flat tax rate on personal income?

Correct AnswerverifiedShow Answer

Deadweight losses are associated with

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The deadweight loss associated with a tax on a commodity is generated by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

From 1950 to today,government spending on Social Security,Medicare,and Medicaid as a percentage of GDP has

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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