Question 1

The efficiency of a tax system refers to the costs it imposes on taxpayers related to the revenue collected.

Accepted Answer

A) True 
 B)False  True

Question 2

Antipoverty programs funded by taxes on the wealthy are sometimes advocated on the basis of the benefits principle.

Accepted Answer

A) True 
 B)False  True

Question 3

Table 12-1  
-Refer to Table 12-1.If Janine makes $97,500 this year,what would her tax liability be,approximately

Accepted Answer

A) $18,525 
B) $25,350 
C) $28,275 
D) $29,740 
A) $18,525 
B) $25,350 
C) $28,275 
D) $29,740 B

Question 4

On what basis is a tax on expensive speed boats that are purchased only by the wealthy NOT likely to satisfy the condition of vertical equity

Accepted Answer

A) Wealthy buyers are most likely to be subject to the implications of the flypaper theory of tax incidence. 
B) Horizontal equity is most associated with a tax on luxury items. 
C) Buyers can easily substitute other luxuries for expensive speedboats. 
D) It is very unlikely that the burden of the tax will fall on workers who make the expensive speed boats. 
A) Wealthy buyers are most likely to be subject to the implications of the flypaper theory of tax incidence. 
B) Horizontal equity is most associated with a tax on luxury items. 
C) Buyers can easily substitute other luxuries for expensive speedboats. 
D) It is very unlikely that the burden of the tax will fall on workers who make the expensive speed boats.

Question 5

MaKenna earns income of $80,000 per year.Her average tax rate is 30 percent.MaKenna paid 20 percent in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income

Accepted Answer

A) 20 percent 
B) 24 percent 
C) 30 percent 
D) 36 percent 
A) 20 percent 
B) 24 percent 
C) 30 percent 
D) 36 percent

Question 6

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

Accepted Answer

A) proportional 
B) regressive 
C) disproportional 
D) progressive 
A) proportional 
B) regressive 
C) disproportional 
D) progressive

Question 7

Which statement best describes the legality of tax avoidance and tax evasion

Accepted Answer

A) Tax avoidance and tax evasion are both legal. 
B) Tax avoidance and tax evasion are both illegal. 
C) Tax avoidance is legal and tax evasion is illegal. 
D) Tax avoidance is illegal and tax evasion is legal. 
A) Tax avoidance and tax evasion are both legal. 
B) Tax avoidance and tax evasion are both illegal. 
C) Tax avoidance is legal and tax evasion is illegal. 
D) Tax avoidance is illegal and tax evasion is legal.

Question 8

Table 12-2
  
-Refer to Table 12-2.The price of a weekend ski pass is $138 and this price reflects the actual unit cost of providing a weekend of skiing.If the government imposes a tax of $15 on each weekend ski pass,what is the deadweight loss associated with the tax

Accepted Answer

A) $2 
B) $37 
C) $52 
D) $79 
A) $2 
B) $37 
C) $52 
D) $79

Question 9

In 1980,what percentage of total income did Canadian governments collect in taxes

Accepted Answer

A) approximately 20 percent 
B) approximately 28 percent 
C) approximately 32 percent 
D) approximately 40 percent 
A) approximately 20 percent 
B) approximately 28 percent 
C) approximately 32 percent 
D) approximately 40 percent

Question 10

Evaluate the statement: Tax loopholes increase the efficiency of tax systems.

Accepted Answer

In some cases,tax loopholes are designed

Question 11

If the government imposes a tax of $3000 on everyone,what would this tax best be described as

Accepted Answer

A) an income tax 
B) a consumption tax 
C) a lump-sum tax 
D) a marginal tax 
A) an income tax 
B) a consumption tax 
C) a lump-sum tax 
D) a marginal tax

Question 12

What is a consumption tax

Accepted Answer

A) a tax on goods but not services 
B) a tax on the amount of income that people spend 
C) a tax on services but not goods 
D) a tax on the amount of income that people earn 
A) a tax on goods but not services 
B) a tax on the amount of income that people spend 
C) a tax on services but not goods 
D) a tax on the amount of income that people earn

Question 13

What do most people agree about the tax system

Accepted Answer

A) It should be both efficient and equitable. 
B) It cannot raise enough revenue to cover government expenditures. 
C) It could raise more revenue if tax rates were lowered. 
D) It should be rewritten to require everyone to pay the same percentage of their income to taxes. 
A) It should be both efficient and equitable. 
B) It cannot raise enough revenue to cover government expenditures. 
C) It could raise more revenue if tax rates were lowered. 
D) It should be rewritten to require everyone to pay the same percentage of their income to taxes.

Question 14

Which of the following claims that all citizens should make an "equal sacrifice" to support government programs usually associated with

Accepted Answer

A) the ability-to-pay principle 
B) the benefits principle 
C) efficiency arguments 
D) regressive tax arguments 
A) the ability-to-pay principle 
B) the benefits principle 
C) efficiency arguments 
D) regressive tax arguments

Question 15

How do policymakers consider goals of efficiency and equity in tax policy

Accepted Answer

A) complementary in most countries 
B) necessary for application of the ability-to-pay principle 
C) often in conflict with each other 
D) more easily sustained when tax laws are complex 
A) complementary in most countries 
B) necessary for application of the ability-to-pay principle 
C) often in conflict with each other 
D) more easily sustained when tax laws are complex

Question 16

The payroll tax differs from the individual income tax in that the payroll tax is primarily earmarked to pay for which of the following

Accepted Answer

A) employer-provided pensions 
B) employment insurance 
C) employer-provided health benefits 
D) job loss and training programs 
A) employer-provided pensions 
B) employment insurance 
C) employer-provided health benefits 
D) job loss and training programs

Question 17

Scenario 12-1
Suppose Jeremy and Kelsey receive great satisfaction from their consumption of turkey.Kelsey would be willing to purchase only one slice and would pay up to $5 for it.Jeremy would be willing to pay $8 for his first slice, $6 for his second slice, and $2 for his third slice.The current market price is $2 per slice.
-Refer to Scenario 12-1.Assume that the government places a tax of $4 on each slice of turkey.What is Kelsey's consumer surplus from turkey

Accepted Answer

A) $0 
B) $2 
C) $3 
D) $6 
A) $0 
B) $2 
C) $3 
D) $6

Question 18

When the government levies a tax on a corporation,what results

Accepted Answer

A) All the burden of the tax ultimately falls on owners. 
B) The corporation is more like a tax collector than a taxpayer. 
C) Output must increase to compensate for reduced profits. 
D) Less deadweight loss will occur since corporations are entities and not people who respond to incentives. 
A) All the burden of the tax ultimately falls on owners. 
B) The corporation is more like a tax collector than a taxpayer. 
C) Output must increase to compensate for reduced profits. 
D) Less deadweight loss will occur since corporations are entities and not people who respond to incentives.

Question 19

Which country has the largest tax burden

Accepted Answer

A) France 
B) Italy 
C) Germany 
D) Canada 
A) France 
B) Italy 
C) Germany 
D) Canada

Question 20

What is NOT an administrative burden of our tax system

Accepted Answer

A) government resources used to enforce tax laws 
B) keeping tax records throughout the year 
C) making charitable contributions at the end of the year for tax deductions 
D) time spent filling out tax forms 
A) government resources used to enforce tax laws 
B) keeping tax records throughout the year 
C) making charitable contributions at the end of the year for tax deductions 
D) time spent filling out tax forms

Exam 12: The Design of the Tax System

The efficiency of a tax system refers to the costs it imposes on taxpayers related to the revenue collected.

Antipoverty programs funded by taxes on the wealthy are sometimes advocated on the basis of the benefits principle.

Table 12-1 -Refer to Table 12-1.If Janine makes $97,500 this year,what would her tax liability be,approximately

On what basis is a tax on expensive speed boats that are purchased only by the wealthy NOT likely to satisfy the condition of vertical equity

MaKenna earns income of $80,000 per year.Her average tax rate is 30 percent.MaKenna paid 20 percent in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income

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

Which statement best describes the legality of tax avoidance and tax evasion

Table 12-2 -Refer to Table 12-2.The price of a weekend ski pass is $138 and this price reflects the actual unit cost of providing a weekend of skiing.If the government imposes a tax of $15 on each weekend ski pass,what is the deadweight loss associated with the tax

In 1980,what percentage of total income did Canadian governments collect in taxes

Evaluate the statement: Tax loopholes increase the efficiency of tax systems.

If the government imposes a tax of $3000 on everyone,what would this tax best be described as

What is a consumption tax

What do most people agree about the tax system

Which of the following claims that all citizens should make an "equal sacrifice" to support government programs usually associated with

How do policymakers consider goals of efficiency and equity in tax policy

The payroll tax differs from the individual income tax in that the payroll tax is primarily earmarked to pay for which of the following

When the government levies a tax on a corporation,what results

Which country has the largest tax burden

What is NOT an administrative burden of our tax system

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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