Question 1

Table 12-25 
-Refer to Table 12-25. Which plan represents the best tax?

Accepted Answer

The best tax depends on the criteria. Pl...

Question 2

The U.S. federal government spends its revenues in a number of ways. Rank the following spending categories from largest to smallest.

Accepted Answer

A)   income security, health, national defense, net interest
B)   health, national defense, net interest, income security
C)   net interest, health, income security, national defense
D)   national defense, income security, net interest, healthE) None of the above
F) All of the above

Question 3

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) B) and C)
F) None of the above

Question 4

In general, Democrats tend to prefer

Accepted Answer

A)   higher marginal tax rates to promote vertical equity, while Republicans tend to prefer lower marginal tax rates to promote incentives to work and save.
B)   lower marginal tax rates to promote vertical equity, while Republicans tend to prefer higher marginal tax rates to promote incentives to work and save.
C)   higher marginal tax rates to promote incentives to work and save, while Republicans tend to prefer lower marginal tax rates to promote vertical equity.
D)   lower marginal tax rates to promote incentives to work and save, while Republicans tend to prefer higher marginal tax rates to promote vertical equity.E) B) and C)
F) A) and D)

Question 5

The government raises revenue through taxation to pay for the services it provides.

Accepted Answer

A) True 
 B)False

Question 6

Who observed that "in this world nothing is certain but death and taxes"?

Accepted Answer

A)   Mark Twain
B)   P.T. Barnum
C)   Ben Franklin
D)   Richard NixonE) A) and C)
F) C) and D)

Question 7

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

Question 8

A lump-sum tax

Accepted Answer

A)   is most frequently used to tax real property.
B)   does not distort incentives.
C)   distorts incentives more than any other type of tax.
D)   is the most fair tax.E) A) and B)
F) A) and C)

Question 9

Table 12-1 
-Refer to Table 12-1. 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. How much consumer surplus accrues to Anna and Clem individually?

Accepted Answer

A)   $125 and $20 respectively
B)   $105 and $30 respectively
C)   $85 and $40 respectively
D)   $65 and $50 respectivelyE) All of the above
F) A) and B)

Question 10

Suppose that in 2020 the average citizen's federal tax bill is $11,987, and total federal spending is $12,294 per person. In 2020, the federal government will have

Accepted Answer

A)   a budget surplus.
B)   a budget deficit.
C)   horizontal equity.
D)   vertical equity.E) None of the above
F) B) and C)

Question 11

Table 12-22 
-Refer to Table 12-22. A progressive tax is illustrated by tax

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) All of the above
F) A) and B)

Question 12

Some colleges charge all students the same fee for a weekly dining services meal plan. Suppose that students differ by how much food they consume each week. For example, members of the women's swimming team consume, on average, twice as much food as the average female college student, and the average male college student consumes 20 percent more food than the average female college student. The dining services fee is most like a(n)

Accepted Answer

A)   excise tax that conforms to the benefits principle.
B)   excise tax that violates the benefits principle.
C)   lump-sum tax that conforms to the benefits principle.
D)   lump-sum tax that violates the benefits principle.E) A) and D)
F) None of the above

Question 13

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2. Suppose the government levies a tax of $1 on a movie ticket and that, as a result, the price of a movie ticket increases to $6. If Bob and Lisa both purchase a movie ticket, what is the deadweight loss from the tax?

Accepted Answer

A)   $0
B)   $1
C)   $2
D)   $3E) A) and C)
F) A) and B)

Question 14

In 2011, the federal government spent 9 percent of the budget on net interest. Which of the following statements regarding net interest is correct?

Accepted Answer

A)   If the government pays down its debt, the amount of the budget needed for net interest decreases.
B)   If the government accrues more debt, the amount of the budget needed for net interest increases.
C)   In 2011, the federal government spent 325 billion dollars to cover interest payments on its loans.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 15

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Accepted Answer

A)   $800 million
B)   $2.5 billion
C)   $5.2 billion
D)   $8.7 billionE) B) and C)
F) C) and D)

Question 16

Which of the following countries has the largest tax burden?

Accepted Answer

A)   Mexico
B)   Canada
C)   United States
D)   DenmarkE) None of the above
F) A) and B)

Question 17

In 2011 the largest percentage of federal government spending was on

Accepted Answer

A)   national defense. The largest source of federal revenues was from corporate income taxes.
B)   health. The largest source of federal revenues was from individual income taxes.
C)   income security. The largest source of federal revenues was from corporate income taxes.
D)   income security. The largest source of federal revenues was from individual income taxes.E) A) and B)
F) B) and D)

Question 18

Leonard, Sheldon, Raj, and Penny each like science fiction moves. The price of a special boxed set of Star Trek DVDs is $50. Leonard values the set of movies at $70, Sheldon at $65, Raj at $60, and Penny at $55. Suppose that if the government taxes DVDs at $10 each, the price rises to $60. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)   $50 and tax revenues increase by $30, so there is a deadweight loss of $20.
B)   $35 and tax revenues increase by $30, so there is a deadweight loss of $5.
C)   $20 and tax revenues increase by $20, so there is no deadweight loss.
D)   $15 and tax revenues increase by $20, so there is no deadweight loss.E) B) and C)
F) A) and B)

Question 19

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Accepted Answer

A)   deadweight losses and administrative burdens.
B)   deadweight losses and frustration with the political system.
C)   administrative burdens and tax-preparation costs.
D)   administrative burdens and the risk of punishment for failure to comply with tax laws.E) A) and B)
F) C) and D)

Question 20

Scenario 12-5
Senator Filch argues that a tax must be paid by people who benefit from government services. Senator Fudge argues that a tax must be paid in accordance with a person's ability to bear the tax burden. Senator Malfoy argues that people with a greater ability to pay a tax should pay a larger amount. Senator Moody argues that taxpayers with similar abilities to pay should contribute the same amount.
-Refer to Scenario 12-5. Which Senator is advocating for taxes based on horizontal equity?

Accepted Answer

A)   Senator Filch
B)   Senator Fudge
C)   Senator Malfoy
D)   Senator MoodyE) A) and B)
F) None of the above

Exam 12: The Design of the Tax System

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

Correct Answer
verified

In 2011 the largest percentage of federal government spending was on

Correct Answer
verified

The U.S. federal government spends its revenues in a number of ways. Rank the following spending categories from largest to smallest.

Correct Answer
verified

A lump-sum tax

Correct Answer
verified

Who observed that "in this world nothing is certain but death and taxes"?

Correct Answer
verified

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Correct Answer
verified

Correct Answer
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Suppose that in 2020 the average citizen's federal tax bill is $11,987, and total federal spending is $12,294 per person. In 2020, the federal government will have

Correct Answer
verified

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Correct Answer
verified
The best tax depends on the criteria. Pl...
View Answer

Which of the following countries has the largest tax burden?

Correct Answer
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Table 12-1 -Refer to Table 12-1. 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. How much consumer surplus accrues to Anna and Clem individually?

Correct Answer
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In 2011, the federal government spent 9 percent of the budget on net interest. Which of the following statements regarding net interest is correct?

Correct Answer
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Correct Answer
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Correct Answer
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In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Correct Answer
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Correct Answer
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In general, Democrats tend to prefer

Correct Answer
verified

Taxes create deadweight loss when they

Correct Answer
verified

The government raises revenue through taxation to pay for the services it provides.

Correct Answer
verified

Table 12-22 -Refer to Table 12-22. A progressive tax is illustrated by tax

Correct Answer
verified

Exam 12: The Design of the Tax System

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

Correct AnswerverifiedShow Answer

In 2011 the largest percentage of federal government spending was on

Correct AnswerverifiedShow Answer

The U.S. federal government spends its revenues in a number of ways. Rank the following spending categories from largest to smallest.

Correct AnswerverifiedShow Answer

A lump-sum tax

Correct AnswerverifiedShow Answer

Who observed that "in this world nothing is certain but death and taxes"?

Correct AnswerverifiedShow Answer

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that in 2020 the average citizen's federal tax bill is $11,987, and total federal spending is $12,294 per person. In 2020, the federal government will have

Correct AnswerverifiedShow Answer

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Correct AnswerverifiedThe best tax depends on the criteria. Pl...View AnswerShow Answer

Which of the following countries has the largest tax burden?

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1. 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. How much consumer surplus accrues to Anna and Clem individually?

Correct AnswerverifiedShow Answer

In 2011, the federal government spent 9 percent of the budget on net interest. Which of the following statements regarding net interest is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In general, Democrats tend to prefer

Correct AnswerverifiedShow Answer

Taxes create deadweight loss when they

Correct AnswerverifiedShow Answer

The government raises revenue through taxation to pay for the services it provides.

Correct AnswerverifiedShow Answer

Table 12-22 -Refer to Table 12-22. A progressive tax is illustrated by tax

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The best tax depends on the criteria. Pl...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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