ANSWER: c personal income taxesa. Minimizing the total deadweight loss from taxes that raise a certain amount of revenue for the government is known as a.. increase in taxes if her margi
Trang 1Chapter 12
The Design of the Tax System
1 During what war did government spending rise dramatically in the United States, and then never again fall to its peacetime levels?
a Civil War
b World War I
c World War II
d Vietnam War
ANSWER: c World War II
SECTION: 1 OBJECTIVE: 1
2 Which type of tax is used to finance the Social Security program in the United States?
a consumption tax
b income tax
c payroll tax
d property tax
ANSWER: c payroll tax
SECTION: 1 OBJECTIVE: 1
3 All of the following are transfer payments except
a Medicaid
b unemployment compensation
c personal income taxes
d food stamps
ANSWER: c personal income taxes
SECTION: 1 OBJECTIVE: 1
4 If Nebraska imposed a tax on milk of 10 cents per gallon,
a this is an excise tax
b this is an income tax
c tax revenue will fall
d the supply of milk will rise
ANSWER: a this is an excise tax
SECTION: 1 OBJECTIVE: 1
5 If either supply or demand is perfectly inelastic, then the deadweight social loss from a tax is
a infinite
b large
c small
d zero
ANSWER: d zero
SECTION: 2 OBJECTIVE: 2
6 The deadweight loss from a tax increases as supply becomes more or as demand becomes more
a inelastic; inelastic
b inelastic; elastic
c elastic; elastic
d elastic; inelastic
ANSWER: c elastic; elastic
SECTION: 2 OBJECTIVE: 2
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7 Minimizing the total deadweight loss from taxes that raise a certain amount of revenue for the government is known as
a an external benefit
b optimal taxation
c a lump-sum tax scheme
d horizontal equity
ANSWER: b optimal taxation
SECTION: 2 OBJECTIVE: 2
8 In the short run, the imposition of a payroll tax of $1 per labor hour will have which of the following effects?
a The quantity of labor exchanged will fall
b The after-tax wage received by workers will fall
c The quantity of labor traded will become inefficient
d All of the above are correct
ANSWER: d All of the above correct
SECTION: 2 OBJECTIVE: 2
9 A person’s tax obligation divided by her income is called her
a marginal social tax rate
b marginal private tax rate
c marginal tax rate
d average tax rate
ANSWER: d average tax rate
SECTION: 2 OBJECTIVE: 3
10 A person’s average tax rate equals her
a tax obligation divided by her marginal tax rate
b increase in taxes if her income were to rise by $1
c tax obligation divided by her income
d increase in taxes if her marginal tax rate were to rise 1%
ANSWER: c tax obligation divided by her income
SECTION: 2 OBJECTIVE: 3
11 A person’s marginal tax rate equals
a her tax obligation divided by her average tax rate
b the increase in taxes she would pay as a percentage of the rise in her income
c her tax obligation divided by her income
d the increase in taxes if her average tax rate were to rise 1%
ANSWER: b the increase in taxes she would pay as a percentage of the rise in her income
SECTION: 2 OBJECTIVE: 3
12 Pat figures that for every extra dollar she earns, she owes the government 33 cents Her total income now is $35,000, on which she pays taxes of $7,000 Her average tax rate is and her marginal tax rate is
a 33%; 20%
b 20%; 33%
c 20%; 20%
d 33%; 33%
ANSWER: b 20%; 33%
SECTION: 2 OBJECTIVE: 3
13 Horizontal equity in taxation refers to the idea that people
a in unequal conditions should be treated differently
b in equal conditions should pay equal taxes
c should be taxed according to their ability to pay
d should receive government benefits according to how much they have been taxed
ANSWER: b in equal conditions should pay equal taxes
SECTION: 3 OBJECTIVE: 3
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14 The idea that people in equal conditions should pay equal taxes is referred to as
a horizontal equity
b vertical equity
c diagonal equity
d linear equity
ANSWER: a horizontal equity
SECTION: 3 OBJECTIVE: 3
15 Vertical equity in taxation refers to the idea that people
a in unequal conditions should be treated differently
b in equal conditions should pay equal taxes
c should be taxed according to their age and experience
d should receive government benefits according to how much they have been taxed
ANSWER: a in unequal conditions should be treated differently
SECTION: 3 OBJECTIVE: 3
16 A tax that is higher for men than for women violates the criterion of
a diagonal equity
b linear equity
c vertical equity
d horizontal equity
ANSWER: d horizontal equity
SECTION: 3 OBJECTIVE: 3
17 The benefits principle of taxation is LEAST characteristic in
a Social Security taxes
b gasoline taxes
c taxes on airline tickets
d tolls used to finance the construction of a bridge
ANSWER: Social Security taxes
SECTION: 3 OBJECTIVE: 3
18 A tax is if it takes a constant fraction of income as income rises
a regressive
b proportional
c progressive
d aggressive
ANSWER: b proportional
SECTION: 3 OBJECTIVE: 3
19 A tax is if it takes a smaller fraction of income as income rises
a regressive
b proportional
c progressive
d aggressive
ANSWER: a regressive
SECTION: 3 OBJECTIVE: 3
20 Most economists argue that when federal, state, and local taxes are combined, the overall effect is
a proportional
b progressive
c regressive
d unfair
ANSWER: a proportional
SECTION: 3 OBJECTIVE: 3
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21 In its purest form, a system would eliminate the existing array of different tax rates on personal income and replace them with a single tax
a value-added tax
b consumption tax
c sales tax
d flat-rate income tax
ANSWER: d flat-rate income tax
SECTION: 3 OBJECTIVE: 3
22 The main arguments in favor of a modified flat-rate tax system (such as a proposal to place a 19% tax on all income over $20,000 with no deductions) are it would
a raise more revenue than the current tax system, and it would be simpler
b raise more revenue than the current tax system, and it would lower marginal tax rates
c be simpler and it would lower average tax rates
d be simpler and it would lower marginal tax rates
ANSWER: d be simpler and it would lower marginal tax rates
SECTION: 3 OBJECTIVE: 4
23 If the government imposed a $1,000 tax on every individual,
a this would be an equitable tax
b allocative efficiency would have to be sacrificed
c this would be an efficient tax
d this would be an income tax
ANSWER: c this would be an efficient tax
SECTION: 3 OBJECTIVE: 4
24 In choosing the form of a tax, there is a trade-off between
a allocative and productive efficiency
b profits and revenues
c efficiency and fairness
d fairness and profits
ANSWER: c efficiency and fairness
SECTION: 3 OBJECTIVE: 5
25 If society is interested in devising a tax that is fair to its citizens,
a the tax will raise efficiency
b none can be devised
c the tax will create inefficiencies
d it should choose a lump-sum tax
ANSWER: c the tax will create inefficiencies
SECTION: 3 OBJECTIVE: 5