Chapter 14 HW Multiple Choice

1.All other things being equal, which of the following results in the least tax burden for consumers in the case of a per-unit tax on a good?

A.Perfectly elastic demand

B.Relatively inelastic demand

C.Unit-elastic demand

D.Perfectly inelastic demand

3.According to the Laffer curve, the government can

A.raise tax revenues by reducing the tax rate.

B.do nothing to raise tax revenues.

C.lose only tax revenues by imposing a tax.

D.raise tax revenues by not imposing any tax.

4.If everyone is a country has the same income, the Lorenz curve

A.slopes downward.

B.is a 45-degree line from the origin.

C.is a vertical line.

D.is a horizontal line.

5.Which of the following is a form of excise tax?

A.Personal income tax

B.Corporate income tax

C.Sales tax

D.Property tax

6.The Lorenz curve shows

A.who the poor are.

B.the income distribution of a country.

C.the per capita income of individuals.

D.the absolute level of income.

7.If an individual earns an additional $200 and has to pay an additional $20 in income tax, his or her average tax rate is

A.2 percent.

B.20 percent.

C.10 percent.

D.There is not enough information provided to answer this question.

8.The amount of income tax that must be paid on an additional dollar of income is determined by the

A.marginal tax rate.

B.average tax rate.

C.payroll tax rate.

D.highest tax rate.

9.Tax incidence is the amount that

A.businesses get in tax credits from the government.

B.the government receives from taxpayers.

C.the government spends using tax revenues.

D.buyers or sellers actually bear of the burden of a tax.

10.If everyone in a country has the same income, then the Gini coefficient equals

A.-1

B.0

C.1

D.infinity

11.The type of government payment to a family because of that family's low income level is called a(n)

A.income transfer.

B.social transfer.

C.means-tested transfer.

D.tax transfer.

12.The tradeoff in the design of a tax system is between

A.equity and corruption.

B.equity and efficiency.

C.corruption and efficiency.

D.fairness and equity.

13.If Kristy pays $2,000 in income tax if her taxable income is $40,000, but she will have to pay $3,000 if her taxable income doubles to $80,000. We can conclude that the tax system is

A.flat.

B.proportional.

C.progressive.

D.regressive.

14.If an individual earns an additional $200 and has to pay an additional $20 in income tax, his or her marginal tax rate is

A.2 percent.

B.1 percent.

C.20 percent.

D.10 percent.

15.An efficient tax system should result in (Check all correct answers.)

A.minimum deadweight losses.

B.taxing at a rate that is positively related to price elasticity of demand.

C.minimal wasting of resources.

D.the least amount of tax dollars.

16.In the case of a per-unit tax on a good, which of the following situations will lead to the least change in price?

A.Supply and demand are relatively inelastic.

B.Demand is relatively elastic and supply is relatively inelastic.

C.Demand is relatively inelastic and supply is relatively elastic.

D.Supply and demand are relatively elastic.

17.If the average tax rate rises as income rises, the tax is called a

A.progressive tax.

B.flat tax.

C.proportional tax.

D.regressive tax.

18.Under the U.S. tax system, taxable income equals

A.Total wagesexemptionsdeductions

B.Total wages + interest + profits

C.Total personal income + exemptions + deductions

D.Total personal income exemptionsdeductions

19.Which of the following is a social insurance program? (Check all correct answers.)

A.Social security

B.Medicare

C.Medicaid

D.Unemployment insurance

20.Which of the following is most consistent with the ability-to-pay principle?

A.Those who require more government services should pay more taxes.

B.Those with higher incomes should pay higher tax rates.

C.Those with higher incomes should pay more in total taxes.

D.Those with higher incomes should pay the same amount of taxes as those with lower incomes.