The top 1 percent of income earners:

a.pay about one-fiftieth of the income tax paid by the bottom 50 percent of income earners

b.pay about one-half of the income tax paid by the bottom 50 percent of income earners

c.pay about twice as much as the income tax paid by the bottom 50 percent of income earners

d.pay over ten times as much as the income tax paid by the bottom 50 percent of income earners

Which of the following statements are correct?

a.Lower-income households consume a higher percentage of their incomes compared to higher-income households

b.Any tax that increases the prices of non-luxury goods will be regressive

c.Both of the above

d.Neither of the above

A tax that imposes the same tax rate on all levels of income is:

a.proportional

b.progressive

c.regressive

The burden of deficit spending falls on future generations:

a.to the extent that deficit spending favors investment rather than consumption

b.to the extent that the deficit spending is financed by foreign creditors

c.Both of the above

d.Neither of the above

The federal personal income tax:

a.is a regressive tax

b.is the largest source of federal tax revenue

c.Both of the above

d.Neither of the above

To minimize the deadweight loss, a tax should:

a.be broad-based

b.have low rates

c.Both of the above

d.Neither of the above

Health care spending:

a.has been decreasing as a percentage of GDP

b.has been decreasing due to the decreased demand for health care caused by the rising standard of living

c.has have been increasing due to the increase in the amount of health care available

d.Both a. and b. above

Which type of tax causes the distribution of income to be more unequal?

a.proportional

b.progressive

c.regressive

Making the federal personal income tax rate structure more progressive:

a.would make the distribution of income more unequal

b.would increase the amount of deadweight loss

c.Both of the above

d.Neither of the above

Excess burden:

a.is the amount that the burden imposed by a tax exceeds the funding provided by the tax

b.does not occur with most taxes

c.is not significant with the federal personal income tax

d.All of the above

Making the federal personal income tax rate structure more progressive:

a.would make the distribution of income more unequal

b.would increase the amount of deadweight loss

c.Both of the above

d.Neither of the above

Excess burden:

a.is the amount that the burden imposed by a tax exceeds the funding provided by the tax

b.does not occur with most taxes

c.is not significant with the federal personal income tax

d.All of the above

The social security tax:

a.is a regressive tax

b.is partially hidden from the taxpayers

c.is the second largest source of federal tax revenue

d.All of the above

The deadweight loss of a tax occurs:

a.when a tax distorts decisions made in the private market

b.when a tax eliminates mutually beneficial transactions

c.Both of the above

d.Neither of the above

The federal personal income tax:

a.was authorized in 1913 by the Sixteenth Amendment

b.initially had a top marginal tax rate of 7%

c.has much higher tax rates today than it initially had

d.All of the above

Loopholes:

a.reduce the tax base

b.mean that lower tax rates can be imposed to collect the same amount of tax revenue

c.Both of the above

d.Neither of the above