Question 1

Which of the following taxes can be supported by the benefits principle of taxation?

Accepted Answer

A)   All of these answers can be supported by the benefits principle of taxation.
B)   progressive income taxes used to pay for national defence
C)   petrol taxes used to pay for roads
D)   property taxes used to pay for police and the court system
E)   progressive income taxes used to pay for antipoverty programsF) D) and E)
G) B) and D)

Question 2

A tax is __________ if it takes a constant fraction of income as income rises.

Accepted Answer

A)   regressive
B)   proportional
C)   progressive
D)   aggressiveE) A) and B)
F) None of the above

Question 3

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise, the tax has

Accepted Answer

A)   caused a deadweight loss.
B)   decreased equity.
C)   generated no tax revenue.
D)   increased efficiency.E) All of the above
F) B) and C)

Question 4

A tax collected from buyers generates a smaller deadweight loss than a tax collected from sellers.

Accepted Answer

A) True 
 B)False

Question 5

If a tax is placed on a good in a market where supply is perfectly inelastic, there is no deadweight loss and the sellers bear the entire burden of the tax.

Accepted Answer

A) True 
 B)False

Question 6

A tax system is regarded as horizontally equitable if

Accepted Answer

A)   all taxpayers pay the same amount of tax
B)   taxes on all goods are levied at the same rate
C)   taxes are as low as possible
D)   the system comprises only lump sum taxes
E)   taxpayers with similar abilities to pay taxes pay the same amountF) B) and E)
G) A) and C)

Question 7

In choosing the form of a tax, there is a trade-off between

Accepted Answer

A)   allocative and productive efficiency.
B)   profits and revenues.
C)   efficiency and equity.
D)   equity and profits.E) B) and D)
F) A) and C)

Question 8

Heike values a pair of blue jeans at €40. If the price is €35, Heike buys the jeans and generates consumer surplus of €5. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to €45. Now Heike chooses not to buy a pair of jeans. This example has demonstrated

Accepted Answer

A)   the deadweight loss from a tax.
B)   the ability-to-pay principle.
C)   the benefits principle.
D)   horizontal equity.
E)   the administrative burden of a tax.F) B) and D)
G) All of the above

Exam 9: The Tax System

A tax system is regarded as horizontally equitable if

Correct Answer
verified

Which of the following taxes can be supported by the benefits principle of taxation?

Correct Answer
verified

A tax is __________ if it takes a constant fraction of income as income rises.

Correct Answer
verified

If a tax is placed on a good in a market where supply is perfectly inelastic, there is no deadweight loss and the sellers bear the entire burden of the tax.

Correct Answer
verified

In choosing the form of a tax, there is a trade-off between

Correct Answer
verified

A tax collected from buyers generates a smaller deadweight loss than a tax collected from sellers.

Correct Answer
verified

Heike values a pair of blue jeans at €40. If the price is €35, Heike buys the jeans and generates consumer surplus of €5. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to €45. Now Heike chooses not to buy a pair of jeans. This example has demonstrated

Correct Answer
verified

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise, the tax has

Correct Answer
verified

Exam 9: The Tax System

A tax system is regarded as horizontally equitable if

Correct AnswerverifiedShow Answer

Which of the following taxes can be supported by the benefits principle of taxation?

Correct AnswerverifiedShow Answer

A tax is __________ if it takes a constant fraction of income as income rises.

Correct AnswerverifiedShow Answer

If a tax is placed on a good in a market where supply is perfectly inelastic, there is no deadweight loss and the sellers bear the entire burden of the tax.

Correct AnswerverifiedShow Answer

In choosing the form of a tax, there is a trade-off between

Correct AnswerverifiedShow Answer

A tax collected from buyers generates a smaller deadweight loss than a tax collected from sellers.

Correct AnswerverifiedShow Answer

Heike values a pair of blue jeans at €40. If the price is €35, Heike buys the jeans and generates consumer surplus of €5. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to €45. Now Heike chooses not to buy a pair of jeans. This example has demonstrated

Correct AnswerverifiedShow Answer

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise, the tax has

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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Correct Answer
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