Question 1

Assume that Mr. Smith's income increased from $40,000 last year to $45,000 this year and that he paid an additional $2,000 in taxes. This would indicate that his marginal tax rate is

Accepted Answer

The answer of Assume that Mr. Smith's income increased from...

Question 2

If a tax system is progressive, then

Accepted Answer

A progressive tax system is one in which the marginal tax rate increases as income rises. This means that higher income earners pay a higher percentage of their income in taxes than lower income earners, resulting in a more progressive tax structure. Therefore, choice B is correct.

Question 3

In a progressive income tax system,

Accepted Answer

In a progressive income tax system, the tax rate increases as income increases. This means that higher income earners will be in higher tax brackets and will pay a higher marginal tax rate on each additional dollar of income earned. The average tax rate, however, takes into account all income earned and thus may be lower than the marginal tax rate for higher income earners due to the progressive nature of the tax system. Therefore, A is the correct answer as the marginal tax rate exceeds the average tax rate.

Question 4

The Social Security tax is considered to be a

Accepted Answer

The Social Security tax is considered to be a regressive tax as it is a fixed percentage of wages up to a certain amount ($137,700 in 2020), which means that those earning lower incomes pay a higher percentage of their income towards Social Security taxes compared to those earning higher incomes.

Question 5

When income is $15,000, the amount of income taxes owed is $2,000; when income increases to $20,000, the amount owed increases to $3,000. The average income tax rate when a person earns $15,000 is

Accepted Answer

To find the average income tax rate, we divide the amount of income taxes owed by the amount of income.

For an income of $15,000, the average income tax rate is:
$2,000 ÷ $15,000 = 0.133 or 13.3%

Therefore, the correct answer is C.

Question 6

-Using the above figure, which of the lines in the above diagram represents a proportional tax?

Accepted Answer

The answer of 
-Using the above figure, which of the...

Question 7

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,500 per year. Based on this information, the income tax system is

Accepted Answer

The income tax system is progressive because as income increases, the tax rate also increases. In this scenario, the individual received a raise of $10,000, but their income tax increased by $1,500, indicating that they moved into a higher tax bracket. If the system was proportional or bracketed, then the increase in income would have resulted in a proportional increase in taxes or a fixed tax rate, respectively. If the system was regressive, then the tax rate would decrease as income increases, which is not the case in this scenario.

Question 8

If you were to face a marginal tax rate of 15 percent, how much would your tax bill increase when your income increased by $2,000?

Accepted Answer

If the marginal tax rate is 15%, then for every additional $100 of income, the tax bill increases by $15. Therefore, for an increase of $2,000, the tax bill would increase by 15% of $2,000, which is $300.

Question 9

What are the three sources of funding for the public sector?
 Can the government rely on all of these sources in the long run?
 Explain.

Accepted Answer

The answer of What are the three sources of funding...

Question 10

The marginal tax rate is

Accepted Answer

The marginal tax rate is the increase in taxes as a percentage of the increase in income. It reflects the tax rate on the last dollar earned and is used to calculate the impact of additional income on taxes owed.

Question 11

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system is

Accepted Answer

The answer of Suppose you are making $50,000 per year...

Question 12

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $5,000 in income taxes, the income tax system would be

Accepted Answer

The income tax system would be progressive because Jamal, who earns more, pays a higher amount of taxes, which is a larger percentage of his income compared to Josephina.

Question 13

What is a government's budget constraint in the long run as opposed to a given time period?

Accepted Answer

The answer of What is a government's budget constraint in...

Question 14

-Using the above figure, which of the lines in the above diagram represents a progressive tax?

Accepted Answer

The answer of 
-Using the above figure, which of the...

Question 15

-Using the above figure, which of the lines in the above diagram represents a regressive tax?

Accepted Answer

The answer of 
-Using the above figure, which of the...

Question 16

Another name for a "flat-rate tax" in which the same tax rate applies to all income earners is a

Accepted Answer

A flat-rate tax is also known as a proportional tax because the same tax rate is applied proportionally to all income earners, regardless of their income levels. So, option A is the correct choice. A progressive tax, on the other hand, charges a high tax rate to high-income earners and a lower tax rate to low-income earners. A regressive tax is one in which people with lower incomes pay a higher percentage of their income in taxes compared to the higher-income earners. The term "passive tax" does not exist in taxation terminology.

Question 17

Why is the government budget constraint different between the short run and the long run?

Accepted Answer

The answer of Why is the government budget constraint different...

Question 18

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $8,000 in income taxes, the income tax system would be

Accepted Answer

Both Jamal and Josephina are paying 10% of their income in taxes, which indicates a proportional tax system where the tax rate is the same regardless of income level.

Question 19

Jamal earns $160,000 per year and Josephina earns $80,000 per year. They both pay the same price to buy the identical automobile and each pays $1,600 in sales tax. In relation to their relative incomes, this is an example of a

Accepted Answer

A regressive tax takes a larger percentage of income from low-income earners than from high-income earners. Since Jamal and Josephina pay the same amount in sales tax despite their different incomes, the tax is regressive relative to their incomes.

Question 20

When income is $15,000, the amount of income income taxes owed is $2,000; when income increases to $20,000, the amount owed increases to $3,000. The marginal tax rate in this case is

Accepted Answer

The marginal tax rate is calculated by dividing the change in taxes owed by the change in income. Here, taxes increase by $1,000 ($3,000 - $2,000) when income increases by $5,000 ($20,000 - $15,000). Thus, the marginal tax rate is $1,000 / $5,000 = 0.20, or 20 percent.

Quiz 6: Funding the Public Sector

Assume that Mr. Smith's income increased from $40,000 last year to $45,000 this year and that he paid an additional $2,000 in taxes. This would indicate that his marginal tax rate is

If a tax system is progressive, then

In a progressive income tax system,

The Social Security tax is considered to be a

When income is $15,000, the amount of income taxes owed is $2,000; when income increases to $20,000, the amount owed increases to $3,000. The average income tax rate when a person earns $15,000 is

-Using the above figure, which of the lines in the above diagram represents a proportional tax?

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,500 per year. Based on this information, the income tax system is

If you were to face a marginal tax rate of 15 percent, how much would your tax bill increase when your income increased by $2,000?

What are the three sources of funding for the public sector? Can the government rely on all of these sources in the long run? Explain.

The marginal tax rate is

Suppose you are making $50,000 per year and paying $5,000 per year in income taxes. You get a $10,000 per year raise and your income taxes are now $6,000 per year. Based on this information, the income tax system is

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $5,000 in income taxes, the income tax system would be

What is a government's budget constraint in the long run as opposed to a given time period?

-Using the above figure, which of the lines in the above diagram represents a progressive tax?

-Using the above figure, which of the lines in the above diagram represents a regressive tax?

Another name for a "flat-rate tax" in which the same tax rate applies to all income earners is a

Why is the government budget constraint different between the short run and the long run?

Jamal earns $160,000 per year and Josephina earns $80,000 per year. If Jamal pays $16,000 in income taxes and Josephina pays $8,000 in income taxes, the income tax system would be

Jamal earns $160,000 per year and Josephina earns $80,000 per year. They both pay the same price to buy the identical automobile and each pays $1,600 in sales tax. In relation to their relative incomes, this is an example of a

When income is $15,000, the amount of income income taxes owed is $2,000; when income increases to $20,000, the amount owed increases to $3,000. The marginal tax rate in this case is