Taxation MCQs

Option A: marginal tax rates are high.

Option B: higher income taxpayers pay more taxes than do lower income taxpayers.

Option C: marginal tax rates are low.

Option D: higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers.

Correct Answer: higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers. ✔

Option A: marginal tax rate

Option B: average tax rate

Option C: horizontal tax rate

Option D: proportional tax rate

Correct Answer: average tax rate ✔

Option A: minimizes the administrative burden form the tax

Option B: does all the things describe in these answers

Option C: raises revenue at the smallest possible cost to taxpayers.

Option D: minimize the deadweight loss from the tax.

Correct Answer: does all the things describe in these answers ✔

Option A: the deadweight has demonstrated

Option B: the ability-to-pay principle

Option C: the benefits principle

Option D: horizontal equity

Correct Answer: the deadweight has demonstrated ✔

Option A: caused a deadweight loss

Option B: decreased equity

Option C: generated no tax revenue

Option D: increased efficiency

Correct Answer: caused a deadweight loss ✔

Option A: doubles

Option B: stays the same

Option C: increase by a factor of four.

Option D: could rise or fall

Correct Answer: increase by a factor of four. ✔

Option A: will fall

Option B: will rise

Option C: will first rise and then fall

Option D: will first fall and then rise

Correct Answer: will first rise and then fall ✔

Option A: a small deadweight loss and the burden of the tax would fall on the renter

Option B: a large deadweight loss and the burden of the tax would fall on the landlora

Option C: a large deadweight loss and the burden of the tax would fall on the renter.

Option D: a small deadweight loss and the burden of the tax would fall on the landlord

Correct Answer: a small deadweight loss and the burden of the tax would fall on the landlord ✔

Option A: generate a deadweight loss that is unaffected by the time period over which it is measured

Option B: cause a greater deadweight loss in the long run when compared to the short run

Option C: None of these answers

Option D: cause a greater deadweight loss in the short run when compared to the long run.

Correct Answer: cause a greater deadweight loss in the long run when compared to the short run ✔

Option A: The buyers pay a larger portion of the tax because demand is more inelastic than supply

Option B: The sellers pay a larger portion of the tax because supply is more elastic than demand

Option C: The buyers pay a larger portion of the tax because demand is more elastic then supply

Option D: The sellers pay a larger portion of the tax because supply is more inelastic than demand

Correct Answer: The sellers pay a larger portion of the tax because supply is more inelastic than demand ✔

Option A: A + B + C + D+ E +F

Option B: A + B + C + D

Option C: A + D

Option D: B + C + E + F

Correct Answer: A + B + C + D ✔

Option A: C + F

Option B: A

Option C: B

Option D: C

Correct Answer: C ✔

Option A: A + B + E

Option B: A + B + C + D

Option C: A

Option D: D

Correct Answer: D ✔

Option A: A + B + E

Option B: D

Option C: C + F

Option D: C + D + F

Correct Answer: D ✔

Option A: All these answers can be supported by the benefits principle of taxation

Option B: Progressive income taxes used to pay for national defense

Option C: Petrol taxes used to pay for roads

Option D: property taxes used to pay for policies and the court system

Correct Answer: All these answers can be supported by the benefits principle of taxation ✔

Option A: all taxpayers pay the same amount of tax

Option B: taxes on all goods are levied at the same rate

Option C: taxes are as low as possible

Option D: the system comprises only lump sum taxes

Correct Answer: taxpayers with similar abilities to pay taxes pay the same amount ✔

Option A: Proportional tax rate

Option B: average tax rate

Option C: marginal tax rate

Option D: vertical tax rate

Correct Answer: marginal tax rate ✔

Option A: efficient

Option B: progressive

Option C: regressive

Option D: proportional

Correct Answer: progressive ✔

Option A: total taxes paid divided by total income

Option B: the extra taxes paid on an additional dollar or income.

Option C: the taxes paid by the marginal worker

Option D: total income divided by total taxes paid

Correct Answer: total taxes paid divided by total income ✔

Option A: the taxes paid by the marginal worker

Option B: total income divided by total taxes paid

Option C: the extra taxes paid on an additional unit of income

Option D: total taxes paid divided by total income

Correct Answer: the extra taxes paid on an additional unit of income ✔

Option A: a proportional tax

Option B: a regressive tax

Option C: an equitable tax

Option D: a progressive tax

Correct Answer: a regressive tax ✔

Option A: an excess of government receipts over government spending.

Option B: an equality of government spending and receipts.

Option C: a surplus of government workers.

Option D: an excess of government spending over government receipts.

Correct Answer: an excess of government receipts over government spending. ✔

Option A: will have no impact on tax revenue.

Option B: will always reduce tax revenue regardless of the prior size of the tax

Option C: could increase tax revenue if the tax had been extremely high

Option D: causes a market to become less efficient

Correct Answer: could increase tax revenue if the tax had been extremely high ✔

Option A: none of these answers

Option B: Reagan curve

Option C: Keynesian curve

Option D: Laffer curve

Correct Answer: Laffer curve ✔

Option A: the unscrupulous to enter the underground economy

Option B: the elderly to retire early.

Option C: all the things described in these answers.

Option D: second earners to stay home.

Correct Answer: all the things described in these answers. ✔

Option A: supply is elastic, and demand is perfectly inelastic

Option B: demand is elastic, and demand is perfectly inelastic

Option C: both supply and demand are relatively inelastic

Option D: both supply and demand are relatively elastic

Correct Answer: both supply and demand are relatively elastic ✔

Option A: a tax on salt

Option B: a tax on cigarettes

Option C: a tax on petrol

Option D: a tax on cruise line tickets

Correct Answer: a tax on cruise line tickets ✔

Option A: B + C + E + F

Option B: E + F

Option C: B + C

Option D: A + B + C + D

Correct Answer: E + F ✔

Option A: B + C + E + F

Option B: E + F

Option C: A + B + C + D

Option D: A + B + C + D + E + F

Correct Answer: E + F ✔

Option A: B + C + E + F

Option B: B

Option C: B + C

Option D: A

Correct Answer: B ✔

Option A: D

Option B: A

Option C: A + B + E

Option D: A + B +C + D

Correct Answer: A ✔

Option A: C + D + F

Option B: A

Option C: A + B + E

Option D: D + C + B

Correct Answer: A ✔