Question 1

The statement that "an old tax is a good tax" means that:

Accepted Answer

A)  Changes in the tax law create uncertainty in the business environment.
B)  Changes in the tax law disrupt traditional planning strategies.
C)  Changes in the tax law increase the compliance burden on businesses.
D)  All of the above.E) None of the above
F) A) and B)

Question 2

Tax liability divided by taxable income equals marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 3

According to the Keynesian concept of efficiency, an efficient tax should be neutral in its effect on free market allocations of economic resources.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements about the income and substitution effects of an income tax rate increase is true?

Accepted Answer

A)  The income and substitution effects are contradictory behavioral reactions.
B)  From the government's perspective, the substitution effect is more desirable than the income effect.
C)  Faith in the income effect is the foundation for supply-side economic theory.
D)  Dynamic forecasts of incremental tax revenues must consider the potential income effect but not the potential substitution effect of a rate increase.E) None of the above
F) C) and D)

Question 5

The federal Social Security tax burden on employees has not increased since 1990 because the tax rate has not increased since that year.

Accepted Answer

A) True 
 B)False

Exam 2: Policy Standards for a Good Tax

According to the Keynesian concept of efficiency, an efficient tax should be neutral in its effect on free market allocations of economic resources.

Correct Answer
verified

The federal Social Security tax burden on employees has not increased since 1990 because the tax rate has not increased since that year.

Correct Answer
verified

The statement that "an old tax is a good tax" means that:

Correct Answer
verified

Tax liability divided by taxable income equals marginal tax rate.

Correct Answer
verified

Which of the following statements about the income and substitution effects of an income tax rate increase is true?

Correct Answer
verified

Exam 2: Policy Standards for a Good Tax

According to the Keynesian concept of efficiency, an efficient tax should be neutral in its effect on free market allocations of economic resources.

Correct AnswerverifiedShow Answer

The federal Social Security tax burden on employees has not increased since 1990 because the tax rate has not increased since that year.

Correct AnswerverifiedShow Answer

The statement that "an old tax is a good tax" means that:

Correct AnswerverifiedShow Answer

Tax liability divided by taxable income equals marginal tax rate.

Correct AnswerverifiedShow Answer

Which of the following statements about the income and substitution effects of an income tax rate increase is true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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