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Economics 101 Practice Test: The Tax System
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Taxation is a term for when a taxing authority, usually a government, levies or imposes a financial obligation on its citizens or residents.

Related Test: Economics 101 Practice Test: Taxation

Economics 101 Practice Test: The Tax System
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25 Questions

1. The deadweight loss associated with a tax on a product occurs because
2. Horizontal equity refers to the idea that
3. Lump-sum taxes are rarely used in the real world because they
4. The “flypaper theory” of taxation suggests that
5. If marginal tax rates increase, the
6. The argument that might be used to require wealthier taxpayers to pay more in taxes for law enforcement because they own more and therefore have more to protect than poorer taxpayers would be based on
7. Vertical equity states that taxpayers with a greater ability to pay taxes should
8. When a taxpayer attempts to legally reduce her tax liability, she is engaging in
9. As government debt increases,
10. Which of the following statements would NOT be used by an advocate of the flat tax?
11. When the government levies a tax on a corporation,
12. With a progressive income tax, marginal tax rates rise as income rises. This means that in general,
13. Incentives to work and save are reduced when
14. If the government taxes the first $50,000 of a person’s income at 20% and all income above $50,000 at 50%, then a person making $80,000 would be required to pay how much in taxes?
15. A tax on the wages that a firm pays its workers is called a(n)
16. When tax laws give preferential treatment to specific types of behavior it is called
17. State and local governments receive the largest portion of their tax revenues from
18. If the government were attempting to get people to save more of their income they might choose to impose a
19. The U.S. income tax
20. If the government were to impose a tax that assigned everyone the same tax liability, it would be
21. When the government places a tax on labor earnings, one result is that people
22. The corporate income tax
23. The largest source of revenue for the federal government is the
24. A well-designed tax system addresses both
25. As tax laws become more complex,

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