CHAPTER 12 - Chapter12 TheDesignoftheTaxSystem 1. During...

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Chapter 12 The Design of the Tax System 1. During what  war did  government  spending  rise dramatically in the United  States, and  then never  again fall to its peacetime levels? a. Civil War b. World  War I c. World  War II d. Vietnam  War ANSWER: c World  War II SECTION: 1 OBJECTIVE: 1  2. Which type of tax is used  to finance the Social Security program  in the United  States? a. consumption  tax b. income tax c. payroll tax d. property  tax ANSWER: c payroll tax SECTION: 1 OBJECTIVE: 1  3. All of the following  are transfer payments except a. Medicaid. b. unemployment  compensation. c. personal income taxes. d. food stamps. ANSWER: c personal income taxes. SECTION: 1 OBJECTIVE: 1 4. If Nebraska  imposed  a tax on milk of 10 cents per gallon, a. this is an excise tax. b. this is an income tax. c. tax revenue  will fall. d. the supply  of milk will rise. ANSWER: a this is an excise tax. SECTION: 1 OBJECTIVE: 1  5. If either supply  or demand  is perfectly inelastic, then the deadweight  social loss from a tax is a. infinite. b. large. c. small. d. zero. ANSWER: d zero. SECTION: 2 OBJECTIVE: 2  69
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70    Chapter 12/The Design of the Tax System 6. The deadweight  loss from a tax increases as supply  becomes more __________ or as demand   becomes more __________. a. inelastic; inelastic b. inelastic; elastic c. elastic; elastic d. elastic; inelastic ANSWER: c elastic; elastic SECTION: 2 OBJECTIVE: 2 7. Minimizing the total deadweight  loss from taxes that raise a certain amount  of revenue  for the  government  is known  as a. an external benefit. b. optimal taxation. c. a lump-sum  tax scheme. d. horizontal equity.
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CHAPTER 12 - Chapter12 TheDesignoftheTaxSystem 1. During...

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