Question

1.

Wealth refers to

Group of answer choices

The way personal income is divided among households.

A flow of money over time.

The market value of assets people own.

The purchasing power this year.

2.

Tax incidence most accurately refers to

Group of answer choices

The distribution of the real burden of a tax.

The taxes paid divided by taxable income.

Those from whom a tax is collected.

The relative tax burdens of state and local governments.

3.

Suppose a taxpayer has an income of $120,000 and a taxable income of $80,000, and pays $20,000 in taxes. If the taxpayer says she is taxed at a 25 percent tax rate, she is referring to the

Group of answer choices

Effective tax rate.

Average tax rate.

Marginal tax rate.

Nominal tax rate.

4.

Which of the following is true about a payroll tax?

Group of answer choices

It results in more workers being employed.

It reduces the net wage to employees.

It reduces the nominal cost of labor.

It shifts the labor supply curve to the right.

5.

Government attempts to create a more equitable income distribution by increasing marginal tax rates may do all of the following except

Group of answer choices

Reduce output.

Increase unemployment.

Increase work effort.

Reduce government tax receipts.

Answer 1

1. The market value of assets people own.

Explanation: The wealth of a person refers to the market value of assets of the person.

2. The distribution of the real burden of a tax.

Explanation: Tax incidence refers to how the burden of a particular tax gets distributed.

3. Effective tax rate.

Explanation: Effective tax rate = tax amount / taxable income * 100 = 20,000/80,000 * 100 = 1/4 * 100 = 25%

4. It reduces the net wage to employees.

Explanation: The burden of the payroll tax falls on both the employers and the employees.

5. Increase work effort.

Explanation: This might actually reduce work efforts.