ECON 2302 Chapter 33 Quiz

Figure 33.2 illustrates Lorenz curves for four different economies. For which economy would lower-income families receive the largest share of total income?

D

Refer to the labor market in Figure 33.5. Suppose that the government imposes a payroll tax on employers in this market. How much of the tax burden will the employers actually pay?

$10 - $8 = $2 per hour

Suppose a taxpayer has an income of $100,000 and a taxable income of $80,000, and pays taxes of $10,000. If the taxpayer talks of being taxed at a 10 percent rate, she is referring to the

Effective tax rate

The effective tax rate refers to the actual taxes paid as a percentage of taxable income.

False

Since the current tax system is fairly ineffective at redistributing income, some people think this indicates

Government failure

If a greater portion of income is distributed to those in the highest income quintile, the

Lorenz curve sags below the diagonal line of absolute equality.

If an individual is taxed at a 17 percent rate for each extra dollar earned, the reference is to the

Marginal tax rate

The Bush tax cuts of 2001-2010 increased education incentives, and as a result,

New vertical inequities were introduced into the tax system

Personal income is

The income received by households before payment of personal taxes.

If an accountant makes $80,000 and after deductions pays $8,000 in taxes while an administrative assistant makes $35,000 and after deductions pays $2,000 in taxes, this is an example of

Vertical equity