Macro Econ Chapter 17
What is the federal corporate tax rate in the United States? The corporate tax rate is Who bears most of the cost of paying the corporate income tax The cost is borne by
21% Shareholders and bondholders
Suppose that in 2019, Mexico's total government outlays were 667 billion pesos and total government revenue was 690 billion pesos. Calculate Mexico's budget surplus or deficit. Be sure to include a negative sign if appropriate. Select the answer that best describes the impact that the surplus or deficit you calculated will have on Mexico's debt. Mexico's debt will
690 - 667 = 23 billion pesos Fall by an amount equal to the size of the surplus
Which phrase best describes a capital gain? A capital gain is Which phrase best describes a dividend? A dividend is
An increase in the value of an asset A portion of profits paid back to shareholders
Match the terms with their definition.
Budget surplus - When the government receives more in taxes than it spends in a given time period Budget deficit - When the federal government spends more than it collects in taxes in a given time period Balanced budget - When government spending and taxes are equal Government debt - The total accumulated amount that the government has borrowed and not yet paid back over time
Suppose that a nation decides to introduce a new income tax system with the tax brackets shown in the table. Income range; Tax rate $0-$20,000; 0% $20,001-$39,000; 31% $39,001-$70,000; 42% $70,001+; 50% Use the table to calculate the average tax rate and marginal tax rate for each of the families. Where applicable, round your answer to the nearest whole number. Byrne family Income=$25,000 Smith family Income=$48,000 Washington family Income=$62,000 Lee family Income=$123,000
Byrne Family - 25,000-20,000 = 5,000 5,000 * 31% = 1,550 1,550 / 25,000 = 6% Average tax rate: 6% Marginal tax rate: 31% Smith Family - 39,000-20,000 = 19,000 19,000 * 31% = 5,890 48,000-39,000 = 9,000 9,000 * 42% = 3,780 5,980 + 3,780 = 9,670 9,670 / 48,000 = 20% Average tax rate: 20% Marginal tax rate: 42% Washington Family - Average tax rate: 25% Marginal tax rate: 42% Lee Family - Average tax rate: 37% Marginal tax rate: 50%
Suppose the government increases taxes. What will happen to disposable income and consumer spending? Disposable income Consumer spending will
Falls Decrease
Which is the largest source of tax revenue in the United States? The most revenue comes from
Individual income taxes
Laura earns a base salary of $50,000 as an event planner and is subject to the following hypothetical income tax bracket. Laura is considering taking on an additional wedding that will increase her income by $5,000. In order for Laura to deem the wedding worth her time, it must earn her $3,000 after taxes. Please round all answers to two decimal places. Income; Tax rate $0-$10,000; 5% $10,001-$30,000; 10% $30,001-$50,000; 20% $50,001+; 50% What is the marginal tax rate associated with taking on this wedding? What is Laura's average tax rate if the extra wedding is accepted? Given the information, will Laura undertake this extra wedding? How much does Laura end up paying in taxes?
Marginal tax rate: 50% ((10,000*0.05) +(20,000*0.10) + (20,000*0.20) + (5,000*0.50)) / 55,000 = (500 + 2,000 + 4,000 + 2,500) / 55,000 = 16.36% Average tax rate: 16.36% No ((10,000 * 0.05) + (20,000 * 0.10) + (20,000 * 0.20)) = $6500
For each of the pairs, please select who tends to benefit more from Social Security. What does it mean that Social Security is a pay‑as‑you‑go system? It means
Men or women - Women Low income or high income - Low income Married or single - Married Revenue from the current Social Security tax is used to fund current payments
Medicare payroll tax is an example of what type of tax? It is a(n)
Proportional or flat tax
Which are reasons *not* to depend on Social Security as a retirement plan? Choose all that apply.
There is no money in "your account" The Social Security tax is "pay as you go"
