Week 5 Home Assignment

1. Which of the following best describes the principle of equity in taxation?

• a) Taxation should promote economic growth

• b) Taxes should be easy to administer

• c) Taxpayers should contribute according to their ability to pay

• d) Taxation should discourage imports

2. What is horizontal equity in taxation?

• a) Different income groups pay different tax rates

• b) People with the same income pay the same amount in taxes

• c) Higher income earners pay a larger percentage of their income in taxes

• d) Taxes are applied uniformly regardless of income

3. Which type of tax system is most closely associated with vertical equity?

• a) Regressive tax

• b) Proportional tax

• c) Progressive tax

• d) Flat tax

4. Which of the following describes an efficient tax system?

• a) A tax that raises revenue with minimal economic distortion

• b) A tax that reduces inequality

• c) A tax that is based on property ownership

• d) A tax that can be easily avoided

5. Which of the following is an example of tax simplicity?

• a) A tax with many exemptions and deductions

• b) A tax that requires complex calculations

• c) A tax that is easy to understand and administer

• d) A tax with different rates for every income level

6. What principle of taxation is violated when a tax creates large administrative costs?

• a) Equity

• b) Simplicity

• c) Efficiency

• d) Flexibility

7. A regressive tax is one where:

• a) Higher income individuals pay a higher percentage of their income

• b) All individuals pay the same dollar amount

• c) Lower-income individuals pay a higher percentage of their income

• d) The tax rate increases with income

8. Which of the following taxes would most likely be considered progressive?

• a) Sales tax

• b) Payroll tax

• c) Income tax with brackets

• d) Property tax

9. What is the main goal of taxation according to the principle of efficiency?

• a) Minimize the burden on taxpayers

• b) Maximize government revenue with minimal loss to the economy

• c) Ensure that everyone pays the same amount

• d) Redistribute wealth to reduce inequality

0. Which principle suggests that taxes should be designed to minimize interference with economic decisions?

• a) Equity

• b) Efficiency

• c) Simplicity

• d) Transparency