Chapter 34 Part 1

1.

1 point

Which of the following accounts for the largest source of tax receipts for the U.S.
federal government?

social Security tax

corporate income tax

individual income tax

excise tax

2.

1 point

Social Security is run on a ______ basis.

contract

trust fund

prepaid

pay-as-you-go

3.

1 point

Which of the following is TRUE of government spending and revenue projections as a
share of GDP for the next 50 years?

Both total spending and total revenue will fall.

Total spending will rise more rapidly than the total revenue.

Total spending will rise more slowly than the total revenue.

Total spending will rise at the same rate as the total revenue.

4.

1 point

Originally the alternative minimum tax was supposed to

alleviate the tax burden for low-income households.

decrease taxes amongst the middle-class to the minimum level.

help low-income households with more than two children.

ensure a minimum tax payment among superrich households.

5.

1 point

If you pay an average tax rate of 25 percent on your salary of $20,000 and your
neighbor pays an average tax rate of 10 percent on his salary of $300,000, the tax
system is

flat.

regressive.

progressive.

proportional.

6.

1 point

Whereas ______ covers the elderly, ______ covers the poor and the disabled.

HMO; PPO

Medicaid; Medicare

PPO; HMO

Medicare; Medicaid

7.

1 point

The average tax rate is

the total tax payment divided by total income.

the tax rate paid on an additional dollar of income.

higher on people with higher incomes.

a separate income tax code begun in 1969 to prevent the rich from paying income taxes.

8.

1 point

From 2008 to 2010, U.S. federal government spending increased to about

15 percent of GDP

30 percent of GDP.

25 percent of GDP.

20 percent of GDP.

9.

1 point

About two-thirds of the U.S. federal budget is spent on all of the following programs,
except

Medicare.

Social Security.

unemployment insurance and welfare.

Medicaid.

10.

1 point

Revenue collected through the Federal Insurance Contributions Act is used to fund

the Federal Deposit Insurance Corporation.

Social Security payments

unemployment insurance.

unemployment compensation.

11.

1 point

Which of the following is true when measuring the role of the government in an
economy by the amount of its government spending?

Government spending is not related to the role of government on the economy because most government actions are motivated by politics.

The amount of government spending overstates the role of the government on the economy because it ignores the costs associated with corruption in the government.

The amount of government spending understates the role of the government in an economy because of the effects of government policies on economic activity.

The amount of government spending overstates the role of the government on the economy because most government actions have negative effects on free markets.

12.

1 point

Together, Social Security, defense, Medicare, and Medicaid made up approximately
________ of federal government spending in 2010, the year illustrated in the text.

58 percent

68 percent

38 percent

48 percent

13.

1 point

Foreign aid makes up approximately what percent of the U.S. federal government
budget?

10 Percent

25 Percent

1 Percent

5 Percent

14.

1 point

Moving from a progressive tax system to a flat tax system would most likely

decrease investment.

raise taxes for poor and middle-income households.

raise taxes on the rich.

lower overall tax revenue.

15.

1 point

What are the three largest sources of tax revenue for the U.S. federal government?

individual income tax, Social Security/Medicare, and corporate income tax

individual income tax, corporate income tax, and sales tax

corporate income tax, excise taxes, and Social Security/Medicare

Social Security/Medicare, corporate income tax, and custom duties

16.

1 point

The current Congressional Budget Office projection for the debt-to-GDP ratio is that

the federal debt will grow much more slowly than the economy over the long run

under any plausible scenario, the federal budget is on a sustainable path.

the federal debt will grow much faster than the economy over the long run.

under any plausible scenario, the federal budget is on a continuous path.

17.

1 point

A ______ has higher rates on people with lower incomes.

flat tax

progressive tax

marginal tax

regressive tax

18.

1 point

Which of the following reduces taxable income?

neither deductions nor exemptions

deductions only

both deductions and exemptions

exemptions only

19.

1 point

As income rises, the marginal tax rate for married couples

decreases in steps.

decreases smoothly.

increases smoothly.

increases in steps.

20.

1 point

The first payment of Social Security benefit began in

1929

1940

1935

1955

21.

1 point

The Social Security program in the United States is financed by

FICA tax revenue.

excise tax revenue.

individual income tax revenue.

corporate income tax revenue.

22.

1 point

What is the level of per capita federal taxes collected in the United States each year?

$700

$4000

$7000

$400

23.

1 point

If you purchased 10 shares of Goldman Sachs stock for $1,200 five years ago and
decide to sell the stock today, since its value has risen to $1,500, how much will you
owe in capital gains tax on your 10 shares? (Assume the tax rate on capital gains is set at
15 percent.)

$180

$45

$225

$0

24.

1 point

The U.S. income tax system is

regressive.

proportional.

progressive.

marginal.

25.

1 point

Which statement about individual income taxes in the United States is TRUE?

All individuals pay the same average tax rate.

There is a huge difference in the tax rate paid within each bracket.

Taxes rates include and vary between 10 percent and 91 percent.

Marginal tax rates are flatter and lower than in the past.

26.

1 point

Over half of U.S. federal income taxes are paid by

the bottom 20 percent of income earners.

the middle class: the twentieth percentile to the eightieth percentile of income earners.

the top 10 percent of income earners.

the top 1 percent of income earners.

27.

1 point

Which of the following welfare payments is made to poor households with children?

earned income tax credit

housing vouchers

temporary assistance for needy families

Social Security

28.

1 point

(Table: A Cross-Country Comparison) According to the data in the table, which country
has a regressive tax rate system?

C only

A only

None of the countries has it.

B and C only

29.

1 point

According to the U.S. Congressional Budget Office, which category of government
spending as a percentage of GDP will increase over time in the future?

national defense

Medicare and Medicaid payments

Social Security payments

earmarked programs

30.

1 point

Which of the following statements about the Social Security program is correct?

On average, retirees in the United States receive about $8,000 per month in Social Security payments.

Women, who generally live longer than men, benefit more from the system.

Your Social Security withholdings from your paychecks are deposited into an account for you.

The earlier you retire, the greater the benefits you receive from the Social Security system.