Question 1

Which of the following most clearly distinguishes government from a private business?

Accepted Answer

A) the power to tax 
B) the hiring of educated employees 
C) the production of goods and services 
D) the need to make managerial decisions 
A) the power to tax 
B) the hiring of educated employees 
C) the production of goods and services 
D) the need to make managerial decisions

Question 2

During the quarter of a century prior to 2000,between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes.What happened to the share of adult Americans with a personal income tax liability between 2000 and 2009?

Accepted Answer

A) It rose to nearly 90 percent. 
B) It rose to approximately 80 percent. 
C) It was virtually constant at approximately 70 percent. 
D) It fell to 51 percent. 
A) It rose to nearly 90 percent. 
B) It rose to approximately 80 percent. 
C) It was virtually constant at approximately 70 percent. 
D) It fell to 51 percent.

Question 3

In 1980,the top 1 percent of earners paid 19.1 percent of the federal personal income tax.By 2008,the share of this tax collected from the top 1 percent of earners

Accepted Answer

A) had declined to less than 15 percent. 
B) was still slightly less than 20 percent. 
C) had risen to approximately 25 percent. 
D) had risen to over 35 percent. 
A) had declined to less than 15 percent. 
B) was still slightly less than 20 percent. 
C) had risen to approximately 25 percent. 
D) had risen to over 35 percent.

Question 4

Compared to the situation prior to 1980,the top marginal personal income tax rate imposed on the rich is now substantially

Accepted Answer

A) lower and so is the share of the revenue collected from them. 
B) higher and so is the share of the revenue collected from them. 
C) lower,but the share of the revenue collected from them is now higher. 
D) higher,but the share of the revenue collected from them is now lower. 
A) lower and so is the share of the revenue collected from them. 
B) higher and so is the share of the revenue collected from them. 
C) lower,but the share of the revenue collected from them is now higher. 
D) higher,but the share of the revenue collected from them is now lower.

Question 5

Which of the following correctly expresses the relationship between the size of government and economic growth?

Accepted Answer

A) Because it is the private sector in which growth occurs,the size of government is generally unrelated to the rate of economic growth. 
B) When government is small,an increase in its size may increase economic growth,but beyond some point,further increases in the size of government will reduce economic growth. 
C) When government is small,an increase in its size may initially lower economic growth,but when it becomes large enough,expansions in government generally increase the rate of economic growth. 
D) The rate of economic growth appears to be increasing with the size of government for the levels of government that we observe in most major industrialized countries. 
A) Because it is the private sector in which growth occurs,the size of government is generally unrelated to the rate of economic growth. 
B) When government is small,an increase in its size may increase economic growth,but beyond some point,further increases in the size of government will reduce economic growth. 
C) When government is small,an increase in its size may initially lower economic growth,but when it becomes large enough,expansions in government generally increase the rate of economic growth. 
D) The rate of economic growth appears to be increasing with the size of government for the levels of government that we observe in most major industrialized countries.

Question 6

As the size of government increases as a share of the economy,

Accepted Answer

A) the burden of deadweight losses of taxation generally diminishes. 
B) the rate of return derived from projects undertaken by the government will tend to increase. 
C) the government generally becomes more heavily involved in unproductive and even counterproductive activities. 
D) the activities of government are generally limited to protective functions such as public safety ,national defense,and provision of a limited set of public goods. 
A) the burden of deadweight losses of taxation generally diminishes. 
B) the rate of return derived from projects undertaken by the government will tend to increase. 
C) the government generally becomes more heavily involved in unproductive and even counterproductive activities. 
D) the activities of government are generally limited to protective functions such as public safety ,national defense,and provision of a limited set of public goods.

Question 7

What percentage of Americans age 18 and over paid personal income taxes in 2009?

Accepted Answer

A) 92 percent 
B) 75 percent 
C) 51 percent 
D) 33 percent 
A) 92 percent 
B) 75 percent 
C) 51 percent 
D) 33 percent

Question 8

Total government spending (federal,state,and local)sums to approximately

Accepted Answer

A) 10 percent of the U.S.economy. 
B) 20 percent of the U.S.economy. 
C) 40 percent of the U.S.economy. 
D) 50 percent of the U.S.economy. 
A) 10 percent of the U.S.economy. 
B) 20 percent of the U.S.economy. 
C) 40 percent of the U.S.economy. 
D) 50 percent of the U.S.economy.

Question 9

Which of the following is true regarding U.S.federal government expenditures?

Accepted Answer

A) National defense has fallen from 52.2 percent of the federal budget in 1960 to 21 percent in 2008. 
B) Federal expenditures on income transfers and health care have risen from 21.5 percent of the budget in 1960 to 57.7 percent in 2008. 
C) Corrected for inflation,the average person today pays more federal taxes in one week than the average person in 1900 paid in an entire year. 
D) All of the above are true. 
A) National defense has fallen from 52.2 percent of the federal budget in 1960 to 21 percent in 2008. 
B) Federal expenditures on income transfers and health care have risen from 21.5 percent of the budget in 1960 to 57.7 percent in 2008. 
C) Corrected for inflation,the average person today pays more federal taxes in one week than the average person in 1900 paid in an entire year. 
D) All of the above are true.

Question 10

In 2010,spending on four items-income transfers (including Social Security),health care,national defense,and interest on the national debt-accounted for

Accepted Answer

A) approximately 25 percent of federal spending. 
B) approximately 40 percent of federal spending. 
C) slightly more than 50 percent of federal spending. 
D) approximately 88 percent of federal spending. 
A) approximately 25 percent of federal spending. 
B) approximately 40 percent of federal spending. 
C) slightly more than 50 percent of federal spending. 
D) approximately 88 percent of federal spending.

Question 11

In 2010,federal expenditures on income transfers,health care,national defense,and interest on the national debt accounted for

Accepted Answer

A) less than 20 percent of federal spending. 
B) about 40 percent of federal spending. 
C) approximately 50 percent of federal spending. 
D) more than 85 percent of federal spending. 
A) less than 20 percent of federal spending. 
B) about 40 percent of federal spending. 
C) approximately 50 percent of federal spending. 
D) more than 85 percent of federal spending.

Question 12

OECD data for 1960 through 1999 indicates that a 10 percent increase in government expenditures as a percent of GDP

Accepted Answer

A) increases economic growth by about 5 percent. 
B) increases economic growth by about 2 percent. 
C) has no effect on economic growth. 
D) reduces economic growth by about 1 percent. 
A) increases economic growth by about 5 percent. 
B) increases economic growth by about 2 percent. 
C) has no effect on economic growth. 
D) reduces economic growth by about 1 percent.

Question 13

In recent years,what percentage of American families have derived income transfers from at least one government transfer program?

Accepted Answer

A) less than 20 percent 
B) approximately 53 percent 
C) approximately 62 percent 
D) nearly 75 percent 
A) less than 20 percent 
B) approximately 53 percent 
C) approximately 62 percent 
D) nearly 75 percent

Question 14

During the last four decades,the composition of federal spending has

Accepted Answer

A) been virtually unchanged,but federal spending as a share of GDP has declined substantially. 
B) been virtually unchanged,but federal spending as a share of GDP has increased sharply. 
C) shifted away from national defense and toward spending on income transfers and health care. 
D) shifted away from health care and income transfers and toward spending on national defense. 
A) been virtually unchanged,but federal spending as a share of GDP has declined substantially. 
B) been virtually unchanged,but federal spending as a share of GDP has increased sharply. 
C) shifted away from national defense and toward spending on income transfers and health care. 
D) shifted away from health care and income transfers and toward spending on national defense.

Question 15

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2008?

Accepted Answer

A) less than 10 percent 
B) approximately 15 percent 
C) approximately 20 percent 
D) more than 35 percent 
A) less than 10 percent 
B) approximately 15 percent 
C) approximately 20 percent 
D) more than 35 percent

Question 16

The private sector cost of tax revenues is equal to the

Accepted Answer

A) tax revenue collected by government from individuals in the economy. 
B) income that could have been earned by government employees if they had worked in the private sector. 
C) difference between government expenditures and tax revenues. 
D) tax revenue plus the cost of tax compliance and the excess burden of taxation. 
A) tax revenue collected by government from individuals in the economy. 
B) income that could have been earned by government employees if they had worked in the private sector. 
C) difference between government expenditures and tax revenues. 
D) tax revenue plus the cost of tax compliance and the excess burden of taxation.

Question 17

In 2006,the income tax payments of the poorest 50 percent of Americans accounted for approximately what percent of all federal income tax revenue?

Accepted Answer

A) 3 percent 
B) 25 percent 
C) 50 percent 
D) 76 percent 
A) 3 percent 
B) 25 percent 
C) 50 percent 
D) 76 percent

Question 18

Government expenditures as a share of the U.S.economy are

Accepted Answer

A) the largest in the world. 
B) the smallest in the world. 
C) smaller than most Western European countries but larger than a number of high-growth Asian economies. 
D) larger than Canada,France,and the United Kingdom but slightly smaller than Germany and Italy. 
A) the largest in the world. 
B) the smallest in the world. 
C) smaller than most Western European countries but larger than a number of high-growth Asian economies. 
D) larger than Canada,France,and the United Kingdom but slightly smaller than Germany and Italy.

Question 19

Which of the following most clearly distinguishes government from a private business?

Accepted Answer

A) production of goods and services-private businesses produce things;governments do not 
B) the power to tax 
C) the hiring of law enforcement employees to protect property rights 
D) selfishness-the owners and managers of private businesses are selfish;government officials are not 
A) production of goods and services-private businesses produce things;governments do not 
B) the power to tax 
C) the hiring of law enforcement employees to protect property rights 
D) selfishness-the owners and managers of private businesses are selfish;government officials are not

Question 20

As government becomes larger and larger as a share of the economy,economic growth is likely to decline because

Accepted Answer

A) taxes are reduced to levels that are inconsistent with economic efficiency. 
B) governments are involved in many activities for which they are ill-suited. 
C) tax-transfer activities are reduced and sometimes virtually eliminated. 
D) governments do not spend enough on the provision of key public goods like education. 
A) taxes are reduced to levels that are inconsistent with economic efficiency. 
B) governments are involved in many activities for which they are ill-suited. 
C) tax-transfer activities are reduced and sometimes virtually eliminated. 
D) governments do not spend enough on the provision of key public goods like education.

Exam 29: Government Spending and Taxation

Which of the following most clearly distinguishes government from a private business?

During the quarter of a century prior to 2000,between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes.What happened to the share of adult Americans with a personal income tax liability between 2000 and 2009?

In 1980,the top 1 percent of earners paid 19.1 percent of the federal personal income tax.By 2008,the share of this tax collected from the top 1 percent of earners

Compared to the situation prior to 1980,the top marginal personal income tax rate imposed on the rich is now substantially

Which of the following correctly expresses the relationship between the size of government and economic growth?

As the size of government increases as a share of the economy,

What percentage of Americans age 18 and over paid personal income taxes in 2009?

Total government spending (federal,state,and local)sums to approximately

Which of the following is true regarding U.S.federal government expenditures?

In 2010,spending on four items-income transfers (including Social Security),health care,national defense,and interest on the national debt-accounted for

In 2010,federal expenditures on income transfers,health care,national defense,and interest on the national debt accounted for

OECD data for 1960 through 1999 indicates that a 10 percent increase in government expenditures as a percent of GDP

In recent years,what percentage of American families have derived income transfers from at least one government transfer program?

During the last four decades,the composition of federal spending has

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2008?

The private sector cost of tax revenues is equal to the

In 2006,the income tax payments of the poorest 50 percent of Americans accounted for approximately what percent of all federal income tax revenue?

Government expenditures as a share of the U.S.economy are

Which of the following most clearly distinguishes government from a private business?

As government becomes larger and larger as a share of the economy,economic growth is likely to decline because

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