Question 1

The marginal tax rate is the tax rate paid on an:

Accepted Answer

A)  average amount of income. 
B)  additional dollar of income. 
C)  average amount of spending. 
D)  additional dollar of spending. 
A)  average amount of income. 
B)  additional dollar of income. 
C)  average amount of spending. 
D)  additional dollar of spending.

Question 2

Which of the following reduces taxable income?

Accepted Answer

A)  deductions only 
B)  exemptions only 
C)  both deductions and exemptions 
D)  neither deductions nor exemptions 
A)  deductions only 
B)  exemptions only 
C)  both deductions and exemptions 
D)  neither deductions nor exemptions

Question 3

If most people in country A fall in the lowest tax bracket and most people in country B fall in the highest tax bracket and both countries have progressive tax systems,we should expect tax revenues to be higher in country A.

Accepted Answer

A) True 
 B)False

Question 4

A good way to judge the fiscal health of the federal government is by looking at today's budget deficit.

Accepted Answer

A) True 
 B)False

Question 5

The largest component of government spending is paying interest on the national debt.

Accepted Answer

A) True 
 B)False

Question 6

The average tax rate is:

Accepted Answer

A)  the tax rate paid on an additional dollar of income. 
B)  higher on people with higher incomes. 
C)  the total tax payment divided by total income. 
D)  a separate income tax code begun in 1969 to prevent the rich from paying income taxes. 
A)  the tax rate paid on an additional dollar of income. 
B)  higher on people with higher incomes. 
C)  the total tax payment divided by total income. 
D)  a separate income tax code begun in 1969 to prevent the rich from paying income taxes.

Question 7

The alternative minimum tax:

Accepted Answer

A)  is the tax rate paid on an additional dollar of income. 
B)  has higher tax rates on people with higher incomes. 
C)  is the total tax payment divided by total income. 
D)  is a separate income tax code that began in 1969 to prevent the rich from not paying income taxes. 
A)  is the tax rate paid on an additional dollar of income. 
B)  has higher tax rates on people with higher incomes. 
C)  is the total tax payment divided by total income. 
D)  is a separate income tax code that began in 1969 to prevent the rich from not paying income taxes.

Question 8

Government spending in the United States is:

Accepted Answer

A)  not likely to fall in the future,given the aging population. 
B)  not likely to fall in the future,given the rising interest payments on the national debt. 
C)  likely to fall in the future,given the consciousness of the American people regarding our growing debt. 
D)  likely to fall in the future,given the cyclical nature of business cycles. 
A)  not likely to fall in the future,given the aging population. 
B)  not likely to fall in the future,given the rising interest payments on the national debt. 
C)  likely to fall in the future,given the consciousness of the American people regarding our growing debt. 
D)  likely to fall in the future,given the cyclical nature of business cycles.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  The burden of the FICA tax is equally split between workers and employers. 
B)  Most of the burden of the FICA tax falls on workers. 
C)  Most of the burden of the FICA tax falls on employers. 
D)  Employees face no burden from the FICA tax. 
A)  The burden of the FICA tax is equally split between workers and employers. 
B)  Most of the burden of the FICA tax falls on workers. 
C)  Most of the burden of the FICA tax falls on employers. 
D)  Employees face no burden from the FICA tax.

Question 10

When the text refers to the current U.S.national debt,it means the:

Accepted Answer

A)  national debt held by the public. 
B)  public debt held by investors. 
C)  private debt held by households. 
D)  total debt held by foreign governments. 
A)  national debt held by the public. 
B)  public debt held by investors. 
C)  private debt held by households. 
D)  total debt held by foreign governments.

Question 11

The alternative minimum tax is only assessed on high-income families.

Accepted Answer

A) True 
 B)False

Question 12

The alternative minimum tax has effectively made the federal income tax:

Accepted Answer

A)  a more regressive tax system. 
B)  a more progressive system. 
C)  a flat tax system. 
D)  the same in dollar terms for every taxpayer. 
A)  a more regressive tax system. 
B)  a more progressive system. 
C)  a flat tax system. 
D)  the same in dollar terms for every taxpayer.

Question 13

Government spending as a percentage of GDP in the United States today is:

Accepted Answer

A)  larger than any other developed country in the world. 
B)  about average as compared with other developed countries. 
C)  one of the smallest among developed countries. 
D)  comparable with countries like Germany,the Netherlands,and Italy. 
A)  larger than any other developed country in the world. 
B)  about average as compared with other developed countries. 
C)  one of the smallest among developed countries. 
D)  comparable with countries like Germany,the Netherlands,and Italy.

Question 14

Suppose a high-income individual,subject to a 15% capital gains tax rate,sells 100 shares of Company X and makes a loss of $500.She also sells 100 shares of Company Y and makes a profit of $1,200.How much in capital gains tax will she pay?

Accepted Answer

A)  $75 
B)  $105 
C)  $180 
D)  $255 
A)  $75 
B)  $105 
C)  $180 
D)  $255

Question 15

Since 1960,marginal tax rates in the United States have decreased for individuals:

Accepted Answer

A)  at all income levels. 
B)  with high incomes only. 
C)  with low incomes only. 
D)  at no income level. 
A)  at all income levels. 
B)  with high incomes only. 
C)  with low incomes only. 
D)  at no income level.

Question 16

Social Security will pay you less if you live longer.

Accepted Answer

A) True 
 B)False

Question 17

Capital gains taxes are paid only when assets are sold.

Accepted Answer

A) True 
 B)False

Question 18

In most cases,Republicans and Democrats agree about how much investment income should be taxed.

Accepted Answer

A) True 
 B)False

Question 19

What are the two biggest sources of tax revenue for the U.S.government? What are the two biggest expenses for the U.S.government? What can you conclude about the way these expenses will change in the future?

Accepted Answer

The biggest sources of tax revenue are t

Question 20

When individuals make payments into Social Security,the funds go into an account identified by their Social Security number.

Accepted Answer

A) True 
 B)False

Exam 17: The Federal Budget- Taxes and Spending

The marginal tax rate is the tax rate paid on an:

Which of the following reduces taxable income?

If most people in country A fall in the lowest tax bracket and most people in country B fall in the highest tax bracket and both countries have progressive tax systems,we should expect tax revenues to be higher in country A.

A good way to judge the fiscal health of the federal government is by looking at today's budget deficit.

The largest component of government spending is paying interest on the national debt.

The average tax rate is:

The alternative minimum tax:

Government spending in the United States is:

Which of the following statements is correct?

When the text refers to the current U.S.national debt,it means the:

The alternative minimum tax is only assessed on high-income families.

The alternative minimum tax has effectively made the federal income tax:

Government spending as a percentage of GDP in the United States today is:

Suppose a high-income individual,subject to a 15% capital gains tax rate,sells 100 shares of Company X and makes a loss of $500.She also sells 100 shares of Company Y and makes a profit of $1,200.How much in capital gains tax will she pay?

Since 1960,marginal tax rates in the United States have decreased for individuals:

Social Security will pay you less if you live longer.

Capital gains taxes are paid only when assets are sold.

In most cases,Republicans and Democrats agree about how much investment income should be taxed.

What are the two biggest sources of tax revenue for the U.S.government? What are the two biggest expenses for the U.S.government? What can you conclude about the way these expenses will change in the future?

When individuals make payments into Social Security,the funds go into an account identified by their Social Security number.

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

Fiscal Policy

International Trade

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