Question 1

The U.S.income tax system is:

Accepted Answer

A)  proportional. 
B)  progressive. 
C)  regressive. 
D)  marginal. 
A)  proportional. 
B)  progressive. 
C)  regressive. 
D)  marginal.

Question 2

Current projections are that the debt-to-GDP ratio will:

Accepted Answer

A)  peak at 80% in 2020 and then gradually decline. 
B)  continue to fall for the foreseeable future. 
C)  increase exponentially between now and 2060. 
D)  fall to zero in 2030. 
A)  peak at 80% in 2020 and then gradually decline. 
B)  continue to fall for the foreseeable future. 
C)  increase exponentially between now and 2060. 
D)  fall to zero in 2030.

Question 3

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

Accepted Answer

A)  corporate income tax,excise taxes,and Social Security/Medicare taxes 
B)  individual income tax,corporate income tax,and sales tax 
C)  Social Security/Medicare taxes,corporate income tax,and custom duties 
D)  individual income tax,Social Security/Medicare taxes,and corporate income tax 
A)  corporate income tax,excise taxes,and Social Security/Medicare taxes 
B)  individual income tax,corporate income tax,and sales tax 
C)  Social Security/Medicare taxes,corporate income tax,and custom duties 
D)  individual income tax,Social Security/Medicare taxes,and corporate income tax

Question 4

The deficit is all federal debt held outside the U.S.government.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions 
Figure: U.S.Marginal and Average Tax Rates  
-(Figure: U.S.Marginal and Average Tax Rates)According to the tax rates shown in the figure,an individual who earns $150,000 a year has an approximate average tax rate of:

Accepted Answer

A)  28%. 
B)  25%. 
C)  20%. 
D)  15%. 
A)  28%. 
B)  25%. 
C)  20%. 
D)  15%.

Question 6

The marginal 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

If tax rates are 10% on income up to $10,000,20% for income between $10,001 and $20,000,and 30% for income over $20,000,the average tax rate for a person earning $25,000 is:

Accepted Answer

A)  10%. 
B)  18%. 
C)  25%. 
D)  30%. 
A)  10%. 
B)  18%. 
C)  25%. 
D)  30%.

Question 8

As income rises,the average tax rate for married couples:

Accepted Answer

A)  decreases smoothly. 
B)  decreases in steps. 
C)  increases smoothly. 
D)  increases in steps. 
A)  decreases smoothly. 
B)  decreases in steps. 
C)  increases smoothly. 
D)  increases in steps.

Question 9

Which tax rate determines whether it is worth it to work an extra day?

Accepted Answer

A)  marginal 
B)  average 
C)  payroll (FIC
A)  
D)  capital gains 
A)  marginal 
B)  average 
C)  payroll (FIC
A)  
D)  capital gains

Question 10

Currently,marginal tax rates are:

Accepted Answer

A)  greater than in the past. 
B)  lower than in the past. 
C)  equal to average marginal tax rates of the past. 
D)  more unpredictable than in the past. 
A)  greater than in the past. 
B)  lower than in the past. 
C)  equal to average marginal tax rates of the past. 
D)  more unpredictable than in the past.

Question 11

What are the three main sources of funds for the U.S.federal government?

Accepted Answer

A)  individual income taxes,corporate income taxes,and Social Security and Medicare taxes 
B)  interest on government bonds,corporate income taxes,Social Security and Medicare taxes 
C)  interest on government bonds,individual income taxes,Social Security and Medicare taxes 
D)  interest on government bonds,individual income taxes,corporate income taxes 
A)  individual income taxes,corporate income taxes,and Social Security and Medicare taxes 
B)  interest on government bonds,corporate income taxes,Social Security and Medicare taxes 
C)  interest on government bonds,individual income taxes,Social Security and Medicare taxes 
D)  interest on government bonds,individual income taxes,corporate income taxes

Question 12

As income rises,the marginal tax rate for married couples:

Accepted Answer

A)  decreases smoothly. 
B)  decreases in steps. 
C)  increases smoothly. 
D)  increases in steps. 
A)  decreases smoothly. 
B)  decreases in steps. 
C)  increases smoothly. 
D)  increases in steps.

Question 13

The level of government spending is an accurate measure of government's influence in the economy.

Accepted Answer

A) True 
 B)False

Question 14

Spending on defense,law enforcement,and scientific research are all projected to increase as a percentage of GDP.

Accepted Answer

A) True 
 B)False

Question 15

The AMT has significantly increased the tax burden for more than 3.5 million households.

Accepted Answer

A) True 
 B)False

Question 16

Use the following to answer questions 
Figure: U.S.Marginal and Average Tax Rates  
-(Figure: U.S.Marginal and Average Tax Rates)According to the tax rates shown in the figure,an individual who earns $85,000 a year will pay income tax of:

Accepted Answer

A)  $5,325. 
B)  $7,202.50. 
C)  $14,097.50. 
D)  $21,250. 
A)  $5,325. 
B)  $7,202.50. 
C)  $14,097.50. 
D)  $21,250.

Question 17

Is the marginal income tax rate or the average income tax rate higher for a typical person in the United States?

Accepted Answer

A)  The marginal income tax rate is higher. 
B)  The average income tax rate is higher. 
C)  They are equal. 
D)  It depends on the person. 
A)  The marginal income tax rate is higher. 
B)  The average income tax rate is higher. 
C)  They are equal. 
D)  It depends on the person.

Question 18

Explain the difference between Medicare and Medicaid.

Accepted Answer

Both Medicare and Medicaid are used to p

Question 19

The original purpose of the alternative minimum tax was to prevent the:

Accepted Answer

A)  poor from paying income tax. 
B)  poor from not paying income tax. 
C)  rich from paying income tax. 
D)  rich from not paying income tax. 
A)  poor from paying income tax. 
B)  poor from not paying income tax. 
C)  rich from paying income tax. 
D)  rich from not paying income tax.

Question 20

Use the following to answer questions 
Figure: U.S.Marginal and Average Tax Rates  
-(Figure: U.S.Marginal and Average Tax Rates)According to the tax rates shown in the figure,an individual who earns $63,700 a year,has no deductions,and claims no exemptions will pay income tax of:

Accepted Answer

A)  $8,772.50. 
B)  $9,555.00. 
C)  $15,925.00. 
D)  $1,565.00. 
A)  $8,772.50. 
B)  $9,555.00. 
C)  $15,925.00. 
D)  $1,565.00.

Exam 17: The Federal Budget- Taxes and Spending

The U.S.income tax system is:

Current projections are that the debt-to-GDP ratio will:

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

The deficit is all federal debt held outside the U.S.government.

Use the following to answer questions Figure: U.S.Marginal and Average Tax Rates -(Figure: U.S.Marginal and Average Tax Rates)According to the tax rates shown in the figure,an individual who earns $150,000 a year has an approximate average tax rate of:

The marginal tax rate is:

If tax rates are 10% on income up to $10,000,20% for income between $10,001 and $20,000,and 30% for income over $20,000,the average tax rate for a person earning $25,000 is:

As income rises,the average tax rate for married couples:

Which tax rate determines whether it is worth it to work an extra day?

Currently,marginal tax rates are:

What are the three main sources of funds for the U.S.federal government?

As income rises,the marginal tax rate for married couples:

The level of government spending is an accurate measure of government's influence in the economy.

Spending on defense,law enforcement,and scientific research are all projected to increase as a percentage of GDP.

The AMT has significantly increased the tax burden for more than 3.5 million households.

Use the following to answer questions Figure: U.S.Marginal and Average Tax Rates -(Figure: U.S.Marginal and Average Tax Rates)According to the tax rates shown in the figure,an individual who earns $85,000 a year will pay income tax of:

Is the marginal income tax rate or the average income tax rate higher for a typical person in the United States?

Explain the difference between Medicare and Medicaid.

The original purpose of the alternative minimum tax was to prevent the:

Use the following to answer questions Figure: U.S.Marginal and Average Tax Rates -(Figure: U.S.Marginal and Average Tax Rates)According to the tax rates shown in the figure,an individual who earns $63,700 a year,has no deductions,and claims no exemptions will pay income tax of:

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Unemployment and Labor Force Participation

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