Question 1

What is the expected future trend of the debt-to-GDP ratio?

Accepted Answer

A)  There are too many unknown variables to make a prediction. 
B)  The ratio will remain stable. 
C)  The ratio will decrease slightly. 
D)  The ratio will increase greatly. 
A)  There are too many unknown variables to make a prediction. 
B)  The ratio will remain stable. 
C)  The ratio will decrease slightly. 
D)  The ratio will increase greatly.

Question 2

The current U.S.debt-to-GDP ratio is the highest in U.S.history.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following represents a change that has been made since the individual income tax was first levied in 1913?

Accepted Answer

A)  In 1969,the overall tax system was changed from a regressive to a progressive set of tax rates. 
B)  In 1969,the alternative minimum tax was introduced to prevent the rich from paying no taxes. 
C)  The alternative minimum tax has been adjusted for inflation. 
D)  Social Security payments are no longer indexed to wages. 
A)  In 1969,the overall tax system was changed from a regressive to a progressive set of tax rates. 
B)  In 1969,the alternative minimum tax was introduced to prevent the rich from paying no taxes. 
C)  The alternative minimum tax has been adjusted for inflation. 
D)  Social Security payments are no longer indexed to wages.

Question 4

The Social Security payment system began issuing Social Security checks:

Accepted Answer

A)  at the end of World War II. 
B)  in 1940. 
C)  during the Great Depression. 
D)  in 1913. 
A)  at the end of World War II. 
B)  in 1940. 
C)  during the Great Depression. 
D)  in 1913.

Question 5

Most of the spending in the federal budget goes to welfare programs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a reason for waste and inefficiency in government spending?

Accepted Answer

A)  weak incentives 
B)  lack of information on how to spend the money effectively 
C)  both weak incentives and lack of information on how to spend the money effectively 
D)  neither weak incentives nor lack of information on how to spend the money effectively 
A)  weak incentives 
B)  lack of information on how to spend the money effectively 
C)  both weak incentives and lack of information on how to spend the money effectively 
D)  neither weak incentives nor lack of information on how to spend the money effectively

Question 7

Which of the following sources of tax revenues make up more than 90% of all government revenue?

Accepted Answer

A)  individual income tax,corporate income tax,and excise taxes 
B)  corporate income tax,Social Security and Medicare taxes,and estate taxes 
C)  individual income tax,corporate income tax,and Social Security and Medicare taxes 
D)  corporate income tax,Social Security and Medicare taxes,and excise taxes 
A)  individual income tax,corporate income tax,and excise taxes 
B)  corporate income tax,Social Security and Medicare taxes,and estate taxes 
C)  individual income tax,corporate income tax,and Social Security and Medicare taxes 
D)  corporate income tax,Social Security and Medicare taxes,and excise taxes

Question 8

It is possible for a country to have a high positive national debt and also have a large budget surplus.

Accepted Answer

A) True 
 B)False

Question 9

Women tend to benefit more than men from the Social Security program because of their higher life expectancy.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  Total spending will rise at the same rate as the total revenue. 
B)  Total spending will rise more slowly than the total revenue. 
C)  Total spending will rise more rapidly than the total revenue. 
D)  Both total spending and total revenue will fall. 
A)  Total spending will rise at the same rate as the total revenue. 
B)  Total spending will rise more slowly than the total revenue. 
C)  Total spending will rise more rapidly than the total revenue. 
D)  Both total spending and total revenue will fall.

Question 11

Compared to most developed nations,the U.S.total government spending as a percentage of GDP is:

Accepted Answer

A)  about average. 
B)  less than that of many countries. 
C)  greater than that of many countries. 
D)  decreasing at a greater rate than that of other countries. 
A)  about average. 
B)  less than that of many countries. 
C)  greater than that of many countries. 
D)  decreasing at a greater rate than that of other countries.

Question 12

Social Security taxes account for the largest source of U.S.federal government receipts today.

Accepted Answer

A) True 
 B)False

Question 13

Because of loopholes and good tax accountants,the rich do not pay any taxes in the United States.

Accepted Answer

A) True 
 B)False

Question 14

What was Milton Friedman's argument for a volunteer army instead of a military draft?

Accepted Answer

A)  The societal cost of a draft was much higher than the paychecks of a volunteer army because of the significant opportunity cost of drafted soldiers. 
B)  A volunteer army would cost less in dollar terms than a drafted army. 
C)  The United States would no longer need an active army because the country could protect itself adequately with just a few volunteer soldiers. 
D)  The opportunity cost of an all-volunteer army is higher than that of the draft. 
A)  The societal cost of a draft was much higher than the paychecks of a volunteer army because of the significant opportunity cost of drafted soldiers. 
B)  A volunteer army would cost less in dollar terms than a drafted army. 
C)  The United States would no longer need an active army because the country could protect itself adequately with just a few volunteer soldiers. 
D)  The opportunity cost of an all-volunteer army is higher than that of the draft.

Question 15

The objective of the alternative minimum tax is to:

Accepted Answer

A)  balance the federal budget. 
B)  ensure that even the poor pay some income taxes. 
C)  prevent the rich from not paying any income taxes. 
D)  raise the Social Security trust fund for retirees. 
A)  balance the federal budget. 
B)  ensure that even the poor pay some income taxes. 
C)  prevent the rich from not paying any income taxes. 
D)  raise the Social Security trust fund for retirees.

Question 16

People earning a higher income pay fewer tax dollars than lower income earners in a regressive tax and pay more tax dollars than lower income earners in a progressive tax.

Accepted Answer

A) True 
 B)False

Question 17

What are the main causes of the increased federal government deficits since 2007?

Accepted Answer

Because of the recession,tax receipts fe

Question 18

Corporate income tax provides the largest share of federal tax receipts.

Accepted Answer

A) True 
 B)False

Question 19

Most of the increase in planned spending over the next 50 years comes from:

Accepted Answer

A)  defense. 
B)  Social Security. 
C)  Medicare and Medicaid. 
D)  foreign aid. 
A)  defense. 
B)  Social Security. 
C)  Medicare and Medicaid. 
D)  foreign aid.

Question 20

Even if the United States experiences no more recessions and the federal government spends nothing extra on any particular program,its expenditures will still rise because:

Accepted Answer

A)  unemployment benefits will rise. 
B)  the government has committed to increasing Medicare payments for the next three decades. 
C)  it will receive less foreign aid in the future. 
D)  the population is aging and thus Social Security and Medicare payments will rise. 
A)  unemployment benefits will rise. 
B)  the government has committed to increasing Medicare payments for the next three decades. 
C)  it will receive less foreign aid in the future. 
D)  the population is aging and thus Social Security and Medicare payments will rise.

Exam 17: The Federal Budget- Taxes and Spending

What is the expected future trend of the debt-to-GDP ratio?

The current U.S.debt-to-GDP ratio is the highest in U.S.history.

Which of the following represents a change that has been made since the individual income tax was first levied in 1913?

The Social Security payment system began issuing Social Security checks:

Most of the spending in the federal budget goes to welfare programs.

Which of the following is a reason for waste and inefficiency in government spending?

Which of the following sources of tax revenues make up more than 90% of all government revenue?

It is possible for a country to have a high positive national debt and also have a large budget surplus.

Women tend to benefit more than men from the Social Security program because of their higher life expectancy.

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

Compared to most developed nations,the U.S.total government spending as a percentage of GDP is:

Social Security taxes account for the largest source of U.S.federal government receipts today.

Because of loopholes and good tax accountants,the rich do not pay any taxes in the United States.

What was Milton Friedman's argument for a volunteer army instead of a military draft?

The objective of the alternative minimum tax is to:

People earning a higher income pay fewer tax dollars than lower income earners in a regressive tax and pay more tax dollars than lower income earners in a progressive tax.

What are the main causes of the increased federal government deficits since 2007?

Corporate income tax provides the largest share of federal tax receipts.

Most of the increase in planned spending over the next 50 years comes from:

Even if the United States experiences no more recessions and the federal government spends nothing extra on any particular program,its expenditures will still rise because:

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

International Finance

Political Economy and Public Choice

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