Question 1

If the opportunity cost of resources used for government programs is ignored,then the government budget _____ the role of government in the economy.

Accepted Answer

A)  overestimates 
B)  underestimates 
C)  correctly reflects 
D)  is totally unrelated to 
A)  overestimates 
B)  underestimates 
C)  correctly reflects 
D)  is totally unrelated to

Question 2

In the United States,the marginal tax rate for married couples:

Accepted Answer

A)  exceeds the average tax rate for most income levels. 
B)  is less than the average tax rate for most income levels. 
C)  is equal to the average tax rate for most income levels. 
D)  is less than the average tax rate at low income levels,but greater than the average tax rate at high income levels. 
A)  exceeds the average tax rate for most income levels. 
B)  is less than the average tax rate for most income levels. 
C)  is equal to the average tax rate for most income levels. 
D)  is less than the average tax rate at low income levels,but greater than the average tax rate at high income levels.

Question 3

In the 1940s,the U.S.debt-to-GDP ratio was higher than 100%.In 2014,the debt-to-GDP ratio was around 70%.

Accepted Answer

A) True 
 B)False

Question 4

As of 2013,the level of per capita federal taxes collected in the United States was about:

Accepted Answer

A)  $400. 
B)  $900. 
C)  $2,000. 
D)  $9,000. 
A)  $400. 
B)  $900. 
C)  $2,000. 
D)  $9,000.

Question 5

The debt-to-GDP ratio has roughly doubled since the Great Recession of 2007-2008.

Accepted Answer

A) True 
 B)False

Question 6

How does the marginal tax rate compare with the average tax rate in a flat tax system? How do these two tax rates compare in a progressive tax system and a regressive tax system?

Accepted Answer

The marginal tax rate is the tax rate pa

Question 7

The alternative minimum tax has become an added tax burden on many upper-middle class families because:

Accepted Answer

A)  Congress intended it to be that way. 
B)  it is not indexed to inflation. 
C)  it is indexed to inflation. 
D)  it is a regressive tax. 
A)  Congress intended it to be that way. 
B)  it is not indexed to inflation. 
C)  it is indexed to inflation. 
D)  it is a regressive tax.

Question 8

The Social Security program in the United States is financed by:

Accepted Answer

A)  individual income tax revenue. 
B)  corporate income tax revenue. 
C)  FICA tax revenue. 
D)  excise tax revenue. 
A)  individual income tax revenue. 
B)  corporate income tax revenue. 
C)  FICA tax revenue. 
D)  excise tax revenue.

Question 9

Explain the difference between an average tax rate and a marginal tax rate.

Accepted Answer

An average tax rate is a perso

Question 10

A country has two income tax brackets: people pay 10% on their first $50,000 and 20% on everything they earn over $50,000.If someone earns $75,000,how much tax does that person pay?

Accepted Answer

A)  $5,000 
B)  $7,500 
C)  $10,000 
D)  $15,000 
A)  $5,000 
B)  $7,500 
C)  $10,000 
D)  $15,000

Question 11

The FICA tax burden is:

Accepted Answer

A)  paid entirely by the employer. 
B)  shared equally by employer and employee. 
C)  borne more by the employee even though the employer contributes an equal dollar amount. 
D)  the same amount as the alternative minimum tax burden. 
A)  paid entirely by the employer. 
B)  shared equally by employer and employee. 
C)  borne more by the employee even though the employer contributes an equal dollar amount. 
D)  the same amount as the alternative minimum tax burden.

Question 12

In the United States,every dollar of individual income is taxed.

Accepted Answer

A) True 
 B)False

Question 13

Social Security redistributes wealth across income classes.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  excise tax 
B)  corporate income tax 
C)  Social Security tax 
D)  individual income tax 
A)  excise tax 
B)  corporate income tax 
C)  Social Security tax 
D)  individual income tax

Question 15

If you purchased 10 shares of Goldman Sachs stock for $1,200 five years ago and continue to hold the stock today but 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%.

Accepted Answer

A)  $0 
B)  $45 
C)  $180 
D)  $225 
A)  $0 
B)  $45 
C)  $180 
D)  $225

Question 16

Which of the following is NOT one of the main sources of tax revenue for the federal government?

Accepted Answer

A)  individual income tax 
B)  Social Security and Medicare taxes 
C)  sales tax 
D)  corporate income tax 
A)  individual income tax 
B)  Social Security and Medicare taxes 
C)  sales tax 
D)  corporate income tax

Question 17

The biggest spending item in the U.S.budget is foreign aid.

Accepted Answer

A) True 
 B)False

Question 18

The income tax is a tax on all of the following,except:

Accepted Answer

A)  labor income. 
B)  interest income. 
C)  dividends and capital gains. 
D)  welfare benefits. 
A)  labor income. 
B)  interest income. 
C)  dividends and capital gains. 
D)  welfare benefits.

Question 19

Taxpayers in the United States for the year 2014 received individual and dependent exemptions,each worth:

Accepted Answer

A)  $3,650. 
B)  $3,950. 
C)  $3,300. 
D)  $4,300. 
A)  $3,650. 
B)  $3,950. 
C)  $3,300. 
D)  $4,300.

Question 20

In 1940,Ida May Fuller received the first Social Security check after contributing only $24.75 in Social Security taxes before she retired and lived to be 100 years old.Her case is an example of how:

Accepted Answer

A)  Social Security payments were not issued to people who were close to retirement. 
B)  people can choose not to contribute to Social Security. 
C)  people begin to get Social Security payments before they retire. 
D)  the first Social Security recipients benefitted much more from the program than will workers entering the program today. 
A)  Social Security payments were not issued to people who were close to retirement. 
B)  people can choose not to contribute to Social Security. 
C)  people begin to get Social Security payments before they retire. 
D)  the first Social Security recipients benefitted much more from the program than will workers entering the program today.

Exam 17: The Federal Budget- Taxes and Spending

If the opportunity cost of resources used for government programs is ignored,then the government budget _____ the role of government in the economy.

In the United States,the marginal tax rate for married couples:

In the 1940s,the U.S.debt-to-GDP ratio was higher than 100%.In 2014,the debt-to-GDP ratio was around 70%.

As of 2013,the level of per capita federal taxes collected in the United States was about:

The debt-to-GDP ratio has roughly doubled since the Great Recession of 2007-2008.

How does the marginal tax rate compare with the average tax rate in a flat tax system? How do these two tax rates compare in a progressive tax system and a regressive tax system?

The alternative minimum tax has become an added tax burden on many upper-middle class families because:

The Social Security program in the United States is financed by:

Explain the difference between an average tax rate and a marginal tax rate.

A country has two income tax brackets: people pay 10% on their first $50,000 and 20% on everything they earn over $50,000.If someone earns $75,000,how much tax does that person pay?

The FICA tax burden is:

In the United States,every dollar of individual income is taxed.

Social Security redistributes wealth across income classes.

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

If you purchased 10 shares of Goldman Sachs stock for $1,200 five years ago and continue to hold the stock today but 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%.

Which of the following is NOT one of the main sources of tax revenue for the federal government?

The biggest spending item in the U.S.budget is foreign aid.

The income tax is a tax on all of the following,except:

Taxpayers in the United States for the year 2014 received individual and dependent exemptions,each worth:

In 1940,Ida May Fuller received the first Social Security check after contributing only $24.75 in Social Security taxes before she retired and lived to be 100 years old.Her case is an example of how:

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