Deck 7: The Government Sector

Question 1

Which statement is true?

A)State and local governments are expected to provide more and more services while their tax bases are limited.
B)State and local governments are expected to provide less and less services while their tax bases are relatively unlimited.
C)Public education has traditionally been the role of the federal government.
D)None of these statements is true.

Answer 1

A

Question 2

Which statement is true?

A)The Social Security tax is an excise tax.
B)A person earning $100,000 pays a higher percentage of her income in Social Security tax than someone earning $50,000.
C)The Social Security tax is an indirect tax.
D)None is true.

Answer 2

D

Question 3

In 2010,a person earning $300,000 would pay Social Security tax on

A)none of her income.
B)all of her income.
C)nearly all of her income.
D)less than half of her income.

Answer 3

D

Question 4

The role of government has grown tremendously over the last _____ decades.

A)four
B)six
C)eight
D)ten

Question 5

The fastest growing source of federal tax revenue is the _____ tax.

A)personal income
B)corporate income
C)payroll
D)excise

Question 6

The most important source of state tax revenue is the _____ tax.

A)property
B)income
C)excise
D)sales

Question 7

Which statement is true?

A)The Kemp-Roth Tax Cut of 1981 and the Tax Reform Act of 1986 both lowered federal personal income tax receipts.
B)The Kemp-Roth Tax Cut of 1981 and the Tax Reform Act of 1986 raised federal personal income tax receipts.
C)The Kemp-Roth Tax Cut of 1981 raised federal personal income tax receipts while the Tax Reform Act of 1986 lowered them.
D)The Kemp-Roth Tax Cut of 1981 lowered federal personal income tax receipts while the Tax Reform Act of 1986 raised them.

Question 8

The key agency in the preparation of the president's budget is

A)the Treasury.
B)the Office of Management and Budget (OMB).
C)the Comptroller of the Currency.
D)the Department of the Defense.

Question 9

Each of the following is an indirect tax except the _____ tax.

A)gasoline
B)telephone
C)corporate income
D)excise

Question 10

Most poor families pay _____ federal personal income tax.

A)no
B)a little
C)a substantial part of their incomes in

Question 11

The largest source of federal tax revenue comes from

A)individual income taxes.
B)social insurance receipts.
C)corporation income taxes.
D)excise taxes.

Question 12

The sales tax is the most important source of _____ government revenue.

A)federal
B)state
C)local

Question 13

Most sales taxes are ___________;most excise taxes are _________.

A)progressive,progressive
B)regressive,regressive
C)progressive,regressive
D)regressive,progressive

Question 14

Which one of these is not an economic function of the federal government?

A)Redistribution of income.
B)Stabilization.
C)Economic regulation.
D)Each is an economic function of the federal government.

Question 15

Which statement is true?

A)The Social Security tax is progressive.
B)An excise tax on cigarettes is regressive.
C)A sales tax is a direct tax.
D)None is true.

Question 16

Which statement is false?

A)About seven percent of federal government spending goes toward interest on the national debt.
B)Over eighty percent of local taxes comes from property taxes.
C)The federal government will spend over $3.8 trillion this fiscal year.
D)None of these statements is false.

Question 17

The maximum anyone had to pay in Social Security tax in 2009 was about ____.

A)$850
B)$6,620
C)$8,500
D)$17,000

Question 18

The federal budget is prepared and passed by

A)the president.
B)Congress.
C)the president and Congress.
D)neither the president nor Congress.

Question 19

Federal spending on defense comes to about _____ per person in the United States.

A)$1,000
B)$1,900
C)$2,700
D)$3,500

Question 20

Each of the following is a basic economic role of the government except

A)tax collection.
B)spending money.
C)regulation of the economy.
D)owning most of the means of production.

Question 21

Which statement is true?

A)Most federal government revenue comes from the personal income tax.
B)The federal personal income tax puts a greater burden on the poor and middle class.
C)The United States is among the most highly taxed industrial countries.
D)None is true.

Question 22

Compared to people earning $150,000 a year,people earning $300,000 pay _________ Social Security taxes.

A)less
B)the same
C)slightly more
D)twice as much

Question 23

The sales tax

A)is a direct tax.
B)is an indirect tax.
C)may be either a direct or an indirect tax.
D)is neither a direct nor an indirect tax.

Question 24

A wage earner making $10,000 pays

A)more in Social Security tax than in personal income tax.
B)more personal income tax than in Social Security tax.
C)about the same in Social Security tax as in personal income tax.

Question 25

Interest payments on the national debt are about _____ percent of total federal expenditures a year.

A)2
B)5
C)7
D)11
E)14

Question 26

In 1980 the top marginal tax rate was

A)28 percent.
B)33 percent.
C)50 percent.
D)70 percent.
E)90 percent.

Question 27

Each of the following is a goal of the federal government except

A)fostering competition.
B)price stability.
C)low unemployment.
D)expanding government ownership.

Question 28

The federal government spends

A)slightly more on defense than on Social Security.
B)slightly more on Social Security than on defense.
C)about the same on Social Security as on defense.

Question 29

The property tax is the most important source of _____ government revenue.

A)federal
B)state
C)local

Question 30

Which of the following pairs represents the chief source of income and the most important type of expenditure of local governments?

A)Property tax and expenditures for highways
B)Property tax and expenditures for education
C)Sales and excise taxes and expenditures for public welfare
D)Sales and excise taxes and expenditures for police,fire,and general government

Question 31

Which statement is false?

A)The corporate income tax now produces only thirteen percent of federal tax revenue.
B)The Tax Reform Act of 1986 took millions of poorer families off the income tax rolls.
C)The Kemp-Roth tax cut of 1981 lowered the average citizen's tax bill by 23%.
D)None is false.

Question 32

Most excise taxes are

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

Question 33

The federal government's fiscal year is _____ months long.

A)6
B)9
C)12
D)18
E)24

Question 34

Which statement is false?

A)There are now nine federal personal income tax brackets.
B)Most people pay more in Social Security tax than in personal income tax.
C)We pay more in direct than indirect taxes to the federal government.
D)None is false.

Question 35

The corporate income tax is

A)direct.
B)indirect.
C)neither direct nor indirect.
D)both direct and indirect.

Question 36

The Social Security tax is

A)direct and progressive.
B)direct and regressive.
C)indirect and progressive.
D)indirect and regressive.

Question 37

Which of the following statements does not apply to the U.S.tax structure?

A)The individual income tax system is progressive.
B)General sales taxes are regressive.
C)Property taxes are an important source of revenue for the federal government.
D)The major sources of revenue for the federal government differ from the major sources of revenue for state and local governments.

Question 38

The economic policy of the U.S.government could have been described as laissez-faire until about

A)1860.
B)1900.
C)1933.
D)1945.
E)1960.

Question 39

Under the Tax Reform Act of 1986 the maximum rate of the corporate income tax was

A)raised.
B)lowered.
C)not changed.

Question 40

According to Adam Smith,each of these was an economic role of government except

A)protecting society from violence and invasion.
B)protecting individuals from oppression.
C)erecting public works which would not be in the interest of private individuals to erect.
D)redistributing some income from the rich to the poor.

Question 41

In modern free enterprise economies,which of the following is not an economic role of government?

A)Stabilization of national income,employment,and the price level
B)Promotion and maintenance of competitive markets
C)Altering the allocation of resources to provide for public demands efficiently
D)Providing a reasonably certain legal,social,and business environment for stable economic growth
E)Planning the production and distribution of most economic goods

Question 42

With respect to local finance,it is correct to say that

A)Sales and excise taxes are the major source of revenue and highway construction and maintenance the major type of expenditure.
B)Property taxes are the basic source of revenue and education the major type of expenditure.
C)The corporate income tax is the major source of revenue and natural resource development the major type of expenditure.
D)Estate and gift taxes are the major source of revenue and most expenditures are for hospitals and health services.

Question 43

Which of the following is NOT an example of a transfer payment?

A)The salaries received by social workers employed by the federal government.
B)Food stamps.
C)Unemployment compensation.
D)Social security payments.
E)Payments under the Aid to Families with Dependent Children program.

Question 44

An excise tax on cigarettes is ________ and _______.

A)regressive,direct.
B)regressive,indirect.
C)progressive,direct.
D)progressive,indirect.

Question 45

Which of the following accounts for the largest percentage of all federal expenditures?

A)Income security such as Social Security
B)National defense
C)Interest on the public debt
D)Veterans' services

Question 46

What proportion of the federal spending is available for discretionary spending?

A)9 percent.
B)14 percent.
C)23 percent.
D)46 percent.

Question 47

Statement I: Most taxes are proportional,in effect.
Statement II: The federal government gets most of its revenue from indirect taxes.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 48

Statement I: The federal corporate income tax is a direct tax.
Statement II: The Social Security tax is a regressive tax.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 49

Which of the following is a transfer payment?

A)The president's salary
B)Veterans' benefits
C)The NASA budget
D)Schoolteachers' salaries
E)Provision of national parks

Question 50

The essential difference between sales and excise taxes is that

A)sales taxes apply to a wide range of products,while excise taxes apply only to a select group of products.
B)excise taxes apply to a wide range of products,while sales taxes apply only to a select group of products.
C)sales taxes are consumption taxes,while excise are not.
D)excise taxes are consumption taxes,while sales are not.

Question 51

Transfer payments to individuals amount to a little less than _____ of total government spending.

A)three-quarters
B)two-thirds
C)half
D)one-third
E)one-quarter

Question 52

During the last half of 2008 and the first half of 2009,the congress passed and the President signed two bills totaling about _______________ in an attempt to avert the Great Recession.

A)about $700 billion
B)about $800 billion
C)nearly $1.5 trillion
D)more than $2.0 trillion

Question 53

A tax on _____ would be the least regressive.

A)food
B)cigarettes
C)beer
D)luxury cars

Question 54

Statement I: Social Security benefits are financed entirely by taxes that workers pay.
Statement II: Social Security benefits are a government transfer payment.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 55

Excise taxes are

A)really income taxes in disguise.
B)profits taxes on major corporations.
C)per-unit taxes on specific goods.
D)percentage taxes on sales revenues.
E)the second most important source of federal revenue.

Question 56

Federal government spending on medicare & medicaid have increased by a factor of _____ between 1969 and 2011.

A)2
B)4
C)5
D)over 7

Question 57

In a progressive tax structure,

A)the marginal tax rate exceeds the average tax rate.
B)vertical equity exists.
C)the average tax rate rises as income falls.
D)all the choices.

Question 58

Which of the following statements is true?

A)New Hampshire residents pay a higher percent of their income in taxes than the people in the province of Quebec,CanadA.
B)The top marginal tax rate today is about half of the top marginal tax rate in 1960.
C)Today the overall tax burden is about the same as what it was in 1929.
D)Education in the U.S.is paid for exclusively by local taxes.

Question 59

The money that pays Social Security benefits is raised by

A)taxes that workers pay.
B)taxes that employers pay.
C)taxes that both workers and employers pay.
D)the personal income tax.

Question 60

Mr.Bush earns $1,000,000 and pays $100,000 in taxes.Mr.Gore earns $150,000 and pays $17,500 in taxes.The tax they pay would be considered

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

Question 61

An example of a tax that is generally regarded to be progressive is

A)the federal income tax.
B)the excise tax on gasoline.
C)the state sales tax.
D)the payroll tax.

Question 62

If you had $1,000 of taxable income you would have to pay _____ in federal income tax.

A)0
B)$100
C)$150
D)Between $150 and $280
E)$280

Question 63

Warren Buffett,the noted stock market investor,and world's second richest man has noted:

A)his average tax rate is lower than his secretary.
B)his world ranking would increase substantially if taxes were lower $20,000
C)his taxes were so high that he was supporting the government by himself.
D)his wealth was very high because of the low tax rates enjoyed by the rich.

Question 64

If taxable income is rising and if the marginal tax rate is greater than the average tax rate,then

A)the average tax rate must be rising.
B)the average tax rate must be falling.
C)the average tax rate may be either rising or falling.
D)the tax is regressive.

Question 65

A progressive tax is one where the percentage charged on income ______________ as income increases.

A)increases and then decreases
B)is constant
C)decreases
D)increases

Question 66

If your taxable income rises from $35,000 to $45,000,and the taxes you pay rise from $12,000 to $15,000,your marginal tax rate is

A)10 percent.
B)20 percent.
C)30 percent.
D)40 percent.
E)Impossible to determine.

Question 67

Which of the following federal government expenditures is the largest burden on the budget?

A)Social security
B)Medicare and medicaid
C)Defense
D)Interest on national debt

Question 68

The second largest source of federal revenue is

A)the individual income tax.
B)the corporate income tax.
C)the payroll tax.
D)sales and excise taxes.

Question 69

A person earning $200,000 a year pays a little over _____ in payroll taxes.

A)$6,000
B)$9,500
C)$12,000
D)$15,000

Question 70

Which of the following would not be a government transfer expenditure?

A)Contribution of employers to support the Social Security program
B)Social security payments to the aged
C)Unemployment compensation benefits
D)Payments to the widows of war veterans

Question 71

Under a progressive income tax,as income increases

A)taxes increase at the same rate as income;if income increases by 10%,taxes increase by 10%.
B)taxes decreases as a share of income.
C)absolute tax payments increase,but the average tax rate declines.
D)taxes increase as a percent of income.

Question 72

Statement I: A progressive tax places a heavier burden on the rich than on the poor.
Statement II: The Social Security tax is more regressive than the federal personal income tax.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 73

If your taxable income rises from $27,000 to $47,000,and the taxes you pay rise from $15,000 to $20,000,your marginal tax rate is

A)15 percent.
B)25 percent.
C)35 percent.
D)45 percent.

Question 74

If you had a total income of $4,000 (including wages,interest,and dividends)you would have to pay federal personal income taxes of

A)0.
B)Less than $600.
C)$600.
D)More than $600.
E)It is impossible to answer without more information.

Question 75

If Mr.Perot faces a 90 percent marginal tax rate,

A)his average tax rate must be falling.
B)the next dollar he earns nets him 90 cents.
C)his total tax payments equal 90 percent of his income.
D)he has a strong incentive to work harder.
E)he has a strong incentive to work less.

Question 76

Statement I: Most Americans pay more in Social Security tax than in personal income tax.
Statement II: A tax on cigarettes is more regressive than a tax on long distance phone calls.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 77

In 2011 when the "Bush tax cuts" expire the percentage tax rate for the rich will revert back to the (pre-Bush)rate of ____________ percent if congress doesn't pass a new law.

A)36.5
B)39.6
C)44.0
D)70.0

Question 78

In 2009 the highest federal personal income tax bracket was _____ percent.

A)28
B)35
C)36
D)50
E)70

Question 79

In 2010,anyone with an income in excess of $_____________ pays the marginal tax rate of 35%.

A)500,000
B)372,950
C)296,400
D)198,200

Question 80

Statement I: Most poor people have an average tax rate of 10 percent.
Statement II: In 1992 the maximum federal personal income tax rate was 31 percent.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.