Deck 16: Economic Policymaking

Question 1

Which of the following federal taxes best reflects the ability-to-pay theory of taxation?

A)Individual income tax
B)Gasoline tax
C)Payroll tax
D)Taxes on alcohol and tobacco
E)Sales tax

Answer 1

A

Question 2

Which of the following is the best example of a proportional tax?

A)All persons,regardless of income,pay a 5 percent tax on the purchase of goods and services.
B)All persons,regardless of income,pay the same amount of money in taxes.
C)All persons,regardless of income,pay the same percentage of their income in taxes.
D)Half the taxpayers pay nothing and the other half pay 25 percent.
E)All persons pay taxes according to their total income level.

Answer 2

C

Question 3

What was the national debt level in mid-2010?

A)$13 trillion
B)$5 trillion
C)$18 billion
D)$100 billion
E)$52 trillion

Answer 3

A

Question 4

Which of the following statements most accurately describes the national defense budget?

A)It includes funding for the Department of Defense as well as the Department of Energy's nuclear activities and the Coast Guard and FBI.
B)It includes only funding for the men and women in uniform.
C)It takes up about 60 percent of the total federal budget.
D)It takes up more of the federal budget than Social Security and healthcare combined.
E)It includes funding for the Defense Department and the Commerce Department.

Question 5

Which of the following statements about the national debt is

A)The debt is the same thing as the deficit.
B)Interest on the debt is a large expenditure item in the federal budget.
C)The Constitution requires that the debt be paid off by the year 2010.
D)The Constitution prohibits the federal government from holding any debt.
E)The federal government completely paid off the national debt in 1999.

Question 6

Which of the following is a federal pension and disability insurance program?

A)Interest on the debt
B)Healthcare
C)National defense
D)Social Security
E)Education

Question 7

According to the graph on page 320,which of the following is the largest proportion of the government budget?

A)National Defense
B)Healthcare
C)Social Security
D)Income Security
E)Interest on the national debt

Question 8

Which of the following best describes the consumer price index?

A)Average annual expenditures
B)An imaginary budget based on the prices of goods
C)An annual adjustment to wages in response to rising prices
D)What an American might typically spend in a year for staple items
E)The lowest possible budget on which one might live

Question 9

The national debt is

A)the total amount of money borrowed by state governments.
B)the amount of money the federal government overspends in one fiscal year.
C)the total value of all the goods and services produced in a nation in one year.
D)the amount of interest that must be paid on borrowed money in one year.
E)the total amount of money borrowed by the federal government.

Question 10

A tax deduction is

A)a reduction in taxes to zero.
B)an expenditure that can be subtracted from income before figuring the taxes owed.
C)the same as a tax exemption.
D)a type of monetary policy.
E)the amount a taxpayer pays in Social Security taxes in a given year.

Question 11

Which of the following is the single largest revenue source for the federal government?

A)Individual income taxes
B)Corporate income taxes
C)Payroll taxes
D)Excise taxes
E)Sales taxes

Question 12

If the U.S.government gave a per-head dollar amount to ranchers to raise organic beef,this would be an)

A)income redistribution.
B)subsidy.
C)progressive tax.
D)regressive tax.
E)tax exemption.

Question 13

Which of the following has NOT put a strain on the Social Security system?

A)Americans increasingly retire at a later age
B)Early retirement
C)Increased life expectancy
D)Falling birthrates
E)Fewer workers paying taxes,in relation to those collecting Social Security

Question 14

Social Security is funded through which of the following tax systems?

A)Payroll tax on workers and their employers
B)Excise taxes on alcohol,tobacco,and gasoline
C)Individual income taxes on wages and salaries
D)Import taxes
E)Export taxes

Question 15

The tax burden for several individuals is as follows: a person earning $20,000 a year pays a 5 percent tax,a person making $30,000 a year pays a 7 percent tax,and a person earning $40,000 a year pays a 10 percent tax.This particular tax system can best be described as which of the following?

A)Sales tax
B)Regressive tax
C)Proportional tax
D)Progressive tax
E)Recapitalized tax

Question 16

Which of the following federal programs is not geared primarily to assist low-income persons?

A)Medicare
B)Medicaid
C)SSI
D)TANF
E)Food Stamps

Question 17

The budget category of Income Security includes

A)defense spending.
B)interest on the debt.
C)private retirement programs.
D)food stamps.
E)education funding.

Question 18

Which of the following is an example of a welfare program?

A)Social Security
B)Medicare
C)Unemployment
D)Veterans' Benefits
E)Temporary Assistance for Needy FamiliesTANF)

Question 19

Which of the following statements about the national debt is NOT

A)The national debt is paid off about every 10 years.
B)The national debt has interest that must be paid annually.
C)The national debt is the accumulated indebtedness of the U.S.
D)The national debt is larger than the typical deficit.
E)The national debt is smaller than the GDP.

Question 20

Why do economists generally classify sales and excise taxes as regressive?

A)Because they are the most unpopular taxes
B)Because they tax everyone at a different rate,regardless of income
C)Because they raise relatively little revenue
D)Because lower-income persons spend a greater proportion of their earnings on items subject to taxation than do upper-income persons
E)Because they are excessively high

Question 21

Which of the following is an example of mandatory spending?

A)Road construction
B)Space Station
C)Interest on the debt
D)Monetary policy
E)Federal land buy-backs

Question 22

What is the difference between a budget deficit and the national debt?

Question 23

A cost-of-living adjustment COLA)is designed to hold down the rising costs of Social Security.

Question 24

Social Security can most accurately be described as a pension system in which the government takes workers' contributions,invests them,and then returns the proceeds to retirees.

Question 25

Why did the number of welfare recipients decrease in the late 1990s?

Question 26

The individual income tax is the single largest source of revenue for the U.S.government.

Question 27

National defense is the third largest category of federal spending.

Question 28

According to the graph on page 313,corporate income taxes are the largest source of revenue for the U.S.government.

Question 29

What is the difference between a progressive tax and a regressive tax? Give an example of each type of tax.

Question 30

Many federal expenditures must be included in the budget because of existing contracts or laws.

Question 31

Which of the following is not an entitlement program?

A)Space Station
B)Medicaid
C)Social Security
D)Federal military retirement
E)Medicare

Question 32

Which of the following agencies makes monetary policy?

A)General Accounting Office
B)Office of Management and Budget
C)Council of Economic Advisers
D)Federal Reserve Board
E)Federal Insurance Board

Question 33

Which of the following statements about welfare is NOT

A)After the welfare reform of 1996,welfare recipients were required to work to get benefits.
B)Food stamps,SSI,EITC,Medicaid,and TANF are the most important welfare programs.
C)Welfare programs are federal programs,involving state and local governments in addition to the national government.
D)Welfare reform passed Congress in 1996.
E)Need-based welfare was abolished in 1996.

Question 34

Social Security,Medicare,and Medicaid are examples of entitlement programs.

Question 35

What is Medicare,and how is it financed?

Question 36

Which of the following statements about welfare programs is

A)Welfare includes a variety of programs including cash and noncash benefits.
B)Welfare programs are totally funded and administered by the federal government.
C)Most welfare recipients stay on welfare throughout their lives.
D)Welfare was eliminated in 1996.
E)Welfare programs are totally funded and administered by the state governments

Question 37

Statistics show that the number of welfare recipients has increased since reforms were enacted in 1996.

Question 38

Payroll taxes and excise taxes are examples of progressive taxes.

Question 39

The Federal Reserve Board is an independent regulatory commission that makes monetary policy.

Question 40

What is the ability-to-pay theory of taxation? Give an example of a type of tax that reflects this approach to taxation.

Question 41

Why do some observers believe that the long-term financial solvency of the Social Security system may be in jeopardy?

Question 42

Explain the nature of a PAYGO provision.

Question 43

Farm programs have been the focus of a number of recent Washington budget battles.Write an essay on farm programs in which you a)describe government subsidy programs for farmers,b)explain the justifications for and the politics behind farm programs,and c)identify who benefits from farm programs and who pays for them.

Question 44

Is the federal tax system fair? Write an essay on the tax system in which you identify at least two alternative approaches to evaluating a tax system.Then evaluate the federal tax system in light of each approach.

Question 45

What is fiscal policy? Which agency of government makes fiscal policy?

Question 46

What are entitlement programs? Give an example of an entitlement program.

Question 47

What do you think of the flat tax,national sales tax,and VAT? Make an argument for adopting each and include your own opinion on which you believe to be better.

Question 48

What is monetary policy? Which branch or agency of government enacts monetary policy?

Question 49

Describe the budgeting process.

Question 50

Many politicians have gotten political mileage out of attacks on welfare spending for the poor.The poor,however,are not the only beneficiaries of the government's largesse.More money goes to middle- and upper-income groups in the form of tax preferences,entitlements,and business subsidies than goes to the poor in the form of welfare.Write an essay describing the subsidy,tax preference,and entitlement programs that provide financial benefits to the middle and upper classes.

Question 51

Explain the Social Security system,and analyze the problems the system currently faces.Identify strategies that would relieve these problems,and make a case for what you consider the best strategy.Make your criteria for your choice clear.