Question 1

Explain the difference between Medicare and Medicaid.

Accepted Answer

Both Medicare and Medicaid are used to p...

Question 2

Suppose you are a married person with one child but your whole family earns less than $20,000 a year. Which of the following will supplement your income?

Accepted Answer

A)   Federal Insurance Contribution Act
B)   alternative minimum tax
C)   Social Security
D)   Earned Income Tax CreditE) All of the above
F) A) and B)

Question 3

A tax with lower tax rates applied to people with higher incomes is called:

Accepted Answer

A)   progressive.
B)   regressive.
C)   flat.
D)   aggressive.E) A) and B)
F) None of the above

Question 4

The Federal Insurance Contributions Act tax is used to fund:

Accepted Answer

A)   The Federal Deposit Insurance Corporation.
B)   federal defense spending.
C)   Social Security payments.
D)   unemployment insurance.E) C) and D)
F) B) and C)

Question 5

If you pay an average tax rate of 25% on your salary of $20,000 and your neighbor pays an average tax rate of 10% on his salary of $300,000, the tax system is:

Accepted Answer

A)   flat.
B)   progressive.
C)   regressive.
D)   proportional.E) None of the above
F) A) and B)

Question 6

In recent years, the average retiree has been paid _____ per month in Social Security benefits.

Accepted Answer

A)   $500
B)   $1,200
C)   $2,000
D)   $3,000E) B) and D)
F) B) and C)

Question 7

When individuals make payments into Social Security, the funds go into an account identified by their Social Security number.

Accepted Answer

A) True 
 B)False

Question 8

If your income is $65,000, with income up to $17,000 subject to a 10% tax rate and income above $17,000 subject to 15% tax rate, then your average tax rate is:

Accepted Answer

A)   11.2%.
B)   12.5%.
C)   13.7%.
D)   14.2%.E) None of the above
F) B) and C)

Question 9

The purpose of FICA taxes is to fund:

Accepted Answer

A)   health services for elderly people.
B)   defense expenditures.
C)   presidential campaigns.
D)   Social Security payments.E) None of the above
F) B) and D)

Question 10

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 taxE) C) and D)
F) A) and D)

Question 11

Government spending as a percentage of GDP in the United States today is:

Accepted Answer

A)   larger than any other developed country in the world.
B)   about average as compared with other developed countries.
C)   one of the smallest among developed countries.
D)   comparable with countries like Germany, the Netherlands, and Italy.E) All of the above
F) B) and D)

Question 12

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.E) A) and C)
F) None of the above

Question 13

The debt-to-GDP ratio for the United States has increased significantly over time since the beginning of World War II.

Accepted Answer

A) True 
 B)False

Question 14

The government finances its debt by:

Accepted Answer

A)   printing money.
B)   borrowing from the Fed.
C)   issuing bonds.
D)   borrowing from foreign investors such as China.E) A) and B)
F) A) and C)

Question 15

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.E) B) and C)
F) All of the above

Question 16

If you receive a capital gain of $2,000 from selling a stock but also incur a capital loss of $1,500 from selling another stock, the total amount of tax you pay based on a 15% capital gain tax rate is:

Accepted Answer

A)   $0.
B)   $75.
C)   $225.
D)   $300.E) C) and D)
F) A) and B)

Question 17

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.E) None of the above
F) A) and C)

Question 18

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 19

Under a regressive tax, people with higher incomes:

Accepted Answer

A)   have higher average tax rates.
B)   have lower average tax rates.
C)   have the same average tax rates as those with lower incomes.
D)   pay fewer tax dollars.E) C) and D)
F) None of the above

Question 20

Which of the following is an example of an "earmark" expenditure?

Accepted Answer

A)   $2 million for a tennis program in a national highway appropriations bill
B)   $5 million to build more tanks for the military
C)   $1 million to build a bridge in Ohio
D)   $2 million in payments to welfare recipientsE) C) and D)
F) None of the above

Exam 17: The Federal Budget: Taxes and Spending

If your income is $65,000, with income up to $17,000 subject to a 10% tax rate and income above $17,000 subject to 15% tax rate, then your average tax rate is:

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The government finances its debt by:

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Under a regressive tax, people with higher incomes:

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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:

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Explain the difference between Medicare and Medicaid.

Correct AnswerverifiedBoth Medicare and Medicaid are used to p...View AnswerShow Answer

The debt-to-GDP ratio for the United States has increased significantly over time since the beginning of World War II.

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The marginal tax rate is:

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The Social Security payment system began issuing Social Security checks:

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Government spending as a percentage of GDP in the United States today is:

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The purpose of FICA taxes is to fund:

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

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Which of the following is an example of an "earmark" expenditure?

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The Federal Insurance Contributions Act tax is used to fund:

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

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When individuals make payments into Social Security, the funds go into an account identified by their Social Security number.

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A tax with lower tax rates applied to people with higher incomes is called:

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If you pay an average tax rate of 25% on your salary of $20,000 and your neighbor pays an average tax rate of 10% on his salary of $300,000, the tax system is:

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In recent years, the average retiree has been paid _____ per month in Social Security benefits.

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Suppose you are a married person with one child but your whole family earns less than $20,000 a year. Which of the following will supplement your income?

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If you receive a capital gain of $2,000 from selling a stock but also incur a capital loss of $1,500 from selling another stock, the total amount of tax you pay based on a 15% capital gain tax rate is:

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Both Medicare and Medicaid are used to p...
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