Question 1

Households in the bottom 20% of the income distribution pay approximately what percent of their income in federal taxes?

Accepted Answer

A)   4.3%
B)   9.9%
C)   17.4%
D)   25.5%E) B) and C)
F) A) and B)

Question 2

The tax rate on an additional dollar of income is the:

Accepted Answer

A)   average tax rate.
B)   total tax rate.
C)   marginal tax rate.
D)   alternative minimum tax rate.E) All of the above
F) B) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 taxesE) A) and D)
F) B) and D)

Question 5

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 6

Together, Social Security, defense, Medicare, and Medicaid make up approximately _____ of the U.S. federal budget.

Accepted Answer

A)   one-quarter
B)   one-third
C)   one-half
D)   two-thirdsE) All of the above
F) A) and D)

Question 7

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

Question 8

Which of the following statements is correct?

Accepted Answer

A)   The burden of the FICA tax is equally split between workers and employers.
B)   Most of the burden of the FICA tax falls on workers.
C)   Most of the burden of the FICA tax falls on employers.
D)   Employees face no burden from the FICA tax.E) A) and B)
F) None of the above

Question 9

A country has two income tax brackets: people pay 10% on their first $50,000 and 20% on everything they earn over $50,000. It also has a personal exemption of $5,000. Who benefits more from the personal exemption, a person making $35,000 or a person making $75,000?

Accepted Answer

A)   the person making $35,000
B)   the person making $75,000
C)   they benefit equally
D)   It is impossible to tell.E) None of the above
F) A) and D)

Question 10

Debt held outside the U.S. government is called the:

Accepted Answer

A)   total U.S. national debt.
B)   debt-to-GDP ratio.
C)   national debt held by the public.
D)   debt to foreign investor holdings.E) B) and C)
F) A) and C)

Question 11

The main forces driving the projections of exponential debt growth in the future are recessions and the rising costs of the welfare programs.

Accepted Answer

A) True 
 B)False

Question 12

The single item on which the U.S. federal government spent the most in 2013 was:

Accepted Answer

A)   foreign aid.
B)   defense.
C)   Social Security.
D)   interest on the debt.E) C) and D)
F) All of the above

Question 13

Since 1960, marginal tax rates in the United States have decreased for individuals:

Accepted Answer

A)   at all income levels.
B)   with high incomes only.
C)   with low incomes only.
D)   at no income level.E) None of the above
F) A) and B)

Question 14

On average, U.S. households with incomes in the top 20% pay:

Accepted Answer

A)   less than 5% of their income in federal income tax.
B)   between 5% and 15% of their income in federal income tax.
C)   between 15% and 20% of their income in federal income tax.
D)   about 25% of their income in federal income tax.E) C) and D)
F) A) and B)

Question 15

Foreign aid constitutes about _____ of the U.S. federal budget.

Accepted Answer

A)   1%
B)   5%
C)   10%
D)   40%E) B) and D)
F) C) and D)

Question 16

Use the following to answer questions: Figure: U.S. Marginal and Average Tax Rates 
-(Figure: U.S. Marginal and Average Tax Rates)  According to the tax rates shown in the figure, an individual who earns $85,000 a year will pay income tax of:

Accepted Answer

A)   $5,325.
B)   $7,202.50.
C)   $14,097.50.
D)   $21,250.E) C) and D)
F) None of the above

Question 17

Current projections are that the debt-to-GDP ratio will:

Accepted Answer

A)   peak at 80% in 2020 and then gradually decline.
B)   continue to fall for the foreseeable future.
C)   increase exponentially between now and 2060.
D)   fall to zero in 2030.E) C) and D)
F) B) and C)

Question 18

What is the annual difference between federal spending and revenues called?

Accepted Answer

A)   the deficit
B)   the national debt held by the public
C)   tax revenue shortfall
D)   spending as a percentage of GDPE) A) and B)
F) A) and C)

Question 19

The average 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) All of the above
F) A) and D)

Question 20

The main income redistribution program that the federal government supports is:

Accepted Answer

A)   the Earned Income Tax Credit program.
B)   the Social Security System.
C)   Medicaid.
D)   Medicare.E) B) and C)
F) A) and D)

Exam 17: The Federal Budget: Taxes and Spending

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

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Since 1960, marginal tax rates in the United States have decreased for individuals:

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Current projections are that the debt-to-GDP ratio will:

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The main income redistribution program that the federal government supports is:

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

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Together, Social Security, defense, Medicare, and Medicaid make up approximately _____ of the U.S. federal budget.

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What is the annual difference between federal spending and revenues called?

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The FICA tax burden is:

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The tax rate on an additional dollar of income is the:

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The main forces driving the projections of exponential debt growth in the future are recessions and the rising costs of the welfare programs.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: U.S. Marginal and Average Tax Rates -(Figure: U.S. Marginal and Average Tax Rates) According to the tax rates shown in the figure, an individual who earns $85,000 a year will pay income tax of:

Correct AnswerverifiedShow Answer

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

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Debt held outside the U.S. government is called the:

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On average, U.S. households with incomes in the top 20% pay:

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The single item on which the U.S. federal government spent the most in 2013 was:

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A country has two income tax brackets: people pay 10% on their first $50,000 and 20% on everything they earn over $50,000. It also has a personal exemption of $5,000. Who benefits more from the personal exemption, a person making $35,000 or a person making $75,000?

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The average tax rate is:

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Foreign aid constitutes about _____ of the U.S. federal budget.

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Households in the bottom 20% of the income distribution pay approximately what percent of their income in federal taxes?

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Which of the following statements is correct?

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