Question 1

The income tax exemption for each individual in 2014 is:

Accepted Answer

A)   $500.
B)   $1,200
C)   $2,850.
D)   $3,950.

Question 2

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

Accepted Answer

A)   last tax rate.
B)   marginal tax rate.
C)   total tax rate.
D)   average tax rate.

Question 3

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, what is that person's average tax rate?

Accepted Answer

A)   10%
B)   13.3%
C)   15%
D)   20%

Question 4

If your marginal tax rate is 25% and you can exempt $3,650 of your income for each member of your family (yourself, your spouse, and your one child) , then the exemption means you will save _____ in taxes.

Accepted Answer

A)   $912.5
B)   $1,825
C)   $2,737.50
D)   $3,650

Question 5

When a member of Congress adds an extra, favored expenditure for his district to a bill, he is:

Accepted Answer

A)   always paying back a contributor.
B)   setting aside his constituents' money.
C)   allotting economic development funds.
D)   earmarking the spending.

Question 6

Proponents of the United States moving from its current progressive tax system to a flat tax system argue that the efficiency gains associated with a flat tax system would mean that even people who are paying a higher tax rate, with increased economic growth, would be better off. Explain this argument.

Accepted Answer

The argument is that the current progres...

Question 7

The highest debt-to-GDP ratio in U.S. history occurred:

Accepted Answer

A)   during the Reagan administration.
B)   in 2009, after the stimulus package was put into place.
C)   during the Great Depression.
D)   during WWII.

Question 8

Suppose a high-income individual, subject to a 15% capital gains tax rate, sells 100 shares of Company X for a price of $9 per share (purchased at $10 each)  and 500 shares of Company Y for a price of $51 per share (purchased at $50 each) . How much in capital gains tax will he pay?

Accepted Answer

A)   $60
B)   $75
C)   $210
D)   $3,690

Question 9

In which of the following tax systems do people with higher incomes end up paying more tax dollars?

Accepted Answer

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

Question 10

Which of the following represents a change that has been made since the individual income tax was first levied in 1913?

Accepted Answer

A)   In 1969, the overall tax system was changed from a regressive to a progressive set of tax rates.
B)   In 1969, the alternative minimum tax was introduced to prevent the rich from paying no taxes.
C)   The alternative minimum tax has been adjusted for inflation.
D)   Social Security payments are no longer indexed to wages.

Question 11

Government spending on "interest on the debt" refers to:

Accepted Answer

A)   interest paid to owners of government debt held by the public.
B)   interest charged by the U.S. government for U.S. foreign aid to other countries.
C)   spending by the U.S. government on education and highways.
D)   interest charged by the U.S. government on loans to states for education programs.

Question 12

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

Accepted Answer

A)   under any plausible scenario, the federal budget is on a sustainable path.
B)   under any plausible scenario, the federal budget is on a continuous path.
C)   the federal debt will grow much more slowly than the economy over the long run.
D)   the federal debt will grow much faster than the economy over the long run.

Question 13

In recent decades, health-care costs per capita rose more than twice as fast as GDP per capita.

Accepted Answer

A) True 
 B)False

Question 14

Is the marginal income tax rate or the average income tax rate higher for a typical person in the United States?

Accepted Answer

A)   The marginal income tax rate is higher.
B)   The average income tax rate is higher.
C)   They are equal.
D)   It depends on the person.

Question 15

The entire U.S. tax system is moderately:

Accepted Answer

A)   flat.
B)   progressive.
C)   regressive.
D)   value-added.

Question 16

Which category of government spending as a percentage of GDP is most likely to increase over time in the future?

Accepted Answer

A)   Medicare and Medicaid payments
B)   unemployment benefits
C)   national defense
D)   earmarked programs

Question 17

Measured in terms of dollars paid out, Social Security is the largest single government program in the world.

Accepted Answer

A) True 
 B)False

Question 18

The annual difference between federal spending and revenues is called the:

Accepted Answer

A)   national deficit.
B)   national debt.
C)   debt held by the public.
D)   debt-to-GDP ratio.

Question 19

In 2013, the U.S. federal government received about _____ in tax revenue.

Accepted Answer

A)   $2.8 billion
B)   $578 billion
C)   $2.8 trillion
D)   $578 trillion

Question 20

Which of the following is the smallest component of U.S. federal government spending?

Accepted Answer

A)   defense
B)   Social Security
C)   unemployment and welfare
D)   interest payments on government debt

Exam 17: The Federal Budget: Taxes and Spending

If your marginal tax rate is 25% and you can exempt $3,650 of your income for each member of your family (yourself, your spouse, and your one child) , then the exemption means you will save _____ in taxes.

Correct Answer
verified

In which of the following tax systems do people with higher incomes end up paying more tax dollars?

Correct Answer
verified

The entire U.S. tax system is moderately:

Correct Answer
verified

Which of the following represents a change that has been made since the individual income tax was first levied in 1913?

Correct Answer
verified

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, what is that person's average tax rate?

Correct Answer
verified

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

Correct Answer
verified

In recent decades, health-care costs per capita rose more than twice as fast as GDP per capita.

Correct Answer
verified

In 2013, the U.S. federal government received about _____ in tax revenue.

Correct Answer
verified

The income tax exemption for each individual in 2014 is:

Correct Answer
verified

Which of the following is the smallest component of U.S. federal government spending?

Correct Answer
verified

Which category of government spending as a percentage of GDP is most likely to increase over time in the future?

Correct Answer
verified

The annual difference between federal spending and revenues is called the:

Correct Answer
verified

Government spending on "interest on the debt" refers to:

Correct Answer
verified

Is the marginal income tax rate or the average income tax rate higher for a typical person in the United States?

Correct Answer
verified

Correct Answer
verified
The argument is that the current progres...
View Answer

Suppose a high-income individual, subject to a 15% capital gains tax rate, sells 100 shares of Company X for a price of $9 per share (purchased at $10 each) and 500 shares of Company Y for a price of $51 per share (purchased at $50 each) . How much in capital gains tax will he pay?

Correct Answer
verified

Measured in terms of dollars paid out, Social Security is the largest single government program in the world.

Correct Answer
verified

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

Correct Answer
verified

The highest debt-to-GDP ratio in U.S. history occurred:

Correct Answer
verified

When a member of Congress adds an extra, favored expenditure for his district to a bill, he is:

Correct Answer
verified

Exam 17: The Federal Budget: Taxes and Spending

If your marginal tax rate is 25% and you can exempt $3,650 of your income for each member of your family (yourself, your spouse, and your one child) , then the exemption means you will save _____ in taxes.

Correct AnswerverifiedShow Answer

In which of the following tax systems do people with higher incomes end up paying more tax dollars?

Correct AnswerverifiedShow Answer

The entire U.S. tax system is moderately:

Correct AnswerverifiedShow Answer

Which of the following represents a change that has been made since the individual income tax was first levied in 1913?

Correct AnswerverifiedShow Answer

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, what is that person's average tax rate?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In recent decades, health-care costs per capita rose more than twice as fast as GDP per capita.

Correct AnswerverifiedShow Answer

In 2013, the U.S. federal government received about _____ in tax revenue.

Correct AnswerverifiedShow Answer

The income tax exemption for each individual in 2014 is:

Correct AnswerverifiedShow Answer

Which of the following is the smallest component of U.S. federal government spending?

Correct AnswerverifiedShow Answer

Which category of government spending as a percentage of GDP is most likely to increase over time in the future?

Correct AnswerverifiedShow Answer

The annual difference between federal spending and revenues is called the:

Correct AnswerverifiedShow Answer

Government spending on "interest on the debt" refers to:

Correct AnswerverifiedShow Answer

Is the marginal income tax rate or the average income tax rate higher for a typical person in the United States?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe argument is that the current progres...View AnswerShow Answer

Suppose a high-income individual, subject to a 15% capital gains tax rate, sells 100 shares of Company X for a price of $9 per share (purchased at $10 each) and 500 shares of Company Y for a price of $51 per share (purchased at $50 each) . How much in capital gains tax will he pay?

Correct AnswerverifiedShow Answer

Measured in terms of dollars paid out, Social Security is the largest single government program in the world.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The highest debt-to-GDP ratio in U.S. history occurred:

Correct AnswerverifiedShow Answer

When a member of Congress adds an extra, favored expenditure for his district to a bill, he is:

Correct AnswerverifiedShow Answer

Correct Answer
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The argument is that the current progres...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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