164. From 1960 to 2015, as percentages of U.S. output, government purchases have
D. increased slightly, while transfer payments have remained about the same.
165. Government purchases of goods and services are
A. nonexhaustive because they do not directly absorb resources and account for production.
166. One distinction between government purchases and transfer payments is that
D. purchases are not part of total government spending, whereas transfers are.
167. The so-called Tax Freedom Day of each year recognizes the day that
A. the federal government requires taxpayers to submit their taxes to the Internal Revenue
Service.
168. In 2014, the so-called Tax Freedom Day in the U.S. occurred in
A. February.
20–83
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A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Diff i cult y :
01 Easy
Learning Objective: 20–02 Identify the main categories of government spending and the main
sources of government revenue.
Test Bank: II
Topic:
Government Finance
169. In 2014, based on data from the OECD, the government’s total tax revenue as a percentage
of total output was highest in which of the following nations?
A. Germany
170. A nation’s “tax burden” is measured by the
A. total amount of tax dollars paid by the citizens.
171. The largest expenditure of the U.S. federal government is for
A. education.
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written consent of McGraw-Hill Education.
B. national defense.
C. pensions and income security.
D. interest on public debt.
172. The U.S. federal expenditures for “pensions and income security” are dominated by
A. housing subsidies.
173. The major sources of funds for the U.S. federal government include the following, except
A. payroll taxes.
174. In 2015, personal income taxes contributed what percentage of total federal tax revenues
in the U.S.?
D. around 90 percent
175. Which of the following statements about government borrowing is not true?
A. It provides the government the ability to maintain spending levels during economic
downturns.
176. “Deficit spending” refers to a situation where the government
D. is spending less than the year before.
20–86
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written consent of McGraw-Hill Education.
Blooms: Remember
Diff i cult y :
01 Easy
Learning Objective: 20–03 List the main categories of federal revenue and spending and
describe the difference between marginal and average tax rates.
Test Bank: II
Topic:
Federal Finance
177. Which of the following is not a significant source of revenue for the U.S. federal
government?
A. personal income taxes
178. In 2015, corporate income taxes contributed about what percentage of U.S. federal tax
revenues?
D. 70 percent
179. The two largest sources of tax revenue for the U.S. federal government are
A. excise taxes and customs duties.
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B. payroll taxes and excise taxes.
C. personal income taxes and payroll taxes.
D. personal income taxes and corporate income taxes.
180. The marginal tax rate is the
A. sum of all individual tax rates.
181. If your income increases from $10,000 per year to $14,000 per year and your tax payment
increases from $2,000 to $2,840, the marginal tax rate
A. is 20 percent.
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written consent of McGraw-Hill Education.
Topic:
Federal Finance
182. If the marginal tax rate is 20 percent, by how much must income have increased if your tax
bill increases by $300?
A. $300
183.
Taxable Income
Total Tax
$15,000
$1,500
30,000
3,500
60,000
9,000
120,000
25,000
The table represents a personal income tax schedule. The average tax rate at the $60,000 level
of income is
A. 10.0 percent.
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written consent of McGraw-Hill Education.
Topic:
Federal Finance
184.
Taxable Income
Total Tax
$15,000
$1,500
30,000
3,500
60,000
9,000
120,000
25,000
The table represents a personal income tax schedule. If income increases from $15,000 to
$30,000, the marginal tax rate is
A. 10.0 percent.
185.
Taxable Income
Total Tax
$15,000
$1,500
30,000
3,500
60,000
9,000
120,000
25,000
The table represents a personal income tax schedule. As income increases, the average tax rate
D. has no definite pattern
20–90
186.
Taxable Income
Total Tax
$15,000
$1,500
30,000
3,500
60,000
9,000
120,000
25,000
The table represents a personal income tax schedule. As income increases, the marginal tax rate
D. has no definite pattern.
187. If taxes are $2,000 when income is $15,000 and they are $3,000 when income is $19,000,
then the marginal tax rate is
A. 20 percent.
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written consent of McGraw-Hill Education.
Diff i cult y :
01 Easy
Learning Objective: 20–03 List the main categories of federal revenue and spending and
describe the difference between marginal and average tax rates.
Test Bank: II
Topic:
Federal Finance
188. With a tax of $4,000 on $24,000 taxable income, the average tax rate is
D. 25 percent.
189. With a tax of $4,000 on $20,000 of income and $6,000 on $30,000 of income, the average
tax rate is
A. constant at 10 percent.
190. Joe complains that 32 percent of his income last year went to taxes. He is referring to his
D. progressive tax rate.
191. Social Security contributions are part of
A. excise taxes.
192. Excise taxes of the federal government include the following items, except a(n)
A. alcoholic beverage tax.
A. They provide funds for Social Security.
194. Which of the following is the most important source of tax revenue for state governments?
A. personal income tax
195. Which of the following is the largest expenditure item of state governments?
D. health and hospitals
196. Many states in the U.S. acquire significant amounts of funds from the following, except
A. state-run lotteries.
197. Which of the following statements about state lotteries is false?
A. State lotteries are monopolies, with competing private lotteries banned.
198. Which of the following is not an argument presented by defenders of state-run lotteries?
A. Lotteries are preferable to taxes because they are voluntary rather than compulsory.
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A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Diff i cult y :
01 Easy
Learning Objective: 20–04 List the main categories of state and local revenue and spending.
Test Bank: II
Topic:
State and Local Finance
199. Which is the most important source of tax revenue for local governments?
D. personal income taxes
200. Which of the following is the largest expenditure item of local governments?
A. highways
201. Property taxes are
A. collected primarily at the federal level.
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AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Diff i cult y :
01 Easy
Learning Objective: 20–04 List the main categories of state and local revenue and spending.
Test Bank: II
Topic:
State and Local Finance
202. The tax revenues of local governments are typically
A. more than their expenditures.
203. In 2013, U.S. governments (local, state, and federal) employed roughly what percentage of
the U.S. labor force?
A. 5 percent
204. Most of the state and local government employees are in what area?
A. health care
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C. administration
D. highways
205. In 2013, the largest portion of federal employees were in which of the following sectors?
A. education and health care
206. When Supreme Court Justice Oliver Wendell Holmes stated, “Taxes are the price we pay
for civilization,” he meant that
20–98
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written consent of McGraw-Hill Education.
Topic:
Apportioning the Tax Burden
207. The benefits-received principle of taxation is
D. the principle behind the income tax system.
208. The progressive structure of the income-tax system is based on the
A. benefits-received principle.
209. A tax structure is called progressive when
D. the average tax rate is constant, but the absolute amount of taxes paid increases with income
increases.
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written consent of McGraw-Hill Education.
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 20–06 Summarize the different philosophies regarding the distribution of a
nations tax burden.
Test Bank: II
Topic:
Apportioning the Tax Burden
210. If a tax is progressive, then
A. the average and marginal tax rates are always equal.
211. If government levies a tax or fee on hunting licenses and uses the resulting revenue for
wildlife stocking programs, this would be an example of
A. a progressive tax.
212. A federal excise tax on tires for cars and trucks would be an example of the
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C. proportional tax.
D. progressive tax.
213. With a tax of $2,000 on $30,000 of income and $2,000 on $70,000 of income, we can
describe the structure of this tax as
A. progressive.
214. If everyone pays a fixed dollar amount of tax, then the tax is a
A. proportional tax.