1. Which of the following is true about the percent of total income all levels of government in the U.S. take as taxes?
a.
In 1902 the government collected about 7 percent of total income. In recent years, it collected about 30 percent
of total income.
b.
In 1902 the government collected about 30 percent of total income. In recent years, it collected about 7 percent
of total income.
c.
In 1902 the government collected about 7 percent of total income. In recent years, it collected about 7 percent
of total income.
d.
In 1902 the government collected about 30 percent of total income. In recent years, it collected about 30
percent of total income.
2. Over the past 100 years, as the U.S. economy’s income has grown,
a.
tax rates have decreased, while tax revenues have increased.
b.
tax rates have increased, while tax revenues have decreased.
c.
both tax rates and tax revenues have increased.
d.
both tax rates and tax revenues have decreased.
3. Which of the following countries has the largest tax burden?
a.
b.
c.
d.
4. Of the following countries, which country’s government collects the largest amount of tax revenue as a percentage of
that country’s total income?
a.
b.
c.
d.
5. Which of the following countries has lower total government tax revenue as a percentage of GDP than the United
States?
a.
Canada
b.
Germany
c.
Sweden
d.
Mexico
6. The U.S. tax burden is
a.
about the same as most European countries.
b.
higher than most European countries.
c.
lower than most European countries.
d.
higher than all European countries.
7. Of the following countries, which country’s government collects the least amount of tax revenue as a percentage of that
country’s total income?
a.
b.
c.
d.
8. The U.S. federal government collects about
a.
one-third of the taxes in our economy.
b.
one-half of the taxes in our economy.
c.
two-thirds of the taxes in our economy.
d.
three-fourths of the taxes in our economy.
9. In 2011, the U.S. federal government collected approximately what percentage of the taxes in the economy?
a.
10%
b.
40%
c.
50%
d.
67%
10. In 2011, the average American paid approximately how much to the federal government in taxes?
a.
$2,000
b.
$2,500
c.
$8,000
d.
$10,500
11. In 2011, the U.S. federal government collected approximately how much in total tax receipts?
a.
$800 million
b.
$2.5 billion
c.
$5.2 billion
d.
$8.7 billion
12. In 2011, which category represented the largest source of receipts for the U.S. federal government?
a.
Medicare
b.
Social Security
c.
corporate income taxes
d.
individual income taxes
13. The largest source of income for the federal government is
a.
individual income taxes.
b.
corporate taxes.
c.
tariffs.
d.
“sin” taxes on alcohol and cigarettes.
14. The largest source of revenue for the federal government is the
a.
individual income tax.
b.
property tax.
c.
sales tax.
d.
corporate income tax.
15. In 2011, approximately what percentage of the U.S. federal government’s receipts came from individual income taxes?
a.
9%
b.
15%
c.
43%
d.
67%
16. The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the
largest to the smallest.
a.
corporate income taxes, individual income taxes, social insurance taxes
b.
social insurance taxes, individual income taxes, corporate income taxes
c.
individual income taxes, social insurance taxes, corporate income taxes
d.
individual income taxes, corporate income taxes, social insurance taxes
17. A person’s tax liability refers to
a.
the percentage of income that a person must pay in taxes.
b.
the amount of tax a person owes to the government.
c.
the amount of tax the government is required to refund to each person.
d.
deductions that can be legally subtracted from a person’s income each year.
18. The amount of income tax owed by a family is
a.
not simply proportional to its total income.
b.
unaffected by deductions.
c.
total income minus tax credits.
d.
a constant fraction of income.
19. A family’s income tax liability is
a.
a standard percentage of all income earned.
b.
determined by wage income rather than dividend and interest income.
c.
based on total income.
d.
constant from year to year.
20. The federal taxes owed by a taxpayer depend
a.
only upon the marginal tax rate on the taxpayer’s first $25,000 of income.
b.
only upon the marginal tax rate on the taxpayer’s last $10,000 of income.
c.
upon all the marginal tax rates up to the taxpayer’s overall level of income.
d.
upon all the marginal tax rates, including those for income levels that exceed the taxpayer’s overall level of
income.
21. The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately
a.
80 percent.
b.
50 percent.
c.
40 percent.
d.
20 percent.
22. The two taxes that together provide the U.S. federal government with almost 80 percent of its revenue are
a.
individual income taxes and property taxes.
b.
individual income taxes and corporate income taxes.
c.
individual income taxes and payroll taxes.
d.
sales taxes and payroll taxes.
23. Which of the following is an example of a payroll tax?
a.
a tax on the wages that a firm pays its workers
b.
a “sin” tax on distilled alcohol
c.
a tax on corporate profits
d.
the portion of federal income taxes earmarked to pay for national defense
24. In the United States, the payroll tax is also called a
a.
dividend income tax.
b.
social insurance tax.
c.
value added tax.
d.
capital gains tax.
25. Which type of tax is used to finance the Social Security program in the United States?
a.
consumption tax
b.
income tax
c.
payroll tax
d.
property tax
26. The revenue that the federal government collects from payroll taxes is earmarked to pay for
a.
national defense and income security (welfare) programs
b.
national defense and Medicare
c.
Social Security and public schools
d.
Social Security and Medicare
27. In 2011, social insurance taxes represented approximately what percentage of total receipts for the federal
government?
a.
5%
b.
12%
c.
36%
d.
44%
28. A payroll tax is a tax on
a.
the wages that a firm pays its workers.
b.
earned and unearned income.
c.
specific goods like gasoline and cigarettes.
d.
corporate profits.
29. The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for
a.
employer-provided pensions.
b.
Social Security and Medicare.
c.
employer-provided health benefits.
d.
job loss and training programs.
30. A tax on the wages that a firm pays its workers is called
a.
an income tax.
b.
an excise tax.
c.
a consumption tax.
d.
a payroll tax.
31. In 2011, what percentage of federal government receipts came from corporate income taxes?
a.
7%
b.
12%
c.
25%
d.
43%
32. Corporate profits distributed as dividends are
a.
tax free.
b.
taxed once.
c.
taxed twice.
d.
taxed three times.
33. The government taxes corporate income on the basis of
a.
profit.
b.
the amount the firm receives for the goods or services it sells.
c.
the number of employees.
d.
All of the above are correct.
34. Corporate profits are
a.
included in payroll taxes.
b.
exempt from taxes.
c.
taxed twice, once as profit and once as dividends.
d.
taxed to pay for Medicare.
35. Which of the following are taxed?
a.
both corporate profits and dividends shareholders receive
b.
corporate profits but not dividends shareholders receive
c.
dividends shareholders receive but not corporate profits
d.
neither corporate profits nor dividends shareholders receive
36. Taxes on specific goods such as gasoline and alcoholic beverages are called
a.
excise taxes.
b.
payroll taxes.
c.
sales taxes.
d.
social insurance taxes.
37. Which of the following is an example of an excise tax?
a.
a tax on the wages that a firm pays its workers
b.
a tax on tobacco
c.
a tax on corporate profits
d.
the portion of federal income taxes earmarked to pay for Social Security and Medicare
38. If New York City imposed a 50 cent tax on soft-drink beverages that contain sugar or high-fructose corn syrup, it
would
a.
be an excise tax.
b.
be an income tax.
c.
reduce tax revenue.
d.
cause the supply of corn to rise.
39. Taxes on specific goods such as cigarettes, gasoline, and alcoholic beverages are called
a.
sales taxes.
b.
excise taxes.
c.
social insurance taxes.
d.
consumption taxes.
40. An estate tax is an example of a(n)
a.
individual income tax.
b.
social insurance tax.
c.
corporate income tax.
d.
None of the above is correct.
41. In 2011, federal government receipts were approximately
a.
$4,000 per person and federal government spending was approximately $8,000 per person, resulting in a
budget deficit.
b.
$8,000 per person and federal government spending was approximately $12,000 per person, resulting in a
budget deficit.
c.
$12,000 per person and federal government spending was approximately $8,000 per person, resulting in a
budget surplus.
d.
$8,000 per person and federal government spending was approximately $4,000 per person, resulting in a
budget surplus.
42. In 2011, which category represented the largest category of spending for the U.S. federal government?
a.
health
b.
income security
c.
national defense
d.
net interest
43. The largest budgetary expense for the federal government in 2011 was
a.
interest on the national debt.
b.
health.
c.
highways.
d.
income security.
44. The U.S. federal government spends its revenues in a number of ways. Rank the following spending categories from
largest to smallest.
a.
income security, health, national defense, net interest
b.
health, national defense, net interest, income security
c.
net interest, health, income security, national defense
d.
national defense, income security, net interest, health
45. The three largest categories of spending by the Federal government in order from first to third would be
a.
income security, net interest, and national defense
b.
national defense, net interest, and income security
c.
income security, health, and national defense
d.
health, income security, and national defense
46. In 2011, approximately how much of federal government spending went to income security?
a.
10%
b.
25%
c.
33%
d.
50%
47. In 2011 the largest percentage of federal government spending was on
a.
national defense. The largest source of federal revenues was from corporate income taxes.
b.
health. The largest source of federal revenues was from individual income taxes.
c.
income security. The largest source of federal revenues was from corporate income taxes.
d.
income security. The largest source of federal revenues was from individual income taxes.
48. A transfer payment is a government payment
a.
to companies that provide goods or services to government agencies.
b.
designed to transfer funds from one government agency to another.
c.
which transfers revenue from the federal government to state government.
d.
not made in exchange for a good or service.
49. All of the following are transfer payments except
a.
welfare payments.
b.
unemployment compensation.
c.
personal income taxes.
d.
Social Security.
50. Which of the following is not true about government spending on national defense?
a.
It is the third-largest spending category for the U.S. federal government.
b.
It includes salaries of military personnel.
c.
It fluctuates over time as the political climate changes.
d.
It is not financed with tax revenue.
51. The government’s health plan for the elderly is called
a.
Medicaid.
b.
Medicare.
c.
Social Security.
d.
food stamps.
52. Medicare is the
a.
government’s health plan for the elderly.
b.
government’s health plan for the poor.
c.
another name for Social Security.
d.
Both a and c are correct.
53. Like spending on Social Security, the share of federal government spending on Medicare has risen substantially over
time. This is most likely a result of
a.
a rising population of poor in the economy.
b.
a rising population of the elderly in the economy.
c.
an immigration policy that promotes an influx of migrant farm workers.
d.
All of the above are important factors.
54. The share of federal government spending on healthcare has risen substantially over time. This is most likely a result
of
a.
medical advances that provide new, better, but often more expensive medical treatments.
b.
a rising population of the elderly in the economy.
c.
health insurance reform that will include government subsidies for health insurance for many low-to-moderate
income families.
d.
All of the above are important factors.
55. The federal healthcare spending program that specifically targets the poor is called
a.
Medicaid.
b.
Medicare.
c.
National Institutes of Health.
d.
Blue Cross/Blue Shield.