LC17: LearningCurve - Ch. 17: The Federal Budget: Taxes and Spending
Assuming no deductions or exemptions, what would the average tax rate be for a person earning $150,000 per year?
20.2%
Government spending (false)
When federal government spending exceeds tax revenues, the national debt falls
The U.S. government spending is _____ of GDP compared to most other developed countries.
a smaller fraction
The current national debt-to-GDP ratio of 80% for the United States:
is high but not unprecedented
The Environmental Protection Agency's impact on the economy is primarily due to its:
power to regulate how business affects the environment
If a nation's debt grows faster than its economy, then that nation's debt-to-GDP ratio will:
rise
Approximately how much money was spent on Social Security benefits in 2020?
$1,102 billion
Assuming no deductions or exemptions, what would the individual income tax liability be for a person earning $45,000 per year?
($16,750 × 0.10) + [($45,000 − $16,750) × 0.15] = $5,912.50
The highest debt-to-GDP ratio in U.S. history occurred in _____ at 108%.
1946
Older adults (false)
By 2030 more than 40% of the U.S. population will be older adults.
Health Care Costs
Compared to the United States, other developed countries spend a lesser fraction of their GDP on health care costs
What does FICA stand for?
Federal Insurance Contributions Act
Which situation is NOT a reason that the debt-to-GDP ratio is expected to soar given current spending and tax trends?
Foreign aid, the largest portion of government spending, is expected to continue to grow
2007 Recession
GDP fell during the recession that began in late 2007, sharply increasing the U.S. debt-to-GDP ratio
Significance of Interest Rates
If interest rates were to increase significantly, interest on the debt could increase significantly.
If a person making $40,000 per year pays $10,000 in federal income taxes, and a person making $72,000 per year pays $22,000 in federal income taxes, which statement best describes the tax code?
It is progressive
Government spending
Most of the money spent by the U.S. government is spent on big programs
Flat Tax
Proponents of a flat tax argue that it would encourage people to make investment, consumption, and work decisions for good economic reasons rather than merely to reduce tax payments
Almost two-thirds of the U.S. budget in a typical year is spent on which four programs?
Social Security, defense, Medicare, and Medicaid
Of the following countries that spend a lot on their militaries, which had the lowest total military expenditures in 2018?
South Korea
U.S. Debt in 2020
The U.S. debt in 2020 was about $25 trillion
U.S. debt-to-GDP ratio
The U.S. debt-to-GDP ratio has grown from 35% in 2007 to about 80% in 2020.
Average interest rate on U.S. debt in 2020
The average interest rate on U.S. debt in 2020 was about 2%
Alternative Minimum Tax
The original goal of the Alternative Minimum Tax was NOT to make sure that it would not be possible for too many people to avoid all income tax.
Overhead Costs
The overhead costs of the Social Security program are low despite a few instances of fraud
Real Tax Rates
The real tax rates people pay are not the same as the rates written into the tax code
The separate income tax code that began in 1969 to ensure that the rich pay income tax is called the:
alternative minimum tax
A flat tax has:
constant tax rate
The _____ ratio will rise significantly in the future, because Americans are getting older and health care costs per person have been _____ significantly.
federal debt-to-GDP; rising
All else equal, the greater one's life expectancy, the:
more beneficial Social Security will be for him or her
Which source accounts for more than 90% of the revenue that the U.S. government collects?
the individual income tax plus the corporate income tax plus Social Security and Medicare taxes
Drafted soldiers are relatively cheap if you just look at _____, but a draft is very costly if you look at _____.
their paychecks; the opportunity cost
Which variable will NOT affect the amount of a Social Security recipient's benefits?
what other retirement savings he or she has
Because Social Security redistributes toward those with higher life expectancy, it's better for:
women than for men
The money that was used to pay benefits to Social Security recipients in 2020 came from:
workers who were paying Social Security taxes in 2020