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