LC17: LearningCurve - Ch. 17: The Federal Budget: Taxes and Spending

A flat tax has: higher tax rates on people with higher incomes. lower rates on people with lower incomes. a constant rate that does not vary with income. higher rates on people with lower incomes.

a constant rate that does not vary with income.

The annual difference between current federal spending and revenues is the: excess. deficit. net credit. shortfall.

deficit.

The federal debt-to-GDP ratio will rise significantly in the future, because Americans are getting older on average and _____ costs per person have been _____ significantly. health care; falling health care; rising energy; falling energy; rising

health care; rising

A regressive tax has: a constant rate. higher rates on people with lower incomes. higher rates on people with higher incomes. lower rates on people with lower incomes.

higher rates on people with lower incomes.

A progressive tax is one with: higher tax rates on people with higher incomes. higher tax rates on people with lower incomes. a marginal rate that does not vary with income. an average rate that does not vary with income.

higher tax rates on people with higher incomes.

Which variable will affect the amount of a Social Security recipient's benefits? whether he or she has children whether he or she plans to work part time in retirement his or her projected earnings during retirement how long he or she worked

how long he or she worked

The current national debt-to-GDP ratio of 80% for the United States: has been roughly constant since 1940. is high but not unprecedented. is an historic high. is relatively low, historically speaking.

is high but not unprecedented.

A tax with higher rates on people with higher incomes is a(n): alternative minimum tax. regressive tax. flat tax. progressive tax.

progressive tax.

If a nation's debt grows faster than its economy, then that nation's debt-to-GDP ratio will: fall. be negative. rise. be positive.

rise.

The marginal tax rate is the:

tax rate paid on an additional dollar of income.

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 health care costs; labor adjustment costs the opportunity cost; their paychecks their paychecks; their benefits

their paychecks; the opportunity cost

In 2020, the federal government's revenues were nearly _____ for every person in the United States.

$11,000

The U.S. debt held by the public in 2020 was about: $18 billion. $18 trillion. $18 million. $18 thousand.

$18 trillion.

In 2020, approximately how much money did the U.S. government collect in taxes? $120 million $940 million $3.6 trillion $13.1 trillion

$3.6 trillion

Assume that you make $60,000 per year, are married, have one child, and carry a mortgage on your house with interest payments of $1,000 per month. Given this information, your average tax rate before exemptions and deductions would be: $6,277.50. $1,975. 12%. 11.34%.

11.34%.

The highest debt-to-GDP ratio in U.S. history occurred in _____ at 108%. 1946 1975 1992 2013

1946

In 2020, what share of U.S. tax receipts came from Social Security and Medicare taxes? less than 1% 16% 7% 36%

36%

Assume that you make $60,000 per year, are married, have one child, and carry a mortgage on your house with interest payments of $1,000 per month. Given this information, your total taxes due before exemptions or deductions would be $: 6,805. 12,150. 4,830. 1,975.

6,805.

Which statement is TRUE? As of 2020, the total national debt held by the public was approximately $18 trillion. As of 2020, the total national debt held by the public was approximately $25 trillion. As of 2020, the total national debt held by the public was approximately $22 trillion. As of 2020, the total national debt held by the public was approximately $4.7 trillion.

As of 2020, the total national debt held by the public was approximately $18 trillion.

Which country has the highest level of total government spending as a percentage of GDP? Sweden the United Kingdom Austria the United States

Austria

Which statement is FALSE? The fiscal health of the federal government cannot be determined simply by looking at today's budget or today's deficit. By 2030 more than 40% of the U.S. population will be older adults. The growth in health care costs is quite similar throughout the developed world. In recent decades, health care costs per person have been rising more than twice as fast as GDP per capita.

By 2030 more than 40% of the U.S. population will be older adults.

Which statement is TRUE? The real tax rates people pay are the same as the rates written into the tax code. The alternative minimum tax is adjusted for inflation. Capital gains taxes are paid only when the assets are sold. The income tax is a tax only on labor income.

Capital gains taxes are paid only when the assets are sold.

CBO stands for: Capital Business Office. Cyclical Business Operations. Congressional Budget Office. the Congress of Business Ombudspersons.

Congressional Budget Office.

Which is TRUE? In the 1980s, the U.S. debt-to-GDP ratio increased due to decreased spending on the military and tax hikes. GDP fell during the recession that began in late 2007, sharply increasing the U.S. debt-to-GDP ratio. The U.S. debt-to-GDP ratio rose in the 1990s under President Clinton due to budget deficits. The U.S. debt-to-GDP ratio has fallen from about 80% in 2007 to about 35% in 2020.

GDP fell during the recession that began in late 2007, sharply increasing the U.S. debt-to-GDP ratio.

Which statement is TRUE? The federal debt-to-GDP ratio will fall in the future, because Americans are getting older on average and health care costs per person have been rising significantly. The U.S. government spending is a larger fraction of GDP than in most other developed countries. If current spending and tax trends continue, the federal debt will grow much faster than the economy over the long run. Compared to the United States, other developed countries spend a larger fraction of their GDP on health care costs.

If current spending and tax trends continue, the federal debt will grow much faster than the economy over the long run.

Which statement is TRUE? The U.S. debt in 2020 was about $25 billion. The federal government received approximately $500 billion in interest payments from bondholders in 2020. The low interest rate in U.S. government debt appears to be due to a shortage of world savings and a low demand for the relatively safe assets of the U.S. government. If interest rates were to increase significantly, interest on the debt could increase significantly.

If interest rates were to increase significantly, interest on the debt could increase significantly.

Which statement is TRUE? An analysis of the U.S. federal budget shows that waste is difficult to eliminate since the majority of the money is spent on small programs. In order to spend more on big government programs, ultimately taxes must rise or spending must be cut somewhere else. To obtain lower taxes, spending and benefits can still increase. It is easy to cut spending on big government programs without cutting benefits.

In order to spend more on big government programs, ultimately taxes must rise or spending must be cut somewhere else.

Which statement is FALSE? The growth in health care costs is quite similar throughout the developed world. The fiscal health of the federal government cannot be determined simply by looking at today's budget or today's deficit. In recent decades, health care costs have been rising more than twice as fast as GDP. By 2030 more than 20% of the U.S. population will be older adults.

In recent decades, health care costs have been rising more than twice as fast as GDP.

Which is TRUE? The U.S. debt-to-GDP ratio has fallen from about 80% in 2007 to about 35% in 2020. In the 1980s, the U.S. debt-to-GDP ratio increased due to increased spending on the military and tax cuts. The U.S. debt-to-GDP ratio rose in the 1990s under President Clinton due to budget deficits. GDP fell during the recession that began in late 2007, sharply decreasing the U.S. debt-to-GDP ratio.

In the 1980s, the U.S. debt-to-GDP ratio increased due to increased spending on the military and tax cuts.

Which country has the lowest level of total government spending as a percentage of GDP? Australia Canada Ireland the United States

Ireland

If a person making $40,000 per year pays $10,000 in federal income taxes, and a person making $72,000 per year pays $18,000 in federal income taxes, which statement best describes the tax code? It is flat. It is regressive. It is an AMT. It is progressive.

It is flat.

f 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 flat. It is regressive. It is progressive. It is an AMT.

It is progressive.

Which statement is TRUE? The advantage of a flat tax is that moving to a flat tax would require raising rates on high income individuals and lowering rates on middle and low income individuals. After all the deductions, exemptions, loopholes, and so forth, the U.S. tax system is regressive. 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. A flat tax has higher tax rates on people with lower incomes.

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.

Of the following countries, which had the highest total military expenditures in 2018? Germany Saudi Arabia United Kingdom Japan

Saudi Arabia

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? United States United Kingdom China South Korea

South Korea

Which statement is TRUE? GDP rose during the recession that began in late 2007, sharply decreasing the U.S. debt-to-GDP ratio. The U.S. debt-to-GDP ratio fell in the 1990s under President Clinton due to budget deficits. In the 1980s, the U.S. debt-to-GDP ratio decreased due to increased spending on the military and tax cuts. The U.S. debt-to-GDP ratio declined from the end of World War II to the 1980s.

The U.S. debt-to-GDP ratio declined from the end of World War II to the 1980s.

Which statement is TRUE? The government does not have to pay interest to the people who lent it money. The United States currently has a debt-to-GDP ratio of more than 70%. The lowest debt-to-GDP ratio in U.S. history occurred in 1946 at around 25%. The national debt held by the public is all federal debt held by individuals, corporations, and governments as well as the U.S. federal government.

The United States currently has a debt-to-GDP ratio of more than 70%.

Which statement is FALSE? The federal debt-to-GDP ratio will fall in the future, because Americans are getting older on average and health care costs per person have been rising significantly. If current spending and tax trends continue, the federal debt will grow much faster than the economy over the long run. Compared to the United States, other developed countries spend a smaller fraction of their GDP on health care costs. The U.S. government spending is a smaller fraction of GDP than in most other developed countries.

The federal debt-to-GDP ratio will fall in the future, because Americans are getting older on average and health care costs per person have been rising significantly.

Which statement is FALSE? The growth in health care costs is quite similar throughout the developed world. The fiscal health of the federal government can be determined simply by looking at today's budget or today's deficit. In recent decades, health care costs per person have been rising more than twice as fast as GDP per capita. By 2030 more than 20% of the U.S. population will be older adults.

The fiscal health of the federal government can be determined simply by looking at today's budget or today's deficit.

Which statement is TRUE? The fiscal health of the federal government cannot be determined simply by looking at today's budget or today's deficit. The growth in health care costs is quite different throughout the developed world. In recent decades, health care costs have been rising more than twice as fast as GDP. By 2030 more than 40% of the U.S. population will be older adults.

The fiscal health of the federal government cannot be determined simply by looking at today's budget or today's deficit.

Which statement is FALSE? The growth in health care costs is quite different throughout the developed world. The fiscal health of the federal government cannot be determined simply by looking at today's budget or today's deficit. In recent decades, health care costs per person have been rising more than twice as fast as GDP per capita. By 2030 more than 20% of the U.S. population will be older adults.

The growth in health care costs is quite different throughout the developed world.

Which statement is TRUE? The growth in health care costs is quite similar throughout the developed world. The fiscal health of the federal government can be determined simply by looking at today's budget or today's deficit. In recent decades, health care costs have been rising more than twice as fast as GDP. By 2030 more than 40% of the U.S. population will be older adults.

The growth in health care costs is quite similar throughout the developed world.

Which statement is TRUE? The national debt held by the public is all federal debt held by individuals, corporations, and governments as well as the U.S. federal government. The United States currently has a debt-to-GDP ratio of less than 70%. The government does not have to pay interest to the people who lent it money. The lowest debt-to-GDP ratio in U.S. history occurred in 1975 at around 25%.

The lowest debt-to-GDP ratio in U.S. history occurred in 1975 at around 25%.

Which statement is FALSE? The United States currently has a debt-to-GDP ratio of more than 70%. The lowest debt-to-GDP ratio in U.S. history occurred in 1975 at around 25%. The national debt held by the public is all federal debt held by individuals, corporations, and governments as well as the U.S. federal government. The government pays interest to the people who lent it money every year.

The national debt held by the public is all federal debt held by individuals, corporations, and governments as well as the U.S. federal government.

Which statement is FALSE? The deficit is the annual difference between federal spending and revenues. When federal government spending exceeds tax revenues, the national debt rises. The average interest rate on U.S. debt in 2020 was about 2%. The national debt held by the public is all federal debt held by individuals, corporations, and governments including the U.S. government.

The national debt held by the public is all federal debt held by individuals, corporations, and governments including the U.S. government.

Which statement is TRUE? The average interest rate on U.S. debt in 2020 was about 10%. When federal government spending exceeds tax revenues, the national debt falls. The debt is the annual difference between federal spending and revenues. The national debt held by the public is all federal debt held by individuals, corporations, and governments other than the U.S. government.

The national debt held by the public is all federal debt held by individuals, corporations, and governments other than the U.S. government.

Which statement is TRUE? Spending in Iraq and Afghanistan was likely to be wasted because the U.S. government had too much information about local wants and needs. Problems of information and incentives impact only a few kinds of government spending. The overhead costs of the Social Security program are low despite a few instances of fraud. The problem of government waste is due to a few isolated instances of wasteful programs.

The overhead costs of the Social Security program are low despite a few instances of fraud.

Which statement is TRUE? In order to spend less on big government programs, ultimately taxes must rise or spending must be cut somewhere else. An analysis of the U.S. federal budget shows that waste is difficult to eliminate since the majority of the money is spent on small programs. To obtain lower taxes, spending and benefits must decrease. It is easy to cut spending on big government programs without cutting benefits.

To obtain lower taxes, spending and benefits must decrease.

What does the "national debt held by the public" include? all federal, state, and local debt held by individuals and corporations all federal, state, and local debt held by U.S. government agencies all federal debt held by U.S. government agencies all federal debt held outside the U.S. government

all federal debt held outside the U.S. government

The separate income tax code that began in 1969 to ensure that the rich pay income tax is called the: alternative minimum tax. average tax code. value-added tax. marginal tax.

alternative minimum tax.

The total tax payment divided by total income is called the: flat tax rate. alternative minimum tax rate. marginal tax rate. average tax rate.

average tax rate.

The _____ ratio will rise significantly in the future, because Americans are getting older and _____ costs per person have been rising significantly. income-to-spending; health care federal debt-to-GDP; labor adjustment income-to-spending; labor adjustment federal debt-to-GDP; health care

federal debt-to-GDP; health care

The _____ ratio will rise significantly in the future, because Americans are getting _____ and health care costs per person have been rising significantly. deficit-to-surplus; younger federal debt-to-GDP; older federal debt-to-GDP; younger deficit-to-surplus; older

federal debt-to-GDP; older

The _____ ratio will _____ significantly in the future, because Americans are getting older and health care costs per person have been rising significantly. deficit-to-surplus; fall federal debt-to-GDP; rise deficit-to-surplus; rise federal debt-to-GDP; fall

federal debt-to-GDP; rise

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; falling income-to-spending; rising federal debt-to-GDP; rising income-to-spending; falling

federal debt-to-GDP; rising

A tax with constant rates that do NOT vary with income is a: flat tax. progressive tax. regressive tax. fair tax.

flat tax.

Milton Friedman pointed out that the real cost of a military draft is the fact that: a draft is administratively complicated and requires a lot of record keeping. drafted soldiers have lower fatality rates on the battlefield than do volunteer soldiers. drafted soldiers have to be paid higher wages to compensate them for the inconvenience. many people who are ill-suited to be soldiers are removed from their jobs or their studies.

many people who are ill-suited to be soldiers are removed from their jobs or their studies.

The tax rate paid on an additional dollar of income is called the: marginal tax rate. average tax rate. alternative minimum tax rate. regressive tax rate.

marginal tax rate.

All else equal, the greater one's life expectancy, the: lower his or her monthly benefits will be. later his or her full retirement age will be. more Social Security taxes he or she will pay. more beneficial Social Security will be for him or her.

more beneficial Social Security will be for him or her.

Government spending is: does not really have any impact on the economy because people expect it. not a complete or fully accurate measure of how the government affects the economy. one of only two ways that the government affects the economy; the other is taxes. the only way in which the government affects the economy.

not a complete or fully accurate measure of how the government affects the economy.

The debt-to-GDP ratio will rise significantly in the future, because Americans are getting _____ on average and _____ costs per person have been rising significantly. younger; labor adjustment younger; health care older; health care older; labor adjustment

older; health care

The debt-to-GDP ratio will rise significantly in the future, because Americans are getting _____ on average and health care costs per person have been _____ significantly. older; rising older; falling younger; rising younger; falling

older; rising

Because _____ for Social Security and Medicare are quite low, it is difficult to cut spending on these programs without cutting _____. FICA tax rates; retirement ages overhead expenses; benefits benefits; overhead expenses overhead expenses; FICA tax rates

overhead expenses; benefits

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 the individual income tax plus the corporate income tax plus custom duties the individual income tax plus excise taxes plus Social Security and Medicare taxes custom duties plus excise taxes plus corporate income tax

the individual income tax plus the corporate income tax plus Social Security and Medicare taxes

Ida May Fuller: received the very first Social Security number: 000-00-0001. was the first person to pay Social Security taxes. wrote the law that created Social Security. was the first person to receive a Social Security check.

was the first person to receive a Social Security check.

Because Social Security redistributes toward those with higher life expectancy, it's better for: women than for men. men than for women. single men than for married women. married men than for single women.

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. foreign investors. the taxes that these recipients paid when they were working. anticipated future tax payments from approximately 2022.

workers who were paying Social Security taxes in 2020.