Question 1

The top 1 percent of households in the United States contribute

Accepted Answer

A)   no federal income tax revenues because of tax loopholes.
B)   less than 50 percent of all federal income tax revenues.
C)   more than 50 percent but less than 75 percent of all federal income tax revenues.
D)   more than 75 percent but less than 90 percent of all federal income tax revenues.
E)   more than 90 percent of all federal income tax revenues.F) A) and B)
G) A) and E)

Question 2

Why do Social Security and Medicare pose problems for the federal government budget?

Accepted Answer

A)   The programs do not cover enough people.
B)   The worker-to-retiree ratio is decreasing.
C)   The number of retirees is decreasing.
D)   The number of sick people is rising too quickly.
E)   Social insurance taxes are capped and cannot be raised.F) A) and D)
G) A) and C)

Question 3

The austerity measures imposed on Greece in 2011

Accepted Answer

A)   were received well by Greek citizens, who were very concerned about their growing national debt.
B)   were forced onto Greece by the United States.
C)   were a by-product of Greece's default on the debt it owed to other European governments.
D)   required reforms to Greece's large public sector in an attempt to decrease its debt and help the country avoid default.
E)   contained a list of recommendations from other European countries with the hopes that Greece would voluntarily enact these reforms.F) B) and D)
G) B) and C)

Question 4

_________would be considered a mandatory outlay in one's monthly budget.

Accepted Answer

A)   A student loan payment
B)   A donation to one's alma mater
C)   A grocery bill
D)   One's electric bill
E)   Gasoline money for travel to and from work) F) C) and D)
G) A) and B)

Question 5

In 2014, revenue from corporate income taxes totaled approximately _______ of total revenue.

Accepted Answer

A)   5 percent
B)   11 percent
C)   15 percent
D)   20 percent
E)   25 percentF) B) and D)
G) All of the above

Question 6

Strict budget regulations, aimed at debt reduction, are called

Accepted Answer

A)   belt-tightening.
B)   austerity.
C)   fiscal discipline.
D)   surplus targeting.
E)   trend reversal.F) B) and E)
G) A) and C)

Question 7

What is the most appropriate way to compare budget deficits/surpluses across time?

Accepted Answer

A)   using nominal dollar figures
B)   using real dollar figures
C)   calculating figures as a portion of gross domestic product GDP) 
D)   using per capita dollar figures
E)   Budget figures cannot be compared across time.F) A) and B)
G) C) and D)

Question 8

Transfer payments refer to funds that are transferred from one group in society to another group,

Accepted Answer

A)   so these payments have no impact on the government budget deficit.
B)   so these payments have no impact on the government debt.
C)   so these payments are unfair to those who lose money in the transfer.
D)   and these payments represent a growing share of U.S. federal outlays.
E)   and these payments remain approximately constant over time.F) A) and B)
G) B) and C)

Question 9

Why do Social Security and Medicare pose problems for the federal government budget?

Accepted Answer

A)   The number of retirees is increasing.
B)   The worker-to-retiree ratio is increasing.
C)   Life expectancy is decreasing.
D)   The number of sick people is rising too quickly.
E)   Social insurance taxes cannot legally be raised any further.F) A) and C)
G) A) and B)

Question 10

The most relevant tax rate for making decisions about earning additional income is the______ tax rate.

Accepted Answer

A)   marginal
B)   income
C)   average
D)   sales
E)   propertyF) C) and E)
G) C) and D)

Question 11

If government revenues in 2011 were $2.2 trillion and government outlays were $3.8 trillion, the federal

Accepted Answer

A)   debt was unaffected in that year.
B)   debt decreased $1.6 trillion.
C)   debt increased $1.6 trillion.
D)   budget surplus was $1.6 trillion.
E)   budget was balanced.F) B) and C)
G) D) and E)

Question 12

Why does the federal debt tend to increase during periods of recession?

Accepted Answer

A)   Economic activity decreases, which decreases revenues and increases outlays.
B)   Economic activity decreases, which decreases revenues and decreases outlays.
C)   Economic activity increases, which increases revenues and increases outlays.
D)   Economic activity increases, which increases revenues and decreases outlays.
E)   Economic activity increases, which decreases revenues and increases outlays.F) A) and B)
G) C) and D)

Question 13

A U.S. federal government budget deficit occurs when

Accepted Answer

A)   government revenue exceeds outlays.
B)   government outlays exceed revenue.
C)   government outlays equal revenue.
D)   the United States borrows money from foreign countries.
E)   the United States lends money to foreign countries.F) A) and D)
G) B) and C)

Question 14

The government withdraws social insurance taxes from the paychecks of workers to

Accepted Answer

A)   discourage people from working.
B)   pay the salaries of the members of Congress.
C)   reduce the incidence of elderly poverty.
D)   penalize wealthy workers.
E)   collect money for international aid.F) All of the above
G) D) and E)

Question 15

Why should U.S. voters be skeptical of politicians who vow against deficit spending, while blaming opponents for the practice?

Accepted Answer

Historical trends have shown that neithe...

Question 16

According to the textbook, the U.S. debt-to-GDP gross domestic product)  ratio in 2013 amounted to

Accepted Answer

A)   100 percent.
B)   220 percent.
C)   50 percent.
D)   67 percent.
E)   33 percent.F) C) and E)
G) All of the above

Question 17

The United States had a_______ as recently as 2001.

Accepted Answer

A)   budget deficit
B)   trade surplus
C)   balanced budget
D)   spending freeze
E)   revenue surplusF) A) and B)
G) A) and C)

Question 18

Why is it generally accepted that any form of Social Security reform will be controversial?

Accepted Answer

Since Social Security requires contribut...

Question 19

By 1918, the top marginal income tax rate in the United States rose to

Accepted Answer

A)   77 percent.
B)   76 percent.
C)   75 percent.
D)   74 percent.
E)   73 percent.F) C) and D)
G) A) and D)

Question 20

Which of the following is NOT an example of an excise tax?

Accepted Answer

A)   cable television
B)   cigarettes
C)   cell phones
D)   sales tax
E)   gasolineF) D) and E)
G) C) and D)

Exam 15: Federal Budgets: the Tools of Fiscal Policy

Why do Social Security and Medicare pose problems for the federal government budget?

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The austerity measures imposed on Greece in 2011

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Which of the following is NOT an example of an excise tax?

Correct AnswerverifiedShow Answer

In 2014, revenue from corporate income taxes totaled approximately _______ of total revenue.

Correct AnswerverifiedShow Answer

Strict budget regulations, aimed at debt reduction, are called

Correct AnswerverifiedShow Answer

The top 1 percent of households in the United States contribute

Correct AnswerverifiedShow Answer

According to the textbook, the U.S. debt-to-GDP gross domestic product) ratio in 2013 amounted to

Correct AnswerverifiedShow Answer

Why is it generally accepted that any form of Social Security reform will be controversial?

Correct AnswerverifiedSince Social Security requires contribut...View AnswerShow Answer

If government revenues in 2011 were $2.2 trillion and government outlays were $3.8 trillion, the federal

Correct AnswerverifiedShow Answer

What is the most appropriate way to compare budget deficits/surpluses across time?

Correct AnswerverifiedShow Answer

The United States had a_______ as recently as 2001.

Correct AnswerverifiedShow Answer

Transfer payments refer to funds that are transferred from one group in society to another group,

Correct AnswerverifiedShow Answer

A U.S. federal government budget deficit occurs when

Correct AnswerverifiedShow Answer

The government withdraws social insurance taxes from the paychecks of workers to

Correct AnswerverifiedShow Answer

_________would be considered a mandatory outlay in one's monthly budget.

Correct AnswerverifiedShow Answer

Why do Social Security and Medicare pose problems for the federal government budget?

Correct AnswerverifiedShow Answer

The most relevant tax rate for making decisions about earning additional income is the______ tax rate.

Correct AnswerverifiedShow Answer

Why does the federal debt tend to increase during periods of recession?

Correct AnswerverifiedShow Answer

By 1918, the top marginal income tax rate in the United States rose to

Correct AnswerverifiedShow Answer

Why should U.S. voters be skeptical of politicians who vow against deficit spending, while blaming opponents for the practice?

Correct AnswerverifiedHistorical trends have shown that neithe...View AnswerShow Answer

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Since Social Security requires contribut...
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Historical trends have shown that neithe...
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