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Final Exam Ch. 28
ECO 252
| Question | Answer |
|---|---|
| A budget is: | a plan for spending and earning money. |
| A progressive income tax system is one in which: | income tax rates increase as earned income increases |
| A U.S. federal government budget deficit occurs when: | government outlays exceed revenue |
| Between 2000 and 2010, real government outlays in the United States grew: | by more than 50%. |
| Budget deficits tend to: | increase during recessions |
| Mandatory outlays are different than discretionary outlays because: | discretionary outlays can be changed during the annual budget process, whereas mandatory outlays cannot |
| One proposed solution to the funding problems faced by Social Security and Medicare is to increase the retirement age from 67 to 70. Although this would mean billions of dollars in savings for these federal programs, an unintended consequence may be: | an increase in the unemployment rate |
| Reforming entitlement programs is difficult because: | reforms require changes to existing law, which takes time |
| Should average citizens be concerned with the government's budget? | Yes, because the government's yearly budget decisions have immediate and future implications for levels of taxation and the provision of public goods. |
| Should we be concerned about a growing federal debt? | Yes, because a large federal debt may slow the rate of economic growth in the future. |
| Social Security and Medicare spending continue to grow and take up larger shares of the federal budget because: | life expectancy is increasing, the number of people receiving benefits is increasing quickly, and the growth in the number of people paying into the programs is decreasing |
| The government withdraws social insurance taxes from the paychecks of workers to: | reduce the incidence of elderly poverty |
| The largest portion of the federal budget is dedicated to: | mandatory outlays |
| The largest source of tax revenue for the government is: | individual income taxes |
| The poorest 40% of households in the United States: | pay negative income taxes because of tax credits and income assistance |
| The top 1% of households in the United States: | contribute nearly 40% of all federal income tax revenues |
| The U.S. government could reduce its budget deficit by: | raising the eligible retirement age to receive Social Security benefits |
| The United States has a: | progressive income tax system |
| The wealthiest 20% of households in the United States: | contribute the vast majority of all federal income taxes |
| Transfer payments refer to funds that are transferred from one group in society to another group: | and these payments represent a growing share of U.S. federal outlays |
| Which of the following is considered mandatory government spending? | payments to Social Security recipients |
| Which of the following is not a revenue source for the U.S. federal government? | sales taxes |
| Why is a budget surplus not necessarily a good thing? | It means tax rates may be too high |
| ____________ a government-administered retirement program. | Social Security is |
| ____________ a mandated federal program that funds health care for retired persons. | Medicare is |
| The current tax rate for Social Insurance is: | 7.65% for the employee and 7.65% for the employer, if not self-employed. |
| The funds used for payments to Medicare recipients come primarily from: | both the employer's and employee's portion of payroll taxes |
| The middle 20% of households in the United States: | contribute less than 10% of all federal income tax revenues |
| Why are interest payments considered mandatory spending in the federal budget? | They are considered mandatory spending because not making such payments could endanger the government's credit rating, which could make it harder to borrow going forward. |
| Due to ____________, government outlays have risen quickly since 2000 | an aging population |
Created by:
mghamiter