Question 1

Which of the following is true about income earners in the United States?

Accepted Answer

A)  The top 1 percent account for less than 1 percent of the total tax revenue. 
B)  The lowest 20 percent pay almost 32 percent of the total tax revenue. 
C)  The highest 20 percent pay less than 40 percent of the total tax revenue. 
D)  The middle 20 percent contribute more than 60 percent of the total tax revenue. 
E)  The top 40 percent contribute more than 80 percent of the total tax revenue. 
A)  The top 1 percent account for less than 1 percent of the total tax revenue. 
B)  The lowest 20 percent pay almost 32 percent of the total tax revenue. 
C)  The highest 20 percent pay less than 40 percent of the total tax revenue. 
D)  The middle 20 percent contribute more than 60 percent of the total tax revenue. 
E)  The top 40 percent contribute more than 80 percent of the total tax revenue. E

Question 2

Why do wealthy citizens contribute much higher tax revenues to the government than poor citizens?

Accepted Answer

A)  Wealthy citizens consume more government services, so they are taxed at a higher rate. 
B)  Wealthy citizens have a much lower average tax rate than poor citizens. 
C)  Wealthy citizens work more hours per week than poor citizens. 
D)  Wealthy citizens have much more taxable income than poor citizens. 
E)  Wealthy citizens do not contribute more tax revenues to the government than poor citizens. 
A)  Wealthy citizens consume more government services, so they are taxed at a higher rate. 
B)  Wealthy citizens have a much lower average tax rate than poor citizens. 
C)  Wealthy citizens work more hours per week than poor citizens. 
D)  Wealthy citizens have much more taxable income than poor citizens. 
E)  Wealthy citizens do not contribute more tax revenues to the government than poor citizens. D

Question 3

Should we be concerned about a growing federal debt?

Accepted Answer

A)  No, because budget deficits are more important to worry about than the federal debt. 
B)  No, because federal debt, unlike private debt, does not have to be repaid. 
C)  Yes, because a large federal debt may slow the rate of economic growth in the future. 
D)  Yes, because if the debt grows too large, we will have to receive bailouts from other countries, which means they will be able to control our policy and economy. 
E)  Yes, because it is likely that the government will confiscate the savings of individuals to pay for the debt. 
A)  No, because budget deficits are more important to worry about than the federal debt. 
B)  No, because federal debt, unlike private debt, does not have to be repaid. 
C)  Yes, because a large federal debt may slow the rate of economic growth in the future. 
D)  Yes, because if the debt grows too large, we will have to receive bailouts from other countries, which means they will be able to control our policy and economy. 
E)  Yes, because it is likely that the government will confiscate the savings of individuals to pay for the debt. C

Question 4

Refer to the following table to answer the next questions: $$\begin{array} { l l } 
\hline  { \text { 2012 Federal Income Tax Brackets } } \
\hline \text { Taxable Income } & \text { Tax Rate } \
\hline \$ 0 - \$ 8,700 & 10 \text { percent } \
\$ 8,701 - \$ 35,350 & 15 \text { percent } \
\$ 35,351 - \$ 85,650 & 25 \text { percent } \
\$ 85,651 - \$ 178,650 & 28 \text { percent } \
\$ 178,651 - \$ 388,350 & 33 \text { percent } \
\text { Over } \$ 388,350 & 35 \text { percent } \
\hline
\end{array}$$
-Using the table, what is the marginal income tax rate of a $5,000 raise for someone who currently makes $67,000 per year?

Accepted Answer

A)  10 percent 
B)  15 percent 
C)  25 percent 
D)  28 percent 
E)  0 percent 
A)  10 percent 
B)  15 percent 
C)  25 percent 
D)  28 percent 
E)  0 percent

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 percent 
A)  5 percent 
B)  11 percent 
C)  15 percent 
D)  20 percent 
E)  25 percent

Question 6

Suppose you return to college and earn an MBA, after which you get an upper-management position with Yum! Brands. If your starting salary is $125,000, and the percentages are the same as they were in 2016, how much will you owe in social insurance taxes?

Accepted Answer

A)  more than $8,800 
B)  more than $8,400 but less than $8,800 
C)  more than $7,900 but less than $8,400 
D)  more than $7,300 but less than $7,900 
E)  less than $7,300 
A)  more than $8,800 
B)  more than $8,400 but less than $8,800 
C)  more than $7,900 but less than $8,400 
D)  more than $7,300 but less than $7,900 
E)  less than $7,300

Question 7

According to the textbook, the country with the highest debt-to-GDP gross domestic product) ratio in the world, in terms of publicly held debt, is

Accepted Answer

A)  the United States. 
B)  Greece. 
C)  Italy. 
D)  France. 
E)  Japan. 
A)  the United States. 
B)  Greece. 
C)  Italy. 
D)  France. 
E)  Japan.

Question 8

Which of the following is FALSE about the recent Greek debt crisis?

Accepted Answer

A)  Protests involving austerity measures led to violent encounters between citizens and the national police. 
B)  The Greek national debt climbed to nearly 150 percent of the gross domestic product GDP) in 2010. 
C)  In response to austerity measures, the far-left political party Syriza) captured the largest number of seats in the elected parliament. 
D)  In the summer of 2015, the Greek government was able to avoid defaulting on its debt. 
E)  Economists generally agree that austerity has brought an end to Greece's economic problems. 
A)  Protests involving austerity measures led to violent encounters between citizens and the national police. 
B)  The Greek national debt climbed to nearly 150 percent of the gross domestic product GDP) in 2010. 
C)  In response to austerity measures, the far-left political party Syriza) captured the largest number of seats in the elected parliament. 
D)  In the summer of 2015, the Greek government was able to avoid defaulting on its debt. 
E)  Economists generally agree that austerity has brought an end to Greece's economic problems.

Question 9

Reforming entitlement programs is difficult because

Accepted Answer

A)  there is very little support for reform. 
B)  there are no good ideas for effective reform. 
C)  reforms require changes to existing law, which takes time. 
D)  all the reforms proposed are only short-term solutions. 
E)  the proposed reforms all require increases in existing tax rates, which are difficult to achieve politically. 
A)  there is very little support for reform. 
B)  there are no good ideas for effective reform. 
C)  reforms require changes to existing law, which takes time. 
D)  all the reforms proposed are only short-term solutions. 
E)  the proposed reforms all require increases in existing tax rates, which are difficult to achieve politically.

Question 10

Suppose you are offered a job with Amazon upon graduation. Your starting salary will be $70,000, which will put you in the 25 percent federal income tax bracket. The total amount of income taxes you pay is $13,530. Your average tax rate is approximately

Accepted Answer

A)  25.0 percent. 
B)  37.5 percent. 
C)  31.3 percent. 
D)  19.3 percent. 
E)  12.5 percent. 
A)  25.0 percent. 
B)  37.5 percent. 
C)  31.3 percent. 
D)  19.3 percent. 
E)  12.5 percent.

Question 11

Refer to the following table to answer the next questions: $$\begin{array} { l l } 
\hline  { \text { 2012 Federal Income Tax Brackets } } \
\hline \text { Taxable Income } & \text { Tax Rate } \
\hline \$ 0 - \$ 8,700 & 10 \text { percent } \
\$ 8,701 - \$ 35,350 & 15 \text { percent } \
\$ 35,351 - \$ 85,650 & 25 \text { percent } \
\$ 85,651 - \$ 178,650 & 28 \text { percent } \
\$ 178,651 - \$ 388,350 & 33 \text { percent } \
\text { Over } \$ 388,350 & 35 \text { percent } \
\hline
\end{array}$$
-Using the table, what is the total payroll tax bill assume zero state and local income taxes) for someone who makes $67,000 per year?

Accepted Answer

A)  $17,905.25 
B)  $23,030.75 
C)  $13,751.25 
D)  $16,933.75 
E)  $5,125.50 
A)  $17,905.25 
B)  $23,030.75 
C)  $13,751.25 
D)  $16,933.75 
E)  $5,125.50

Question 12

The largest source of tax revenue for the federal government comes from ________ taxes.

Accepted Answer

A)  corporate income 
B)  excise tax 
C)  social insurance 
D)  individual income 
E)  marginal income 
A)  corporate income 
B)  excise tax 
C)  social insurance 
D)  individual income 
E)  marginal income

Question 13

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

Question 14

The number of workers per Social Security beneficiary in 1960 was approximately

Accepted Answer

A)  2.1. 
B)  3.1. 
C)  4.1. 
D)  5.1. 
E)  6.1. 
A)  2.1. 
B)  3.1. 
C)  4.1. 
D)  5.1. 
E)  6.1.

Question 15

In practice, government-issued ________ is/are similar to individuals using loans or credit cards
to finance consumer purchases

Accepted Answer

A)  austerity 
B)  deficits 
C)  debt 
D)  outlays 
E)  budgets 
A)  austerity 
B)  deficits 
C)  debt 
D)  outlays 
E)  budgets

Question 16

Assuming all of the following are in your personal monthly budget, your ________ payment is
considered a discretionary outlay.

Accepted Answer

A)  mortgage or rent, if you do not own a home) 
B)  car loan 
C)  student loan 
D)  electric bill 
E)  boat loan 
A)  mortgage or rent, if you do not own a home) 
B)  car loan 
C)  student loan 
D)  electric bill 
E)  boat loan

Question 17

What has contributed to the decline in discretionary outlays by the federal government?

Accepted Answer

The end of the Cold War with the Soviet

Question 18

Some proponents of entitlement-program reform suggest indexing Social Security benefits to the consumer price index CPI)

Accepted Answer

A)  because beneficiary payments are currently growing slower than cost of living increases. 
B)  rather than to the producer price index, because CPI historically grows at a faster rate, which would mean benefit payments would grow at a faster rate. 
C)  rather than to the producer price index, because CPI historically grows at a slower rate, which would mean benefit payments would grow at a slower rate. 
D)  rather than to the average wage index, because CPI historically grows at a slower rate, which would mean benefit payments would grow at a slower rate. 
E)  rather than to the average wage index, because CPI historically grows at a faster rate, which would mean benefit payments would grow at a faster rate. 
A)  because beneficiary payments are currently growing slower than cost of living increases. 
B)  rather than to the producer price index, because CPI historically grows at a faster rate, which would mean benefit payments would grow at a faster rate. 
C)  rather than to the producer price index, because CPI historically grows at a slower rate, which would mean benefit payments would grow at a slower rate. 
D)  rather than to the average wage index, because CPI historically grows at a slower rate, which would mean benefit payments would grow at a slower rate. 
E)  rather than to the average wage index, because CPI historically grows at a faster rate, which would mean benefit payments would grow at a faster rate.

Question 19

Use the following table to answer the next questions: $$\begin{array} { l l l l l } 
\hline&& \ { \text { Public Debt over Time } } \
\hline &  {  \mathbf {2001} } &&\quad\quad\quad\quad\quad { \mathbf { 2 0 1 1 } } \
\hline & \text { Debt } & \text { GDP } & \text { Debt } & \text { GDP } \
\hline \text { United States } & \$ 3.3 \text { trillion } & \$ 10.2 \text { trillion } & \$ 12.2 \text { trillion } & \$ 15.0 \text { trillion } \
\text { France } & \$ 0.9 \text { trillion } & \$ 1.5 \text { trillion } & \$ 1.8 \text { trillion } & \$ 2.0 \text { trillion } \
\text { Italy } & \$ 1.5 \text { trillion } & \$ 1.2 \text { trillion } & \$ 1.7 \text { trillion } & \$ 1.6 \text { trillion } \
\text { Belgium } & \$ 0.3 \text { trillion } & \$ 0.3 \text { trillion } & \$ 0.3 \text { trillion } & \$ 0.4 \text { trillion } \
\text { Australia } & \text { \$0.2 trillion } & \$ 0.7 \text { trillion } & \$ 0.4 \text { trillion } & \$ 1.4 \text { trillion } \
\hline
\end{array}$$
-According to the table, the country with the highest average yearly budget deficit over the time period is

Accepted Answer

A)  the United States. 
B)  France. 
C)  Italy. 
D)  Belgium. 
E)  Australia. 
A)  the United States. 
B)  France. 
C)  Italy. 
D)  Belgium. 
E)  Australia.

Question 20

During economic downturns, particularly one like the Great Recession, it is common for the central government to ramp up spending in an effort to lessen the impacts. What do you think is the reasoning for this behavior?

Accepted Answer

In a recession, economic output falls be

Which of the following is true about income earners in the United States?

Why do wealthy citizens contribute much higher tax revenues to the government than poor citizens?

Should we be concerned about a growing federal debt?

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

Suppose you return to college and earn an MBA, after which you get an upper-management position with Yum! Brands. If your starting salary is $125,000, and the percentages are the same as they were in 2016, how much will you owe in social insurance taxes?

According to the textbook, the country with the highest debt-to-GDP gross domestic product) ratio in the world, in terms of publicly held debt, is

Which of the following is FALSE about the recent Greek debt crisis?

Reforming entitlement programs is difficult because

Suppose you are offered a job with Amazon upon graduation. Your starting salary will be $70,000, which will put you in the 25 percent federal income tax bracket. The total amount of income taxes you pay is $13,530. Your average tax rate is approximately

The largest source of tax revenue for the federal government comes from ________ taxes.

The United States had a ________ as recently as 2001.

The number of workers per Social Security beneficiary in 1960 was approximately

In practice, government-issued ________ is/are similar to individuals using loans or credit cards to finance consumer purchases

Assuming all of the following are in your personal monthly budget, your ________ payment is considered a discretionary outlay.

What has contributed to the decline in discretionary outlays by the federal government?

Some proponents of entitlement-program reform suggest indexing Social Security benefits to the consumer price index CPI)

During economic downturns, particularly one like the Great Recession, it is common for the central government to ramp up spending in an effort to lessen the impacts. What do you think is the reasoning for this behavior?

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Fiscal Policy

Money and the Federal Reserve

Monetary Policy Learning Objectives

International Trade

International Finance

Filters

Exam 15: Federal Budgets: the Tools of Fiscal Policy

Which of the following is true about income earners in the United States?

Why do wealthy citizens contribute much higher tax revenues to the government than poor citizens?

Should we be concerned about a growing federal debt?

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

Suppose you return to college and earn an MBA, after which you get an upper-management position with Yum! Brands. If your starting salary is $125,000, and the percentages are the same as they were in 2016, how much will you owe in social insurance taxes?

According to the textbook, the country with the highest debt-to-GDP gross domestic product) ratio in the world, in terms of publicly held debt, is

Which of the following is FALSE about the recent Greek debt crisis?

Reforming entitlement programs is difficult because

Suppose you are offered a job with Amazon upon graduation. Your starting salary will be $70,000, which will put you in the 25 percent federal income tax bracket. The total amount of income taxes you pay is $13,530. Your average tax rate is approximately

The largest source of tax revenue for the federal government comes from ________ taxes.

The United States had a ________ as recently as 2001.

The number of workers per Social Security beneficiary in 1960 was approximately

In practice, government-issued ________ is/are similar to individuals using loans or credit cards to finance consumer purchases

Assuming all of the following are in your personal monthly budget, your ________ payment is considered a discretionary outlay.

What has contributed to the decline in discretionary outlays by the federal government?

Some proponents of entitlement-program reform suggest indexing Social Security benefits to the consumer price index CPI)

During economic downturns, particularly one like the Great Recession, it is common for the central government to ramp up spending in an effort to lessen the impacts. What do you think is the reasoning for this behavior?

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Fiscal Policy

Money and the Federal Reserve

Monetary Policy Learning Objectives

International Trade

International Finance

Filters