Question 1

Increased spending on which of the following items is most likely to increase the size of government during the years following 2010?

Accepted Answer

A) education 
B) Social Security and Medicare 
C) agricultural subsidies 
D) transportation (roads and airports) 
A) education 
B) Social Security and Medicare 
C) agricultural subsidies 
D) transportation (roads and airports) B

Question 2

In recent years, what percentage of American families have derived income transfers from at least one government transfer program?

Accepted Answer

A) less than 20 percent 
B) approximately 53 percent 
C) approximately 62 percent 
D) nearly 75 percent 
A) less than 20 percent 
B) approximately 53 percent 
C) approximately 62 percent 
D) nearly 75 percent B

Question 3

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Accepted Answer

A) one dollar 
B) less than one dollar because the administration of and compliance with the tax laws creates jobs for people 
C) more than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production 
D) more than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes 
E) Both c and d are correct. 
A) one dollar 
B) less than one dollar because the administration of and compliance with the tax laws creates jobs for people 
C) more than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production 
D) more than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes 
E) Both c and d are correct. E

Question 4

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2008?

Accepted Answer

A) less than 10 percent 
B) approximately 15 percent 
C) approximately 20 percent 
D) more than 35 percent 
A) less than 10 percent 
B) approximately 15 percent 
C) approximately 20 percent 
D) more than 35 percent

Question 5

When the tax structure of a nation is progressive, as real incomes increase, the tax revenues of the government will

Accepted Answer

A) decline. 
B) increase by the same proportion as the increase in real income. 
C) increase by a larger proportion than the increase in real income. 
D) remain unchanged unless legislative action is undertaken. 
A) decline. 
B) increase by the same proportion as the increase in real income. 
C) increase by a larger proportion than the increase in real income. 
D) remain unchanged unless legislative action is undertaken.

Question 6

Which of the following is true?

Accepted Answer

A) In 2002, national defense accounted for more than half of federal spending. 
B) Federal spending on national defense has increase rapidly during the last several decades. 
C) Federal spending on health care programs such as Medicare and Medicaid has increased rapidly during the last several decades. 
D) Federal spending in the aftermath of hurricane Katrina expanded over 50%. 
A) In 2002, national defense accounted for more than half of federal spending. 
B) Federal spending on national defense has increase rapidly during the last several decades. 
C) Federal spending on health care programs such as Medicare and Medicaid has increased rapidly during the last several decades. 
D) Federal spending in the aftermath of hurricane Katrina expanded over 50%.

Question 7

In 2010, federal expenditures on income transfers, health care, national defense, and interest on the national debt accounted for

Accepted Answer

A) less than 20 percent of federal spending. 
B) about 40 percent of federal spending. 
C) approximately 50 percent of federal spending. 
D) more than 85 percent of federal spending. 
A) less than 20 percent of federal spending. 
B) about 40 percent of federal spending. 
C) approximately 50 percent of federal spending. 
D) more than 85 percent of federal spending.

Question 8

How have the size and functions of government in the United States changed during the last century?

Accepted Answer

During the last century, government has

Question 9

Economic theory indicates that, the size of government will be

Accepted Answer

A) unrelated to economic growth. 
B) negatively related to economic growth at all possible sizes of government. 
C) positively related to economic growth at all possible sizes of government. 
D) positively related to economic growth at small levels of government but is negatively related to economic growth as government becomes larger and larger. 
A) unrelated to economic growth. 
B) negatively related to economic growth at all possible sizes of government. 
C) positively related to economic growth at all possible sizes of government. 
D) positively related to economic growth at small levels of government but is negatively related to economic growth as government becomes larger and larger.

Question 10

When the number of families with someone employed by the government is added to those receiving income from transfer programs, the share of American families receiving income from the government is

Accepted Answer

A) less than 20 percent 
B) approximately 50 percent of the total 
C) approximately 62 percent of the total 
D) a little more than 75 percent of the total 
A) less than 20 percent 
B) approximately 50 percent of the total 
C) approximately 62 percent of the total 
D) a little more than 75 percent of the total

Question 11

As the size of government increases as a share of the economy,

Accepted Answer

A) the burden of deadweight losses of taxation generally diminishes. 
B) the rate of return derived from projects undertaken by the government will tend to increase. 
C) the government generally becomes more heavily involved in unproductive and even counterproductive activities. 
D) the activities of government are generally limited to protective functions such as public safety , national defense, and provision of a limited set of public goods. 
A) the burden of deadweight losses of taxation generally diminishes. 
B) the rate of return derived from projects undertaken by the government will tend to increase. 
C) the government generally becomes more heavily involved in unproductive and even counterproductive activities. 
D) the activities of government are generally limited to protective functions such as public safety , national defense, and provision of a limited set of public goods.

Question 12

Estimates from the U.S. Treasury Department suggest that the typical family in the lowest income quintile pays approximately what percent of their total income in federal taxes?

Accepted Answer

A) 5 percent 
B) 25 percent 
C) 50 percent 
D) 76 percent 
A) 5 percent 
B) 25 percent 
C) 50 percent 
D) 76 percent

Question 13

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

Accepted Answer

A) between 1 and 2 percent of the revenues collected. 
B) between 5 and 6 percent of the revenues collected. 
C) between 12 and 15 percent of the revenues collected. 
D) more than half of the revenues collected. 
A) between 1 and 2 percent of the revenues collected. 
B) between 5 and 6 percent of the revenues collected. 
C) between 12 and 15 percent of the revenues collected. 
D) more than half of the revenues collected.

Question 14

During the first 125 years of the United States,

Accepted Answer

A) there were no constitutional constraints on the spending of the federal government. 
B) real spending per person by the federal government rose by a factor of 60. 
C) most of the government spending was undertaken at the state and local levels. 
D) most of the government spending was undertaken at the federal level. 
A) there were no constitutional constraints on the spending of the federal government. 
B) real spending per person by the federal government rose by a factor of 60. 
C) most of the government spending was undertaken at the state and local levels. 
D) most of the government spending was undertaken at the federal level.

Question 15

Measured as a share of GDP, the total government expenditures of the United States are

Accepted Answer

A) larger than any country in the world. 
B) smaller than any country in the world. 
C) smaller than the comparable figure for Japan and most Western European countries. 
D) larger than the comparable figure for Japan and most Western European countries. 
A) larger than any country in the world. 
B) smaller than any country in the world. 
C) smaller than the comparable figure for Japan and most Western European countries. 
D) larger than the comparable figure for Japan and most Western European countries.

Question 16

When the government borrows funds in order to pay for its current expenditures,

Accepted Answer

A) the government will have to repay the borrowed funds within five years. 
B) the government can spend without having to increase taxes, either now or in the future. 
C) future taxes will have to be higher in order to pay the interest on the borrowed funds. 
D) the cost imposed on the private sector is virtually eliminated because taxes can remain constant. 
A) the government will have to repay the borrowed funds within five years. 
B) the government can spend without having to increase taxes, either now or in the future. 
C) future taxes will have to be higher in order to pay the interest on the borrowed funds. 
D) the cost imposed on the private sector is virtually eliminated because taxes can remain constant.

Question 17

Which of the following is true?

Accepted Answer

A) Real federal spending per person was approximately 50 times higher in 1900 than 1800. 
B) Real federal spending per person grew more rapidly during the 19th century than during the 20th century. 
C) Real federal spending per person was approximately 60 times greater in 1990 than in 1916. 
D) Real federal spending per person has decreased significantly since 1964. 
A) Real federal spending per person was approximately 50 times higher in 1900 than 1800. 
B) Real federal spending per person grew more rapidly during the 19th century than during the 20th century. 
C) Real federal spending per person was approximately 60 times greater in 1990 than in 1916. 
D) Real federal spending per person has decreased significantly since 1964.

Question 18

Which of the following is an example of a transfer payment?

Accepted Answer

A) wages and salaries paid to the employees of the Internal Revenue Service 
B) purchase of automobiles by a local police department 
C) agriculture subsidies paid to farmers 
D) salaries paid to the college professors of state-operated universities 
A) wages and salaries paid to the employees of the Internal Revenue Service 
B) purchase of automobiles by a local police department 
C) agriculture subsidies paid to farmers 
D) salaries paid to the college professors of state-operated universities

Question 19

In 2006, the income tax payments of the poorest 50 percent of Americans accounted for approximately what percent of all federal income tax revenue?

Accepted Answer

A) 3 percent 
B) 25 percent 
C) 50 percent 
D) 76 percent 
A) 3 percent 
B) 25 percent 
C) 50 percent 
D) 76 percent

Question 20

How has the share of the personal income tax paid by the rich (the top 1 percent of earners) and the not-so-well-off (the bottom half of earners) changed during the last four decades?

Accepted Answer

A) The rich now pay a larger share and the not-so-well-off pay a smaller share of the personal income tax. 
B) The rich now pay a smaller share and the not-so-well-off pay a larger share of the personal income tax. 
C) The share of the personal income tax paid by the rich increased between 1960 and 1980, but the share of the revenues collected from the rich has declined sharply since 1980. 
D) The relative shares paid by the rich and the not-so-well-off have been virtually unchanged during the last four decades. 
A) The rich now pay a larger share and the not-so-well-off pay a smaller share of the personal income tax. 
B) The rich now pay a smaller share and the not-so-well-off pay a larger share of the personal income tax. 
C) The share of the personal income tax paid by the rich increased between 1960 and 1980, but the share of the revenues collected from the rich has declined sharply since 1980. 
D) The relative shares paid by the rich and the not-so-well-off have been virtually unchanged during the last four decades.

Exam 16: Appendix: Government Spending and Taxation

Increased spending on which of the following items is most likely to increase the size of government during the years following 2010?

In recent years, what percentage of American families have derived income transfers from at least one government transfer program?

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2008?

When the tax structure of a nation is progressive, as real incomes increase, the tax revenues of the government will

Which of the following is true?

In 2010, federal expenditures on income transfers, health care, national defense, and interest on the national debt accounted for

How have the size and functions of government in the United States changed during the last century?

Economic theory indicates that, the size of government will be

When the number of families with someone employed by the government is added to those receiving income from transfer programs, the share of American families receiving income from the government is

As the size of government increases as a share of the economy,

Estimates from the U.S. Treasury Department suggest that the typical family in the lowest income quintile pays approximately what percent of their total income in federal taxes?

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

During the first 125 years of the United States,

Measured as a share of GDP, the total government expenditures of the United States are

When the government borrows funds in order to pay for its current expenditures,

Which of the following is true?

Which of the following is an example of a transfer payment?

In 2006, the income tax payments of the poorest 50 percent of Americans accounted for approximately what percent of all federal income tax revenue?

How has the share of the personal income tax paid by the rich (the top 1 percent of earners) and the not-so-well-off (the bottom half of earners) changed during the last four decades?

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters