Question 1

Revenue collected through the Federal Insurance Contributions Act is used to fund

Accepted Answer

A)  the Federal Deposit Insurance Corporation. 
B)  unemployment insurance. 
C)  unemployment compensation. 
D)  Social Security payments.

Question 2

How much FICA tax does your employer pay on the taxable portion of your income?

Accepted Answer

A)  1.45 percent 
B)  6.2 percent 
C)  12.4 v 
D)  15.3 percent

Question 3

Suppose you are a married person with one child but your whole family earns less than $20,000 a year. Which of the following will supplement your income?

Accepted Answer

A)  Federal Insurance Contribution Act 
B)  alternative minimum tax 
C)  Social Security 
D)  Earned Income Tax Credit

Question 4

Together, Social Security, defense, Medicare, and Medicaid make up approximately what percent of federal government spending?

Accepted Answer

A)  38 percent 
B)  48 percent 
C)  58 percent 
D)  68 percent

Question 5

The tax rate on an additional dollar of income is the

Accepted Answer

A)  average tax rate. 
B)  total tax rate. 
C)  marginal tax rate. 
D)  alternative minimum tax rate.

Question 6

Debt held outside the U.S. government is called the

Accepted Answer

A)  total U.S. national debt. 
B)  debt-to-GDP ratio. 
C)  publically held national debt. 
D)  debt to foreign investor holdings.

Question 7

Almost a third of the total national debt is held by other U.S. government agencies.

Accepted Answer

A) True 
 B)False

Question 8

The United States spends more on its military than

Accepted Answer

A)  China. 
B)  Russia. 
C)  Saudi Arabia. 
D)  Each of these answers is correct.

Question 9

Suppose the tax rate on the first $20,000 income is 0 percent;10 percent on the next $20,000 earned; and 20 percent on any additional income earned. A person earning $35,000 pays an income tax of

Accepted Answer

A)  $1,000. 
B)  $1,500. 
C)  $2,000. 
D)  $3,500.

Question 10

Future Social Security recipients with similar life expectancies have fewer benefits relative to older people who have already been receiving them for a while because

Accepted Answer

A)  Social Security payments are now no longer paid out when the government has a budget deficit. 
B)  the retirement age when one becomes eligible for Social Security will likely increase. 
C)  Social Security payments have fallen as a percentage of the federal government's spending. 
D)  Social Security payments are not indexed to wages.

Question 11

The Social Security system is becoming

Accepted Answer

A)  less generous. 
B)  more generous. 
C)  more profitable. 
D)  more reliable.

Question 12

The Federal Insurance Contributions Act taxes are paid to fund

Accepted Answer

A)  Medicaid. 
B)  Medicare. 
C)  Social Security. 
D)  the operation of the Federal Emergency Management Agency.

Question 13

In a progressive tax system, if a person moves from one income bracket to a higher income bracket

Accepted Answer

A)  both the marginal tax rate and average tax rate will be higher. 
B)  both the marginal tax rate and average tax rate will be lower. 
C)  the marginal tax rate will be lower and the average tax rate will be higher. 
D)  the marginal tax rate will be higher and the average tax rate will be lower.

Question 14

Corporations ultimately bear the entire burden of the corporate income tax.

Accepted Answer

A) True 
 B)False

Question 15

In 1940, Ida May Fuller received the first Social Security check after contributing only $24.75 in Social Security taxes before she retired and lived to be 100 years old. Her case is an example of how

Accepted Answer

A)  Social Security payments were not issued to people who were close to retirement. 
B)  people can choose not to contribute to Social Security. 
C)  people begin to get Social Security payments before they retire. 
D)  the first Social Security recipients benefitted much more from the program than will workers entering the program today.

Question 16

What was Milton Friedman's argument for a volunteer army instead of a military draft?

Accepted Answer

A)  The societal cost of a draft was much higher than the paychecks of a volunteer army because of the significant opportunity cost of drafted soldiers. 
B)  A volunteer army would cost less in dollar terms than a drafted army. 
C)  The United States would no longer need an active army because the country could protect itself adequately with just a few volunteer soldiers. 
D)  None of the answers is correct.

Question 17

If most people in country A fall in the lowest tax bracket and most people in country B fall in the highest tax bracket and both countries have progressive tax systems, we should expect tax revenues to be higher in country

Accepted Answer

A) True 
 B)False

Question 18

Under a regressive tax, people with higher incomes

Accepted Answer

A)  have higher average tax rates. 
B)  have lower average tax rates. 
C)  have the same average tax rates as those with lower incomes. 
D)  pay fewer tax dollars.

Question 19

Under a flat tax

Accepted Answer

A)  the marginal tax rate is zero but the average tax rate is one. 
B)  people with higher incomes pay less tax dollars. 
C)  the average tax rate is the same for people with different income levels. 
D)  the amount of tax payment is the same for people with different income levels.

Question 20

What is the U.S. corporate tax rate?

Accepted Answer

A)  6.2 percent 
B)  15 percent 
C)  35 percent 
D)  37 percent

Exam 34: The Federal Reserve System and Open Market Operations

Revenue collected through the Federal Insurance Contributions Act is used to fund

How much FICA tax does your employer pay on the taxable portion of your income?

Suppose you are a married person with one child but your whole family earns less than $20,000 a year. Which of the following will supplement your income?

Together, Social Security, defense, Medicare, and Medicaid make up approximately what percent of federal government spending?

The tax rate on an additional dollar of income is the

Debt held outside the U.S. government is called the

Almost a third of the total national debt is held by other U.S. government agencies.

The United States spends more on its military than

Suppose the tax rate on the first $20,000 income is 0 percent;10 percent on the next $20,000 earned; and 20 percent on any additional income earned. A person earning $35,000 pays an income tax of

Future Social Security recipients with similar life expectancies have fewer benefits relative to older people who have already been receiving them for a while because

The Social Security system is becoming

The Federal Insurance Contributions Act taxes are paid to fund

In a progressive tax system, if a person moves from one income bracket to a higher income bracket

Corporations ultimately bear the entire burden of the corporate income tax.

In 1940, Ida May Fuller received the first Social Security check after contributing only $24.75 in Social Security taxes before she retired and lived to be 100 years old. Her case is an example of how

What was Milton Friedman's argument for a volunteer army instead of a military draft?

If most people in country A fall in the lowest tax bracket and most people in country B fall in the highest tax bracket and both countries have progressive tax systems, we should expect tax revenues to be higher in country

Under a regressive tax, people with higher incomes

Under a flat tax

What is the U.S. corporate tax rate?