Ch. 14 Taxes and Government Spending
Multiple Choice
Identify the choice that best completes the
statement or answers the question.
|
|
|
1.
|
What do taxes collected under the Federal Insurance Contribution Act (FICA)
fund?
a. | Social Security and Medicaid | b. | Social Security and
Medicare | c. | Medicare and Medicaid | d. | Medicaid and Supplemental Security
Income |
|
|
|
2.
|
Which of the following defines a means-tested program?
a. | Eligibility depends on income. | b. | Any person who is a U.S. citizen is
eligible. | c. | Age is a major criterion for eligibility. | d. | People pay first and
receive benefits later. |
|
|
|
3.
|
Who generally bears most of a sales tax when the demand for the good taxed is
inelastic?
a. | the retailer | c. | the wholesaler | b. | the consumer | d. | the producer |
|
|
|
4.
|
What do Social Security taxes pay for?
a. | benefits to federal workers and military personnel | b. | benefits to those
who are unemployed | c. | transportation and training expenses for
low-income people | d. | benefits to older citizens, surviving family
members of wage earners, and people with certain disabilities |
|
|
|
5.
|
Which of the following is one reason the federal government collects income
taxes as a person earns?
a. | so that people do not realize exactly how much they are paying | b. | so that the money
can be put aside until it is needed | c. | so that the government can pay bills as they
come due | d. | so that taxpayers can qualify for refunds of excess
tax |
|
|
|
6.
|
What is a major difference between an operating budget and a capital
budget?
a. | In an operating budget, legislation is needed; in a capital budget, no legislation is
needed. | b. | An operating budget is raised by bonds; a capital budget is raised by
taxes. | c. | An operating budget consists of small amounts of money; a capital budget consists of
large amounts of money. | d. | An operating budget is for day-to-day expenses;
a capital budget is for investment spending. |
|
|
|
7.
|
What is an entitlement?
a. | a social welfare program providing benefits to people who meet certain eligibility
requirements | b. | a social welfare program paying bills for government spending such as supplies and
utilities | c. | a social welfare program spending funds over which legislators have direct
control | d. | a social welfare program providing payments that the government receives for certain
services |
|
|
|
8.
|
What is the major source of tax revenue for local governments?
a. | inheritance taxes | c. | property taxes | b. | income taxes | d. | sales taxes |
|
|
|
9.
|
All of the following are constitutional limits on the power to tax EXCEPT
that
a. | tax money must not go to individual interests. | b. | federal taxes must
be the same in every state. | c. | imports must not be taxed. | d. | exports must not be
taxed. |
|
|
|
10.
|
Your department store receipt says that you paid a 5% sales tax on sports
equipment. This sales tax is an example of a
a. | proportional tax. | c. | regressive tax. | b. | progressive tax. | d. | income tax. |
|
|
|
11.
|
All but which of the following may be claimed as a tax deduction?
a. | interest on a home mortgage | c. | some medical
expenses | b. | donations to charity | d. | money spent on household expenses |
|
|
|
12.
|
Your pay stub deducts money for FICA. What does this mean?
a. | Money is being withheld to fund Social Security and Medicare. | b. | Money is being
withheld for federal, state, and city taxes. | c. | Money is being withheld for personal exemptions
and deductions. | d. | Money is being withheld for excise and estate taxes. |
|
|
|
13.
|
Which is an example of discretionary spending?
a. | Social Security | c. | Medicaid | b. | Medicare | d. | education |
|
|
|
14.
|
When you drive away from the gas pump, you have just paid a(n)
a. | import fee. | c. | corporate income tax. | b. | excise
tax. | d. | estate
tax. |
|
|
|
15.
|
The federal government spends the largest amount of its budget on Social
Security, which is an example of
a. | federal aid to state and local governments. | b. | discretionary
spending. | c. | mandatory spending. | d. | defense
spending. |
|
|
|
16.
|
What happens to the money that your employer withholds from your
paycheck?
a. | Your employer holds it until you leave your job and then returns it to
you. | b. | Your employer returns to you at the end of the year so that you can pay your federal
taxes. | c. | Your employer holds it in case you damage his property. | d. | Your employer sends
it to the federal government to help pay your income tax bill. |
|
|
|
17.
|
Your aunt is a state employee. Her salary comes out of the state’s
a. | capital budget. | c. | general accounting budget. | b. | operating
budget. | d. | federal
budget. |
|
|
|
18.
|
Which of the following is NOT tax exempt?
a. | the federal military base near your home | b. | your family’s
church | c. | the homeless shelter in your neighborhood | d. | the convenience
store on the corner |
|
|
|
19.
|
Which of the following is an example of state spending?
a. | the state police who stopped to assist you when you had a flat
tire | b. | the state campground where your family vacations | c. | state water quality
inspections | d. | all of the above |
|
|
|
20.
|
The main source of funding for your school probably comes from
a. | state sales taxes. | c. | payroll taxes. | b. | local property taxes. | d. | federal income
taxes. |
|