Name: 
 

ECON CH-14


Matching
 
 
Identifying Key Terms
Match each term with the correct statement below.
a.
individual income tax
g.
balanced budget
b.
tax return
h.
discretionary spending
c.
tax incentive
i.
mandatory spending
d.
tax exempt
j.
Medicare
e.
tax assessor
k.
tariff
f.
tax base
l.
personal property
 

 1. 

 spending category about which government planners can make choices
 

 2. 

 not subject to taxes
 

 3. 

 income, property, good, or service that is subject to a tax
 

 4. 

 an official who determines the value of a property
 

 5. 

 form used to file income taxes
 

 6. 

 the use of taxation to encourage or discourage certain types of behavior
 

 7. 

 a national health insurance program that helps pay for health care for people over age 65 or with certain disabilities
 

 8. 

 spending on certain programs that is required by existing law
 

 9. 

 a tax on imported goods
 

 10. 

 budget in which revenues are equal to spending
 
 
Identifying Key Terms
Match each term with the correct statement below.
a.
corporate income tax
g.
incidence of a tax
b.
estate tax
h.
deductions
c.
regressive tax
i.
real property
d.
proportional tax
j.
Medicaid
e.
individual income tax
k.
withholding
f.
gift tax
l.
Social Security
 

 11. 

 the final burden of a tax
 

 12. 

 entitlement program that benefits low-income families, some people with disabilities, and elderly people in nursing homes
 

 13. 

 a tax on the amount of money a person earns
 

 14. 

 physical possessions, such as land and buildings
 

 15. 

 a tax for which the percentage of income paid in taxes decreases as income increases
 

 16. 

 variable amounts that you can subtract from your gross income
 

 17. 

 taking tax payments out of an employee’s pay before he or she receives it
 

 18. 

 a tax for which the percentage of income paid in taxes remains the same for all income levels
 

 19. 

 a tax on the value of a company’s profits
 

 20. 

 a tax on the total value of the money and property of a person who has died
 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 21. 
Which of the following is NOT tax exempt?
a.
your family’s church
b.
the convenience store on the corner
c.
the federal military base near your home
d.
the homeless shelter in your neighborhood
 

 22. 
Which of the following defines a means-tested program?
a.
People pay first and receive benefits later.
b.
Age is a major criterion for eligibility.
c.
Any person who is a U.S. citizen is eligible.
d.
Eligibility depends on income.
 

 23. 
Your department store receipt says that you paid a 5% sales tax on sports equipment. This sales tax is an example of a
a.
regressive tax.
c.
proportional tax.
b.
progressive tax.
d.
income tax.
 

 24. 
Which of the following is an example of state spending?
a.
the state campground where your family vacations
b.
state water quality inspections
c.
the state police who stopped to assist you when you had a flat tire
d.
all of the above
 

 25. 
Which is an example of discretionary spending?
a.
Medicare
c.
education
b.
Social Security
d.
Medicaid
 

 26. 
Who generally bears most of a sales tax when the demand for the good taxed is inelastic?
a.
the wholesaler
c.
the consumer
b.
the producer
d.
the retailer
 

 27. 
What do taxes collected under the Federal Insurance Contribution Act (FICA) fund?
a.
Medicaid and Supplemental Security Income
b.
Social Security and Medicare
c.
Medicare and Medicaid
d.
Social Security and Medicaid
 

 28. 
What happens to the money that your employer withholds from your paycheck?
a.
Your employer sends it to the federal government to help pay your income tax bill.
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 holds it until you leave your job and then returns it to you.
 

 29. 
What is the major source of tax revenue for local governments?
a.
inheritance taxes
c.
income taxes
b.
sales taxes
d.
property taxes
 

 30. 
All but which of the following may be claimed as a tax deduction?
a.
some medical expenses
c.
money spent on household expenses
b.
interest on a home mortgage
d.
donations to charity
 

 31. 
Your pay stub deducts money for FICA. What does this mean?
a.
Money is being withheld for federal, state, and city taxes.
b.
Money is being withheld to fund Social Security and Medicare.
c.
Money is being withheld for excise and estate taxes.
d.
Money is being withheld for personal exemptions and deductions.
 

 32. 
What do Social Security taxes pay for?
a.
benefits to federal workers and military personnel
b.
benefits to older citizens, surviving family members of wage earners, and people with certain disabilities
c.
transportation and training expenses for low-income people
d.
benefits to those who are unemployed
 

 33. 
Which of the following is one reason the federal government collects income taxes as a person earns?
a.
so that the government can pay bills as they come due
b.
so that the money can be put aside until it is needed
c.
so that taxpayers can qualify for refunds of excess tax
d.
so that people do not realize exactly how much they are paying
 

 34. 
The main source of funding for your school probably comes from
a.
local property taxes.
c.
state sales taxes.
b.
federal income taxes.
d.
payroll taxes.
 

 35. 
The sales tax on a $20.00 hammer is 7%, or $1.40. Why is this tax a bigger burden for Josh, who has a $15,000 income, than for Aaron, who has a $150,000 income?
a.
Josh will have to pay a greater property tax on the hammer than will Aaron.
b.
The burden is the same for both Josh and Aaron.
c.
The tax rate is higher for Josh than for Aaron.
d.
The tax represents a larger proportion of Josh’s income.
 

 36. 
When you drive away from the gas pump, you have just paid a(n)
a.
corporate income tax.
c.
estate tax.
b.
import fee.
d.
excise tax.
 

 37. 
The demand for cable television is relatively elastic, since if the price gets too high, people will rent DVDs or videos instead of watching cable. Who is likely to bear the incidence of a 10 percent tax on cable television?
a.
the producer
c.
the consumer and producer equally
b.
the government
d.
the consumer
 

 38. 
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.
exports must not be taxed.
d.
imports must not be taxed.
 

 39. 
Suppose your total taxable income this year is $75,000. You are taxed at a rate of 10% on the first $25,000, 20% on the next $25,000, and 30% on the final $25,000. What is your total income tax?
a.
$15,000
c.
$25,00
b.
$7,500
d.
$2,500
 

 40. 
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 is for day-to-day expenses; a capital budget is for investment spending.
d.
An operating budget consists of small amounts of money; a capital budget consists of large amounts of money.
 

 41. 
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.
defense spending.
c.
discretionary spending.
d.
mandatory spending.
 

 42. 
What is an entitlement?
a.
a social welfare program paying bills for government spending such as supplies and utilities
b.
a social welfare program providing payments that the government receives for certain services
c.
a social welfare program spending funds over which legislators have direct control
d.
a social welfare program providing benefits to people who meet certain eligibility requirements
 

 43. 
Your aunt is a state employee. Her salary comes out of the state’s
a.
general accounting budget.
c.
federal budget.
b.
capital budget.
d.
operating budget.
 



 
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