question

A budget deficit occurs when expenditures exceed

answer

revenues.

question

Most of today's federal debt was run up by government borrowing during

answer

the 1980s

question

Approximately what percentage of the annual federal budget pays interest on the national debt?

answer

9

question

Which is NOT a major source of federal revenue?

answer

excise taxes

question

In Pollock v. farmer's loan and trust co. (1895), the U.S. Supreme Court ruled that

answer

the income tax was unconstitutional

question

The sixteenth amendment, ratified in 1913,

answer

explicitly permitted Congress to levy an income tax

question

A(n) _____ is a policy document allocating taxes and expenditures, or a series of goals with price tags attached.

answer

budget

question

A budget is

answer

a policy document allocating burdens (taxes) and benefits (expenditures)

question

Congress was officially given the power to levy an income tax through the

answer

Sixteenth Amendment

question

The federal government's budget is mainly

answer

a policy statement that allocates burdens and benefits by attaching price tags to policy goals

question

According to Aaron Wildavsky, budgeting is a process most concerned with

answer

translating financial resources into human purposes

question

What is NOT a responsibility of the IRS?

answer

establishing the annual tax rates that Americans of different incomes must pay

question

Income taxes

answer

provide the largest source of federal revenue

question

In order of decreasing amounts, the sources of federal revenue include

answer

individual income tax, social insurance receipts, borrowing, and corporate income tax

question

Corporations today pay

answer

income taxes which account for much less federal revenue than individual income taxes

question

The income tax is generally progressive, meaning that

answer

those with more income pay higher rates of tax on their income

question

Social Security taxes are

answer

paid for by employees and employers

question

Social insurance taxes

answer

are earmarked for a specific purpose

question

The fastest growing source of federal revenue has been

answer

Social Security Taxes

question

The government borrows money principally by

answer

selling bonds

question

Who can purchase US government bonds?

answer

financial institutions, citizens, corporations, mutual funds

question

The federal debt

answer

consists of all the money borrowed over the years by the national government and still outstanding

question

The federal debt in the US

answer

has increased due to the budget deficit caused by the difference between revenues and expenditures

question

Unlike state and local governments, the federal government is borrowing primarily for

answer

its day to day expenses

question

_____ are revenue losses attributable to provisions of the federal tax laws which allow a special exemption, exclusion, or deduction.

answer

tax expenditures

question

Tax expenditures consists of

answer

tax exemptions, deductions, and exclusions

question

The federal income tax deduction for mortgage interest on an owner-occupied home is an example of a

answer

tax expenditure

question

An example of a tax expenditure is

answer

a tax deduction for the mortgage interest paid by homeowners

question

The Office of Management and Budget estimates that the total tax expenditures is more than _____ of the federal government's total receipts.

answer

30 percent

question

Tax expenditures tend to most benefit

answer

middle and upper income people and corporations

question

What is false about President Reagan's 1981 tax cut?

answer

Corporate taxes were increased.

question

What is true about President Reagan's 1981 tax cut?

answer

It provided new tax incentives for personal saving and investment.

question

What was not a provision of Reagan's 1985 tax simplification program?

answer

It increased the number of tax expenditures available to businesses

question

Beginning in 1985, federal income taxes were _____ to the cost of living, so that government no longer got a larger percentage when inflation pushed incomes into higher brackets while the tax rates stayed the same.

answer

indexed

question

President Reagan's 1981 tax cuts were most beneficial to

answer

high income families

question

In 1993, Congress agreed to president Clinton's proposal to

answer

raise the income tax rate for families in the highest income brackets

question

The US government's annual budget is now approximately

answer

2.75 trillion

question

Compared to most other countries with developed economies, the national, state, and local governments in the US tax

answer

less

question

Compared to other western nations, america's total government expenditure as a percentage of the GDP is

answer

one of the smallest

question

Which of the following countries have the smallest total tax revenues as a percentage of their gross domestic product?

answer

U.S.

question

The federal budget consumes _____ of America's GDP

answer

Fifty percent.

question

In order of decreasing amounts, federal expenditures include

answer

none

question

America's national, state, and local governments spend an amount equal to _____ of the GDP.

answer

20 percent

question

During the 1950s and early 1960s, over half the federal budget was spent every year on

answer

the Department of Defense

question

From the mid 1960s to the early 1980s, the biggest change in government spending was the

answer

increase in social service expenditures and decline in defense spending

question

The military industrial complex refers to

answer

the close relationship between defense officials and the corporations that supply their hardware needs

question

The budget of the Department of Defense

answer

decreased in the 1990s

question

The purchasing of military hardware is known as

answer

procurement

question

The biggest expenditure in the federal budget today is

answer

income security programs

question

The Social Security Act, which set up the Social Security system, was passed in

answer

1935

question

The social security act was passed under the administration of president

answer

FDR

question

In 1965, _____ was added to the social Security programs to provide hospital and physician coverage to the elderly

answer

Medicare

question

Medicare

answer

provides both hospital and physician coverage to the elderly

question

The biggest slice of the federal budget pie belongs to

answer

income security expenditures

question

By 1990 the Social Security system was financed by a payroll tax of

answer

over 15 percent

question

A major feature of incremental budgeting is that it

answer

provides small increases in the current budget over the previous year's budget

question

An example of incremental budgeting is

answer

giving an agency a little more than it had last year

question

What is not a feature of incremental budgeting?

answer

Agencies must justify their entire budget request

question

_____ refers to the concept that in the spending appropriations process, the best predictor of this year's budget is last year's budget plus a little bit more.

answer

Incrementalism

question

The most prevalent model of budgetary decision making in practice is

answer

incrementalism

question

What is not associated with incremental budgeting?

answer

An agency or program must prove it still merits its very existence every year

question

Budget items mandated by a law or by a previous obligation are known as

answer

uncontrollable expenditures

question

Social Security payments are an example of a(n)

answer

entitlement

question

An "uncontrollable" expenditure in the federal budget is defines as

answer

an expenditure that is required by current law or a previous government obligation to people automatically eligible for some benefit

question

Social Security programs, interest on the national debt, and military pensions are examples of

answer

uncontrollable expenditures

question

The biggest uncontrollable expenditure in the federal budget is

answer

the Social security system

question

An estimated ____ of the federal budget is considered uncontrollable, unless Congress changes a law or existing benefit levels.

answer

two thirds

question

Approximately what percentage of the federal budget is uncontrollable?

answer

two thirds

question

The ultimate power to determine how much the government will tax and spend, and what it will spend taxes for, lies with

answer

Congress

question

In the House, it is the _____ Committee that writes tax codes, subject to the approval of Congress as a whole.

answer

Ways and Means

question

Agencies invariably pad their budget requests because

answer

they want the almost inevitable budget cuts to be bearable

question

In the Senate, the _____ Committee is responsible for writing tax codes, subject to the approval of Congress as a whole.

answer

Finance

question

The budget cycle begins in the executive branch _____ months before the fiscal year begins.

answer

19

question

The director of the Office of Management and Budget

answer

is a presidential appointee requiring approval of the Senate

question

The ____ is responsible for supervising preparation of the federal budget and advising the president on budgetary matters.

answer

Office of Management and Budget

question

Until Congress passed the Budget and Accounting Act of 1921,

answer

agencies of the executive branch sent their budget requests to the secretary of the treasury, who forwarded them on to Congress, with the president playing little or no role in the entire process

question

Before the president submits her budget to congress the OMB coordinates the requests of

answer

executive agencies

question

The heads of executive agencies send their budget requests to the

answer

Office of Management and Budget

question

Agencies' behavior and budgets are audited, monitored, and evaluated for Congress by the

answer

General Accounting Office

question

The Office of Management and Budget parcels out money to government agencies and is accountable to the

answer

president

question

What is false about the OMB?

answer

The OMB is one of the few government agencies created by the Constitution (totally false)

question

Once the Office of Management and Budget has prepared the federal budget,

answer

the president makes revisions and submits it to Congress

question

According to the Constitution, all federal appropriations must be authorized by

answer

Congress

question

The Congressional budget and Impoundment control act of 1974 did not set up

answer

The Office of Management and budget

question

The Congressional Budget and Impoundment Act of 1974 requires that

answer

Congress agree on a budget according to a fixed schedule, with target figures for the total budget size

question

The congressional equivalent of the Office of Management and Budget is the

answer

Congressional Budget Office

question

One of the important purposes of the Congressional Budget Act of 1974 is to

answer

force Congress to consider the budget as a whole rather than in terms of individual appropriations

question

The main purpose of the Congressional Budget Office is to

answer

advise Congress on the consequences of its budget decisions

question

To set a limit on total government spending, both houses of Congress are required to pass a(n) _____ every April, binding Congress to a total expenditure level, or bottom line, of all federal spending for all programs.

answer

budget resolutions

question

A budget resolution

answer

sets limits on expenditures based on revenue projections

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