Unit 12 Taxes, Spending, and Budgets

What effect did the 16th Amendment have on the federal government?

• It allowed the federal government to fund state programs.

• It authorized the federal government to implement social welfare programs.

• It gave the federal government a major source of revenue.

• It made free education accessible to the whole population.

Which term describes the country's financial situation for the year in the scenario below?

Scenario

• A country starts the year with $7 trillion in debt.

• Throughout the year, it collects $2 trillion in revenue.

• Throughout the year, it spends $3 trillion.

• a surplus of $1 trillion

• a deficit of $1 trillion

• a surplus of $8 trillion

• a deficit of $8 trillion

A state taxes its residents at different rates using income tax brackets, with higher incomes taxed at higher rates. How is this tax categorized?

• proportional

• regressive

• progressive

• flat

Due to health concerns, a state levies a tax of 10 cents on every pound of candy. What type of tax is this?

• sales tax

• excise tax

• corporate tax

• income tax

Which conclusions does the graph support?

Select 2 answers

• Federal revenue steadily increased from 2015 to 2022.

• Estate and gift taxes were a much bigger source of revenue in 2022 than in 2015.

• Individual income taxes are a much bigger source of revenue than corporate income taxes.

• More than half of federal revenue comes from income taxes.

Which are examples of discretionary spending?

Select 2 answers

• interest on debt

• entitlements

• public education

• defense

Which is an example of a social welfare service?

• A local library allows state residents to borrow books.

• A state program helps people with low income pay for housing.

• A school district uses school buses to provide free transportation to school.

• The federal government creates jobs through the construction of a new highway.

Consider the differences between mandatory and discretionary spending. Which of the following statements are correct?

Select 2 answers

• Mandatory spending levels may be adjusted from year to year.

• Discretionary spending levels may be adjusted from year to year.

• Mandatory spending levels are set by prior legislation.

• Discretionary spending levels are set by prior legislation.

The scenario below illustrates what concept?

A new stadium opens in a city. The stadium creates jobs, and it attracts visitors who spend money at nearby hotels and restaurants. Stadium employees and business owners have more money, so they increase their spending at other nearby businesses. These businesses use their additional income to hire more workers.

• supply and demand

• market competition

• circular flow of money

• inflation

Which of the following actions illustrate free market activity?

Select 2 answers

• A restaurant requires employees to wash hands after using the restroom under health laws.

• A buyer purchases a smartphone secondhand because it is cheaper than buying a new smartphone.

• A manufacturer that frequently sells out of an item increases the item's cost.

• A house owner pays a garbage collection fee to a city four times a year.