State and Local Government Revenue Quiz

What is intergovernmental revenue?

• Funds collected by state governments through property taxes

• Money transferred from one level of government to another

• Income generated from private businesses operating in the state

• Revenue obtained solely through sales taxes

Which of the following is a primary source of revenue for state governments?

• Property taxes

• Federal defense grants

• Sales taxes and income taxes

• Revenue from international trade

What is the main source of revenue for local governments?

• Tariffs on imported goods

• Federal aid programs

• Property taxes

• Corporate income taxes

Which of the following best describes a balanced budget requirement for state governments?

• States cannot borrow money under any circumstances

• State revenues must equal or exceed expenditures within a fiscal year

• States are allowed to have unlimited deficit spending

• State governments must receive federal approval for all expenditures

Which category of spending is typically the largest for state and local governments?

• Foreign aid

• Education

• Military defense

• Space exploration

What are intergovernmental expenditures?

• Funds spent on foreign investments by state governments

• Money transferred from state to local governments for specific programs

• Federal funding for private businesses

• Money allocated to international organizations

Which of the following is an example of discretionary spending at the state level?

• Medicare funding

• Social Security payments

• Education spending

• Interest on national debt

Why do many state and local governments struggle with revenue volatility?

• Their revenue sources, such as sales and income taxes, fluctuate with the economy

• They depend entirely on federal grants for funding

• They have fixed revenue sources that do not change

• They only collect taxes once every ten years

What is one major challenge state and local governments face in budgeting?

• The inability to collect taxes from residents

• High levels of discretionary spending freedom

• Meeting mandated expenditures without sufficient revenue

• Being prohibited from funding infrastructure projects

How does infrastructure spending impact state and local government budgets?

• It requires significant long-term investments that can strain budgets

• It is covered entirely by the federal government

• It does not affect local or state finances

• It is a minor expense with little impact on government budgets