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Chapter 6: Funding the Public Sector
Quizzes
Quiz 3
Quiz 3
This activity contains 10 questions.
The history of the Social Security system has included
a steady decrease in the rate of return.
a steady increase in the Social Security tax rate
a steady increase in the dollar value of Social Security outlays
a steady increase in the wage base
all of the above
Subsidizing medical services through Medicare
A) makes medical services available to a large percentage of the population, who otherwise could not afford them.
B) creates a differential between the price received by providers and the price perceived by consumers.
C) is a minor item of the federal budget.
D) all of the above are true.
E) only A and B are true.
An excise tax has been levied on the good in the picture. What can be said about who pays the tax?
Both the producer and consumer pay a portion of the tax but the consumer pays a larger share.
The entire tax is paid by the producer.
Both the producer and consumer pay a portion of the tax but the producer pays a larger share.
The entire tax is paid by the consumer.
What is the tax base?
The total amount of money collected in taxes.
The value of goods, services, incomes or wealth subject to taxation.
The amount of money that must be collected to pay for government expenditures.
The amount that the government borrows.
One of the suggestions to help Social Security is to allow investment in the stock market. Which of the following is a problem associated with the ability to invest Social Security funds in the stock market?
The government has to pick which stocks to invest in.
Purchases of stock would reduce future tax rate increases.
The stock market returns are guaranteed, but the rates will not increase over time.
The rates of return on stocks can fluctuate quite a bit over time, so income would not be guaranteed.
Which of the following statements is/are true about Social Security?
A) The Social Security system was founded after the Great Depression in order to provide a minimum level of pension benefits to all persons.
B) The inflation-adjusted rate of return from Social Security contributions was higher than the inflation-adjusted rate of return from the stock market until the 70s.
C) Today's workers will receive their Social Security pension benefits from tomorrow's workers contributions.
D) All of the above.
E) Only A and B are true.
All of the following are funding sources for the government except:
subsidies.
value-added tax.
sales taxes.
borrowing.
How does dynamic tax analysis differ from static tax analysis?
Static tax analysis assumes that the tax base may eventually decline as taxes are raised while dynamic tax analysis assumes the tax base remains constant.
Dynamic tax analysis assumes that in order to maximize tax revenues tax rates must constantly be changing while static analysis assumes that taxes must remain unchanged.
Dynamic tax analysis says that all taxes should be ad valorem and static tax analysis says that taxes should be a combination of sales taxes and income taxes.
Dynamic tax analysis assumes that the tax base may eventually decline as taxes are raised while static tax analysis assumes the tax base remains constant.
Which of the following is
not
true of the U.S. Social Security System?
The system was established as a means of guaranteeing a minimum level of pension benefits to all persons.
The system was founded in 1935.
Each worker has a private retirement account that she/he pays in to.
The Social Security contributions are the mandatory taxes paid out workers’ wages and salaries.
Some of the proposals for reforming the current Social Security system include:
reforming immigration policies.
increasing the rate of return of Social Security by possibly allowing a portion to be invested in the stock market.
reducing the number of people eligible for benefits.
raising taxes.
cutting the amount of benefits each person is eligible to receive.
all of the above.
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