Name: ________________________ Class: ___________________ Date: __________
ID: A
Chapter 10 Test True/False Indicate whether the statement is true or false. ____
1. The public sector is that part of the economy that is made up of individuals and privately-owned businesses.
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2. Government spending can directly affect both the allocation of resources and the distribution of income.
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3. The fastest growing category of federal expenditures since 1980 has been defense.
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4. Some states have enacted balanced budget amendments that prohibit annual spending from exceeding annual revenues.
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5. During the 1980s, the federal government began to have budget surpluses for the first time since World War II.
Multiple Choice Identify the choice that best completes the statement or answers the question. ____
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6. All levels of government combined consume about a. one-tenth of the nation's output. c. one-half of the nation's output. b. one-third of the nation's output. d. three-fourths of the nation's output. 7. The largest category of spending for most local governments is a. elementary and secondary education. c. police protection. b. hospitals. d. public welfare. 8. The United States government accumulated huge deficits during the 1980s due to a. a shift in the incidence of taxes to corporations. b. environmental cleanup. c. a doubling of spending on national defense. d. huge, annual increases in welfare. 9. The “pay-as-you-go” provision was a feature of the a. Budget Enforcement Act. c. Omnibus Budget Reconciliation Act. b. Gramm-Rudman-Hollings Bill. d. Economic Recovery Tax Act. 10. Transfer payments from the government to individuals or other levels of government might be used for all of the following EXCEPT a. Social Security. c. maintenance of the armed forces. b. interstate highway construction. d. subsidies to farmers. 11. The largest category of state spending is a. highways. c. intergovernmental expenditures. b. education. d. public welfare. 12. Legislation intended to establish a balanced budget was the a. Budget Enforcement Act. c. Omnibus Budget Reconciliation Act. b. Gramm-Rudman-Hollings Bill. d. Economic Recovery Tax Act.
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Name: ________________________
ID: A
____ 13.
According to the graph, federal government purchases exceeded state and local government purchases in a. b.
1973 1967
c. d.
1975 1985
____ 14.
According to the graph, government spending accounted for about what portion of the total value of the nation’s output between 1980 and 2000? a. about a quarter c. about half b. about a third d. about two thirds 2
Name: ________________________
ID: A
____ 15.
a. b.
Based on the graph, after 1997, the government was running a budget deficit. c. balancing the budget. running a budget surplus. d. borrowing more to pay its bills.
____ 16. The federal budget deficit is gone, transformed by a strong economy into a string of projected surpluses that should grow larger for years to come.... Eliminating the deficit is hardly the end of the government’s financial troubles, however.... [T]he national debt was built up over decades of deficit spending—the federal government has not run steady surpluses since the 1920s—and it remains an economic millstone of considerable proportion. Source: The New York Times, January 31, 1999.
a. b.
According to this passage, at the time it was written (1999), the national debt was eliminated. c. rising. falling. d. staying about the same.
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Name: ________________________
____ 17.
ID: A
According to the graph, about what percentage of revenues did the federal government spend in 1990 for the privilege of using borrowed money? a. a little more than 10% c. a little more than 15% b. a little less than 10% d. a little less than 15%
____ 18. The new tax cut, coupled with falling corporate tax revenue, has gobbled up three-quarters of the projected federal budget surplus through 2004, a revised Congressional Budget Office estimate reveals. As the surplus shrinks, budget experts from both parties now believe Congress and President Bush will have to tap funds reserved for Medicare to pay for the spending increases they want for the fiscal year that begins in October. Only last January, budget forecasters had expected the surplus...to total a record $489 billion from 2001 through 2004. That number has shrunk to $127 billion. Source: “Tax Cut Helps Drain Surplus,” Chicago Sun-Times, June 27, 2001.
a. b. c. d.
According to the passage, because of reduced revenue, the government may have to increase the corporate tax rate. reduce the size of the tax cut. reduce the spending increases they had planned for the year. reduce spending on health insurance for senior citizens.
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Name: ________________________
ID: A
Government Employment in the United States Number of Employees 3,047,000 4,595,000
Employer Federal Government (excluding armed forces) State Governments Local Governments Counties Municipalities School districts Townships Special districts Local Governments Total All Governments Total
____ 19. a. b.
____ 20.
2,253,000 2,665,000 5,134,000 424,000 627,000 11,103,000 18,745,000
According to the table, most government employees work for the federal government. c. a local government. a state government. d. a school district.
In the late 1990s, the average expenditure per elementary and secondary student was $5,885. Based on the map, which of the following states spent less than the average per student? a. Maine c. North Carolina b. New Mexico d. Massachusetts
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Name: ________________________
ID: A
Matching Match each statement with the correct item below. a. how income is allocated among individuals, families, and other groups in the economy b. act of Congress that authorizes federal agencies to spend money c. situation in which federal spending exceeds revenue d. part of the economy made up of federal, state, and local governments e. funds transferred from one level of government to another for spending f. federal programs that must receive annual authorization by Congress g. presidential power to cancel specific budget items without rejecting the entire budget h. higher interest rates caused by heavy government borrowing i. legal limits on annual discretionary spending j. total amount the government borrowed from investors to finance deficit spending ____ ____ ____ ____ ____
21. 22. 23. 24. 25.
federal debt distribution of income intergovernmental expenditures discretionary spending federal budget deficit
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