Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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How
does the federal government pay for budget deficits? A. | increases tax
rates | C. | borrows money by
issuing bonds | B. | decreases tax rates | D. | sells money to foreign governments | | | | |
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2.
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Which
of the following explains why balanced budgets are difficult to achieve at the federal
level? A. | The largest
portion of the federal budget is mandatory. | B. | The largest
portion of the federal budget is discretionary. | C. | Congress is not
allowed to decrease spending. | D. | The President is not allowed to increase
spending. | | |
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3.
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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. | | | | |
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4.
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Of
the four categories listed below, which accounts for the largest amount of local
expenditures? A. | insurance trust
funds | C. | highways | B. | public utilities | D. | higher education | | | | |
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5.
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Which
of the following statements best describes the relationship of the federal deficit to the federal
debt? A. | The federal
deficit is another term for the federal debt. | B. | The federal
deficit leads to borrowing, which adds to the federal debt. | C. | The federal debt
leads to borrowing, which adds to the federal deficit. | D. | The federal debt
is the opposite of the federal deficit. | | |
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6.
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Which
of the following represents the largest source of expenses for state governments? A. | public
utilities | C. | national
defense | B. | police protection | D. | road and highway construction | | | | |
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7.
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All
of the following are effects of increased government spending EXCEPT A. | a direct change
in the allocation of resources. | B. | an indirect change in the allocation of
resources. | C. | an alteration in the distribution of
income. | D. | a decrease in competition between the public and private
sectors. | | |
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8.
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Historically, the federal budget was characterized by a remarkable amount of which
kind of spending? A. | deficit | C. | shortage | B. | surplus | D. | discretionary | | | | |
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