Chapter 16: Government Spends, Collects, and Owes

Question 1

Medicare

Answer 1

Government program that provides health care for the aged

Question 2

Public goods

Answer 2

Goods or services that can be used by many individuals at the same time without reducing the benefit each person receives

Question 3

Income redistribution

Answer 3

Government activity that takes income from some people through taxation and uses it to help citizens in need

Question 4

Social-insurance programs

Answer 4

Government programs that pay benefits to retired and disabled workers, their families, and the unemployed

Question 5

Social Security

Answer 5

Federal program that provides monthly payments to people who are retired or unable to work

Question 6

Workers’ compensation

Answer 6

Government program that extends payments for medical care to workers injured on the job

Question 7

Public-assistance programs/welfare

Answer 7

Government programs that make payments to citizens based on need

Question 8

Supplemental Security Income

Answer 8

Federal programs that include food stamps and payments to the disabled and the aged

Question 9

Temporary Assistance for Needy Families

Answer 9

State-run program that provides assistance and work opportunities to needy families

Question 10

Medicaid

Answer 10

State and federal public-assistance program that helps pay health care costs for low-income and disabled persons

Question 11

Externalities

Answer 11

Economic side effects or by-products hat affect an uninvolved third party; can be negative or positive (eg pollution)

Question 12

Fiscal year

Answer 12

Year by which accounts are kept; for the federal government, October 1 to September 30 of the next year

Question 13

Budget deficit

Answer 13

Situation when the amount of government spending exceeds its receipts during the fiscal year

Question 14

Deficit financing

Answer 14

Government policy of spending more money than it is able to bring in through revenues

Question 15

National debt

Answer 15

Total amount of outstanding debt for the federal government

Question 16

Budget surplus

Answer 16

Situation when the amount of government receipts is larger than its expenditures during the fiscal year

Question 17

Benefits-received principle

Answer 17

System of taxation in which those who use a particular government service support it with taxes in proportion to the benefit they receive; those who do not use the service do not pay taxes for it (eg gasoline)

Question 18

Ability-to-pay principle

Answer 18

Principle of taxation in which those with higher incomes pay more taxes than those with lower incomes, regardless of the number of government services they use

Question 19

Proportional tax

Answer 19

Tax that takes the same percentage of all incomes

Question 20

Progressive tax

Answer 20

Tax that takes a larger percentage of higher incomes than of lower incomes; justified on the ability-to-pay principle

Question 21

Regressive tax

Answer 21

Tax that takes a larger percentage of lower incomes than of higher incomes (eg food) (opposite of progressive tax)

Question 22

Public-works projects

Answer 22

Publicly used facilities, such as schools and highways, built by federal, state, or local governments with public money