21. Which of the following is NOT true about government spending on national defense?

a. It is the second-largest spending category for the U.S. federal government.

b. It includes salaries of military personnel.

c. It fluctuates over time as the political climate changes.

d. It is not financed with tax revenue.

22. A budget deficit

a. occurs when government receipts are less than spending.

b. occurs when government spending is less than receipts.

c. occurs when government receipts are equal to spending.

d. is the accumulation of years of government overspending.

23. The government finances budget deficits by

a. selling stock, much like a corporation.

b. printing additional currency.

c. borrowing from the public.

d. raising taxes on products such as cigarettes and alcoholic beverages.

24. The government finances the budget deficit by

a. borrowing from the public.

b. borrowing solely from the Federal Reserve Bank.

c. printing currency in the amount of the budget deficit.

d. requiring that budget surpluses occur every other year to pay off the deficits.

25. State and local governments receive the largest portion of their tax revenues from

a. sales taxes and income taxes.

b. income taxes and property taxes.

c. payroll taxes and income taxes.

d. property taxes and sales taxes.

26. The tax that generates the most revenue for state and local government is the

a. corporate income tax.

b. individual income tax.

c. property tax.

d. sales tax.

27. State and local governments

a. are funded entirely by their own tax base.

b. receive the majority of their tax revenues from corporate income tax.

c. are generally not responsible for collecting sales tax.

d. receive some of their funds from the federal government.

28. The single largest expenditure by state and local governments is on

a. highways.

b. police.

c. public welfare.

d. education.

29. For state and local governments, education accounts for what percent of spending?

a. 25 percent

b. 34 percent

c. 50 percent

d. 75 percent

30. The largest source of income for the federal government is

a. individual income taxes.

b. corporate taxes.

c. tariffs.

d. fines and penalties.