7 . Government consumption does not require resources to be reallocated from private to government use .
8 . Since 1959 , the percent of federal government expenditures devoted to transfers has increased by more than 50 percent .
9 . Transfer payments , including Social Security and welfare and medical assistance , account for nearly 60 percent of federal government expenditures .
10 . Interest on the federal government ’ s debt accounts for about 20 percent of federal government expenditure .
11 . Federal grants-in-aid to state and local governments finance about 20 percent of annual spending by these governments .
12 . The federal government allocates about 10 percent of its budget to Social Security .
13 . State and local governments in the United States spend a bit more than onethird of their budgets on education .
14 . Sales taxes account for about 22 percent of state and local government revenue in the United States .
15 . The federal government obtains about half of its revenue annually from retail sales taxes .
16 . State governments do not fund any part of Medicaid . 17 . The social compact is an 18 th century idea by political theorists .
18 . The proportion of revenue received by the federal government from payroll taxes is higher than the proportion of revenue received by state and local governments from payroll taxes .
Multiple Choice Questions 1 . The real cost of government goods and services is : a . money . b . taxes . c . the private goods and services foregone . d . inflation .