Which Federal Program Poses the Biggest Budget Challenge for the Federal

question 24

Multiple Choice

Which federal program poses the biggest budget challenge for the federal government in the coming years?

• A)the Earned Income Tax Credit
• B)Medicaid
• C)the Supplemental Nutritional Assistance Program
• D)Social Security

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Definitions:

After-Tax Income

The amount of income an individual or corporation retains after all applicable taxes have been deducted.

Depreciation

The accounting process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Net Cash Flow

Net cash flow is the total amount of money being transferred into and out of a business, particularly in reference to the amount of liquidity.

Economic Value Added (EVA)

A method used to measure a firm’s true profitability. EVA is found by taking the firm’s after-tax operating profit and subtracting the annual cost of all the capital a firm uses. If the firm generates a positive EVA, its management has created value for its shareholders. If the EVA is negative, management has destroyed shareholder value.