Future Business Leader Achievments (FBLA) Economics Practice Exam

"Entitlements" are

1. federal revenue given to state and local governments in the form of grants

2. taxes that only the federal government is allowed to collect; state and local governments may not collect these taxes

3. new tax revenues that can be used only to pay off old debts; they cannot be used to fund new programs

4. money that the government is required to give all households that meet eligibility requirements

The correct answer is: money that the government is required to give all households that meet eligibility requirements

The term "entitlements" refers specifically to government programs through which individuals are granted certain benefits or financial assistance based on established eligibility criteria. This includes programs like Social Security, Medicare, and Medicaid, where qualifying individuals or households are assured of receiving benefits, thereby creating a legal obligation for the government to provide these funds. Entitlement programs are typically funded through taxation and are designed to support individuals who meet specific income or demographic profiles. This characteristic distinguishes them from other types of government spending, such as grants provided to local governments or tax revenues that are earmarked strictly for debt repayment or that can only be collected by the federal government. Understanding this definition is crucial, as it highlights the role of the government in providing safety nets for eligible populations, ensuring that those in need have access to essential services and financial support.