Question 1

Redistribution programs are means-tested.To qualify for such a program,a person must demonstrate that:

Accepted Answer

A)  his or her family is larger than the mean family size for the country as a whole.
B)  his or her average (or mean) family income has fallen (or not gone up) during the past three years.
C)  though unemployed,he or she is making serious efforts to get a job.
D)  his or her income (or means) is below a certain specified level.E) A) and B)
F) None of the above

Question 2

Progress in medical science has contributed to _____ health care costs.

Accepted Answer

A)  increasing
B)  decreasing
C)  constant
D)  randomly fluctuatingE) A) and B)
F) A) and C)

Question 3

In 2014,health care expenditures in the United States accounted for _____ of GDP.

Accepted Answer

A)  approximately 1%
B)  15% to 20%
C)  40% to 50%
D)  over 80%E) C) and D)
F) B) and C)

Question 4

Studies of family income over time reveal that:

Accepted Answer

A)  most people in the highest quintile tend to fall to the lowest quintile during their lifetime.
B)  income mobility is rare for all quintiles of the income distribution.
C)  many people who move down the income ladder are young.
D)  many people who start out at the bottom of the income ladder when they are young move up the income ladder as they age and move down again when they retire.E) A) and B)
F) A) and C)

Question 5

Suppose ABC Health is a private health insurance company that offers an identical policy to all customers.Each customer pays a premium equal to the average consumer's annual medical expenses.This is a system that has the potential to fail because of the _____ problem.

Accepted Answer

A)  adverse selection
B)  income inequality
C)  single-payer
D)  equity versus efficiencyE) A) and D)
F) A) and B)

Question 6

Some of the major causes of poverty are lack of education,bad luck,lack of proficiency in English,and:

Accepted Answer

A)  racial and gender discrimination.
B)  geographic region.
C)  differences in religious preference.
D)  government restrictions.E) None of the above
F) A) and B)

Question 7

Technological change in the United States over the past three decades has increased the demand for skilled labor and decreased the demand for unskilled labor.

Accepted Answer

A) True 
 B)False

Question 8

To ensure that low- and middle-income families have health insurance that they can afford,the Affordable Care Act of 2010:

Accepted Answer

A)  provides government subsidies to low- and middle-income families.
B)  provides Medicaid for low- and middle-income families.
C)  exempts low- and middle-income families from the individual mandate.
D)  forces employers to provide them with health insurance.E) A) and B)
F) A) and D)

Question 9

Which factor is NOT a major cause of poverty in the United States?

Accepted Answer

A)  inadequate educational attainment
B)  discrimination
C)  lack of adequate health coverage
D)  welfareE) None of the above
F) C) and D)

Question 10

The poverty threshold is the same,regardless of the number of members in a household.

Accepted Answer

A) True 
 B)False

Question 11

Since 1967,the percentage of the population living below the poverty line has:

Accepted Answer

A)  not fluctuated.
B)  steadily increased.
C)  steadily decreased.
D)  fluctuated,but not in any consistent direction.E) B) and D)
F) A) and C)

Question 12

Which transaction is a transfer payment?

Accepted Answer

A)  The government pays an employee by making a direct transfer to the employee's bank account.
B)  An army officer transfers part of her pay to the government to pay her taxes.
C)  A senior citizen receives a Social Security payment.
D)  Government spends additional funds on infrastructure.E) B) and D)
F) C) and D)

Question 13

When a welfare program is provided to those whose income falls below some minimum,it is said to be:

Accepted Answer

A)  means-tested.
B)  an in-kind benefit.
C)  a monetary benefit.
D)  a negative income tax.E) C) and D)
F) B) and D)

Question 14

Programs that are not means-tested:

Accepted Answer

A)  provide benefits for people regardless of income level.
B)  specifically help those with low incomes.
C)  provide benefits only for households that earn below the mean household income in the United States for a given year.
D)  provide only in-kind benefits.E) None of the above
F) B) and C)

Question 15

Which factor is one that has been associated with the increase in income inequality in the United States?

Accepted Answer

A)  a decrease in households headed by single women
B)  a reduction in the percentage of the population over age 65
C)  a smaller gap between the wages of skilled and unskilled workers
D)  the way technological change has affected labor demandE) All of the above
F) B) and D)

Question 16

A high-income household is taxed a certain amount of money.A low-income household receives financial assistance in the same amount from government.The value of the marginal dollar of the financial assistance to the family and the taxes paid by the high-income family are:

Accepted Answer

A)  the same since it is the same amount of money.
B)  different since the marginal dollar is worth more to the low-income family.
C)  different since the high-income family's lost income will keep them from buying necessities.
D)  unimportant in determining the impact of this plan on the welfare state.E) All of the above
F) A) and D)

Question 17

An example of a social insurance program is:

Accepted Answer

A)  expenditure on national defense.
B)  Social Security payments to the disabled.
C)  the food stamp program.
D)  purchasing a new city police car.E) B) and C)
F) A) and C)

Question 18

Employment-based insurance:

Accepted Answer

A)  is provided by companies to their employees.
B)  is provided only to those who are not working.
C)  consistently runs into the problem of adverse selection death spiral.
D)  does not receive benefits from the U.S.government.E) A) and B)
F) All of the above

Question 19

Which example BEST illustrates social insurance?

Accepted Answer

A)  liability insurance for automobiles
B)  food stamps
C)  housing subsidies
D)  Social SecurityE) A) and B)
F) B) and D)

Question 20

Means-tested programs are available only to those with sufficiently low income.An example of a means-tested program is Temporary Assistance for Needy Families.

Accepted Answer

A) True 
 B)False

Exam 18: The Economics of the Welfare State

Which transaction is a transfer payment?

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Technological change in the United States over the past three decades has increased the demand for skilled labor and decreased the demand for unskilled labor.

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Employment-based insurance:

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Programs that are not means-tested:

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A high-income household is taxed a certain amount of money.A low-income household receives financial assistance in the same amount from government.The value of the marginal dollar of the financial assistance to the family and the taxes paid by the high-income family are:

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Progress in medical science has contributed to _____ health care costs.

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In 2014,health care expenditures in the United States accounted for _____ of GDP.

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Redistribution programs are means-tested.To qualify for such a program,a person must demonstrate that:

Correct AnswerverifiedShow Answer

Some of the major causes of poverty are lack of education,bad luck,lack of proficiency in English,and:

Correct AnswerverifiedShow Answer

When a welfare program is provided to those whose income falls below some minimum,it is said to be:

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Suppose ABC Health is a private health insurance company that offers an identical policy to all customers.Each customer pays a premium equal to the average consumer's annual medical expenses.This is a system that has the potential to fail because of the _____ problem.

Correct AnswerverifiedShow Answer

Which factor is one that has been associated with the increase in income inequality in the United States?

Correct AnswerverifiedShow Answer

Studies of family income over time reveal that:

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To ensure that low- and middle-income families have health insurance that they can afford,the Affordable Care Act of 2010:

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Which factor is NOT a major cause of poverty in the United States?

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Means-tested programs are available only to those with sufficiently low income.An example of a means-tested program is Temporary Assistance for Needy Families.

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Which example BEST illustrates social insurance?

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The poverty threshold is the same,regardless of the number of members in a household.

Correct AnswerverifiedShow Answer

Since 1967,the percentage of the population living below the poverty line has:

Correct AnswerverifiedShow Answer

An example of a social insurance program is:

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