Question 1

Which program was introduced in 1990 to replace the means-tested program Aid to Families with Dependent Children?

Accepted Answer

A) Social Security 
B) Medicare 
C) food stamps 
D) Temporary Assistance to Needy Families 
A) Social Security 
B) Medicare 
C) food stamps 
D) Temporary Assistance to Needy Families

Question 2

Community rating is a regulation that requires:

Accepted Answer

A) cities to give ratings to movies shown in local theaters. 
B) insurance companies to offer the same policies for the same premium to everyone,regardless of medical history. 
C) insurance companies to charge higher premiums to healthy people. 
D) insurance companies to charge higher premiums to the sickest people in the community. 
A) cities to give ratings to movies shown in local theaters. 
B) insurance companies to offer the same policies for the same premium to everyone,regardless of medical history. 
C) insurance companies to charge higher premiums to healthy people. 
D) insurance companies to charge higher premiums to the sickest people in the community.

Question 3

The _____ is widely used to measure income inequality.

Accepted Answer

A) Gini coefficient 
B) median household income 
C) poverty rate 
D) ability-to-pay principle 
A) Gini coefficient 
B) median household income 
C) poverty rate 
D) ability-to-pay principle

Question 4

In 2015,_____ of the U.S.population was living in poverty.

Accepted Answer

A) approximately 13% 
B) 20% to 24% 
C) 25% to 29% 
D) more than 30% 
A) approximately 13% 
B) 20% to 24% 
C) 25% to 29% 
D) more than 30%

Question 5

When adverse selection occurs,healthy people pay premiums that are _____ their actual health care costs.

Accepted Answer

A) higher than 
B) equal to 
C) less than 
D) positively correlated to 
A) higher than 
B) equal to 
C) less than 
D) positively correlated to

Question 6

A factor that has been associated with the increase in income inequality in the United States is the:

Accepted Answer

A) decrease in households headed by single women. 
B) reduction in the percentage of the population over age 65. 
C) increase in immigration. 
D) slowdown in technological change. 
A) decrease in households headed by single women. 
B) reduction in the percentage of the population over age 65. 
C) increase in immigration. 
D) slowdown in technological change.

Question 7

The provision of specific goods and services (rather than cash)to needy people by way of welfare programs is:

Accepted Answer

A) the income effect. 
B) the wealth effect. 
C) in-kind benefits. 
D) Rawlsian assistance. 
A) the income effect. 
B) the wealth effect. 
C) in-kind benefits. 
D) Rawlsian assistance.

Question 8

In the United States,the government pays _____ of all medical costs.

Accepted Answer

A) 100% 
B) between 70% and 80% 
C) approximately 50% 
D) less than 20% 
A) 100% 
B) between 70% and 80% 
C) approximately 50% 
D) less than 20%

Question 9

The negative income tax:

Accepted Answer

A) describes a badly designed tax system. 
B) is a system in which low incomes are taxed at a higher rate than are high incomes. 
C) is a program in which low-income working families receive income supplements,rather than having to pay taxes. 
D) is the minimum tax that must be paid by a business,even if it has a negative income (or a loss). 
A) describes a badly designed tax system. 
B) is a system in which low incomes are taxed at a higher rate than are high incomes. 
C) is a program in which low-income working families receive income supplements,rather than having to pay taxes. 
D) is the minimum tax that must be paid by a business,even if it has a negative income (or a loss).

Question 10

The welfare state:

Accepted Answer

A) often takes up a large share of government spending in wealthy countries. 
B) is generally referred to as Social Security. 
C) usually takes up only a small share of government spending in wealthy countries. 
D) affects only low-income households. 
A) often takes up a large share of government spending in wealthy countries. 
B) is generally referred to as Social Security. 
C) usually takes up only a small share of government spending in wealthy countries. 
D) affects only low-income households.

Question 11

During the past 25 years,the degree of income inequality in the United States has been rising.Which factor is NOT a possible reason for this phenomenon?

Accepted Answer

A) technological progress that has increased the demand for high-skilled workers relative to the demand for low-skilled workers 
B) increased imports of labor-intensive products 
C) increased immigration 
D) higher divorce rates 
A) technological progress that has increased the demand for high-skilled workers relative to the demand for low-skilled workers 
B) increased imports of labor-intensive products 
C) increased immigration 
D) higher divorce rates

Question 12

The U.S.government health insurance program for people aged 65 years and older is:

Accepted Answer

A) Medicare. 
B) Medicaid. 
C) the Veterans Administration. 
D) health savings accounts. 
A) Medicare. 
B) Medicaid. 
C) the Veterans Administration. 
D) health savings accounts.

Question 13

The percentage of the population that falls below the poverty threshold is called the:

Accepted Answer

A) poor rate. 
B) poverty rate. 
C) homeless rate. 
D) absolute number of people in poverty. 
A) poor rate. 
B) poverty rate. 
C) homeless rate. 
D) absolute number of people in poverty.

Question 14

For the United States in 2012,a Gini coefficient of 0.47 suggests that:

Accepted Answer

A) the United States has almost achieved income equality. 
B) the average household income is $47,000. 
C) compared with most European countries,the United States has unusually high levels of income inequality. 
D) the median household income for the United States is $47,000. 
A) the United States has almost achieved income equality. 
B) the average household income is $47,000. 
C) compared with most European countries,the United States has unusually high levels of income inequality. 
D) the median household income for the United States is $47,000.

Question 15

A negative income tax is levied on firms,even if they have negative income.

Accepted Answer

A) True 
 B)False

Question 16

Economists believe that looking at the distribution of income by quintiles at one moment overstates the true inequality of income because:

Accepted Answer

A) it ignores the effect of taxes. 
B) it ignores the effect of transfer payments. 
C) families near the bottom of the distribution in any given year may be having an unusually bad year,while those at the top may be having an unusually good one. 
D) families near the bottom of the distribution in any given year are often having an unusually good year,while those at the top are often having an unusually bad one. 
A) it ignores the effect of taxes. 
B) it ignores the effect of transfer payments. 
C) families near the bottom of the distribution in any given year may be having an unusually bad year,while those at the top may be having an unusually good one. 
D) families near the bottom of the distribution in any given year are often having an unusually good year,while those at the top are often having an unusually bad one.

Question 17

A sudden loss of income and a significant increase in costly medical expenses are examples of:

Accepted Answer

A) economic insecurity. 
B) economic inequality. 
C) poverty thresholds. 
D) the Great Compression. 
A) economic insecurity. 
B) economic inequality. 
C) poverty thresholds. 
D) the Great Compression.

Question 18

If you were to support the provision of a particular economic policy without knowing your own economic status,you would be operating:

Accepted Answer

A) under a Rawlsian "veil of ignorance." 
B) in a way similar to how Robert Nozick believes one should operate. 
C) in a way that would not encourage economic fairness. 
D) in such a way as to increase the number of people below the poverty line. 
A) under a Rawlsian "veil of ignorance." 
B) in a way similar to how Robert Nozick believes one should operate. 
C) in a way that would not encourage economic fairness. 
D) in such a way as to increase the number of people below the poverty line.

Question 19

Compared with other countries of comparable wealth,the United States has:

Accepted Answer

A) unusually high poverty rates. 
B) similar levels of poverty. 
C) relatively low levels of poverty. 
D) low levels of poverty only when relative measures of poverty are used. 
A) unusually high poverty rates. 
B) similar levels of poverty. 
C) relatively low levels of poverty. 
D) low levels of poverty only when relative measures of poverty are used.

Question 20

As of 2015,approximately _____ of working-age adult Americans have no health insurance.

Accepted Answer

A) 1% to 10% 
B) 11% to 20% 
C) 21% to 50% 
D) over 50% 
A) 1% to 10% 
B) 11% to 20% 
C) 21% to 50% 
D) over 50%

Exam 18: The Economics of the Welfare State

Which program was introduced in 1990 to replace the means-tested program Aid to Families with Dependent Children?

Community rating is a regulation that requires:

The _____ is widely used to measure income inequality.

In 2015,_____ of the U.S.population was living in poverty.

When adverse selection occurs,healthy people pay premiums that are _____ their actual health care costs.

A factor that has been associated with the increase in income inequality in the United States is the:

The provision of specific goods and services (rather than cash)to needy people by way of welfare programs is:

In the United States,the government pays _____ of all medical costs.

The negative income tax:

The welfare state:

During the past 25 years,the degree of income inequality in the United States has been rising.Which factor is NOT a possible reason for this phenomenon?

The U.S.government health insurance program for people aged 65 years and older is:

The percentage of the population that falls below the poverty threshold is called the:

For the United States in 2012,a Gini coefficient of 0.47 suggests that:

A negative income tax is levied on firms,even if they have negative income.

Economists believe that looking at the distribution of income by quintiles at one moment overstates the true inequality of income because:

A sudden loss of income and a significant increase in costly medical expenses are examples of:

If you were to support the provision of a particular economic policy without knowing your own economic status,you would be operating:

Compared with other countries of comparable wealth,the United States has:

As of 2015,approximately _____ of working-age adult Americans have no health insurance.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters