Question 1

Explain how the Social Security program affects economic output.

Accepted Answer

The Social Security program reduces econ

Question 2

Which of the following is least likely to be the case?

Accepted Answer

A) Food stamps encourage the production of more food. 
B) Housing subsidies encourage the production of additional housing. 
C) Medicare changes the mix of output away from medical services. 
D) Student loans change the mix of output in favor of educational services. 
A) Food stamps encourage the production of more food. 
B) Housing subsidies encourage the production of additional housing. 
C) Medicare changes the mix of output away from medical services. 
D) Student loans change the mix of output in favor of educational services.

Question 3

The existence of income transfer programs indicates that government failure has occurred.

Accepted Answer

A) True 
 B)False

Question 4

Income transfer programs can change the mix of output.

Accepted Answer

A) True 
 B)False

Question 5

The existence of income transfer programs is likely to

Accepted Answer

A) Result in recipients having fewer children. 
B) Change the distribution of income but not the mix of output. 
C) Decrease the supply of labor. 
D) Discourage people from overusing health care services. 
A) Result in recipients having fewer children. 
B) Change the distribution of income but not the mix of output. 
C) Decrease the supply of labor. 
D) Discourage people from overusing health care services.

Question 6

Use the following formula to answer the indicated question: Benefit amount = Maximum award - 0.4 (Wages in excess of ceiling)Rafael is retired and earns $15,000 per year working part-time.He is entitled to a maximum Social Security retirement benefit of $14,000.Social Security regulations allow him to earn $10,000 and still get maximum benefits.Rafael's total income,including Social Security benefits,is

Accepted Answer

A) $27,000. 
B) $15,000. 
C) $25,000. 
D) $29,000. 
A) $27,000. 
B) $15,000. 
C) $25,000. 
D) $29,000.

Question 7

The primary cost of the Social Security program is the

Accepted Answer

A) Financial costs of administering the program. 
B) Reduction in total output the program causes because of work disincentives. 
C) Redistribution of income from younger to older workers. 
D) Benefits paid. 
A) Financial costs of administering the program. 
B) Reduction in total output the program causes because of work disincentives. 
C) Redistribution of income from younger to older workers. 
D) Benefits paid.

Question 8

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - Wages Suppose Parker works 2,000 hours per year at a wage of $12 per hour.If the state maximum welfare benefit is $14,000 per year,based on the welfare formula given,Parker's welfare benefit will be

Accepted Answer

A) Zero. 
B) $7,000. 
C) $14,000. 
D) $28,000. 
A) Zero. 
B) $7,000. 
C) $14,000. 
D) $28,000.

Question 9

The existence of income transfer programs indicates that the market mechanism has failed.

Accepted Answer

A) True 
 B)False

Question 10

Lower marginal tax rates for welfare programs will reduce the number of people on welfare.

Accepted Answer

A) True 
 B)False

Question 11

Graphically show how transfer payments affect labor supply and production possibilities.

Accepted Answer

See Figure 34.3 in your text.T

Question 12

By 2030 in the United States there will be ________ workers for every retired person.

Accepted Answer

A) 4 
B) 2 
C) 1 
D) 8 
A) 4 
B) 2 
C) 1 
D) 8

Question 13

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.7 [Wages - (Work expenses + Child care costs)] Based on the information given,the marginal tax rate is

Accepted Answer

A) Zero percent. 
B) 30 percent. 
C) 70 percent. 
D) 100 percent. 
A) Zero percent. 
B) 30 percent. 
C) 70 percent. 
D) 100 percent.

Question 14

Suppose a poverty program has a basic benefit of $14,000,zero deductions,and a marginal tax rate of 0.70.The breakeven level of income is

Accepted Answer

A) $14,000. 
B) $9,800. 
C) $4,200. 
D) $20,000. 
A) $14,000. 
B) $9,800. 
C) $4,200. 
D) $20,000.

Question 15

The Social Security program tends to

Accepted Answer

A) Increase work incentives for both older and younger workers. 
B) Increase work incentives for older workers but not younger workers. 
C) Decrease work incentives for both older and younger workers. 
D) Decrease work incentives for older workers but not younger workers. 
A) Increase work incentives for both older and younger workers. 
B) Increase work incentives for older workers but not younger workers. 
C) Decrease work incentives for both older and younger workers. 
D) Decrease work incentives for older workers but not younger workers.

Question 16

Refer to Figure 34.3.If a welfare recipient did not work,he or she would receive welfare benefits of

Accepted Answer

A) $0. 
B) $1,000. 
C) $5,000. 
D) $10,000. 
A) $0. 
B) $1,000. 
C) $5,000. 
D) $10,000.

Question 17

Which of the following programs is the largest federal income transfer program?

Accepted Answer

A) Welfare. 
B) Social Security. 
C) Unemployment compensation. 
D) Food stamps. 
A) Welfare. 
B) Social Security. 
C) Unemployment compensation. 
D) Food stamps.

Question 18

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.7 [Wages - (Work expenses + Child care costs)] Suppose Ramirez works 1,800 hours per year at a wage of $7 per hour,has no child care expenses,and has work expenses of $600.If the state maximum welfare benefit is $13,000 per year,based on the welfare formula given,Ramirez's welfare benefit will be

Accepted Answer

A) Zero because his income has exceeded the limit. 
B) $400. 
C) $1,000. 
D) $4,600. 
A) Zero because his income has exceeded the limit. 
B) $400. 
C) $1,000. 
D) $4,600.

Question 19

The creation of a retirement program,such as the Social Security program,will cause an increase in the wage rate,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 20

The percentage of income transfers that go to their intended recipients and purposes refers to the

Accepted Answer

A) Target welfare population. 
B) Target efficiency. 
C) Efficiency coefficient. 
D) Market efficiency. 
A) Target welfare population. 
B) Target efficiency. 
C) Efficiency coefficient. 
D) Market efficiency.

Exam 34: Transfer Payments: Welfare and Social Security

Explain how the Social Security program affects economic output.

Which of the following is least likely to be the case?

The existence of income transfer programs indicates that government failure has occurred.

Income transfer programs can change the mix of output.

The existence of income transfer programs is likely to

The primary cost of the Social Security program is the

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - Wages Suppose Parker works 2,000 hours per year at a wage of $12 per hour.If the state maximum welfare benefit is $14,000 per year,based on the welfare formula given,Parker's welfare benefit will be

The existence of income transfer programs indicates that the market mechanism has failed.

Lower marginal tax rates for welfare programs will reduce the number of people on welfare.

Graphically show how transfer payments affect labor supply and production possibilities.

By 2030 in the United States there will be ________ workers for every retired person.

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.7 [Wages - (Work expenses + Child care costs)] Based on the information given,the marginal tax rate is

Suppose a poverty program has a basic benefit of $14,000,zero deductions,and a marginal tax rate of 0.70.The breakeven level of income is

The Social Security program tends to

Refer to Figure 34.3.If a welfare recipient did not work,he or she would receive welfare benefits of

Which of the following programs is the largest federal income transfer program?

The creation of a retirement program,such as the Social Security program,will cause an increase in the wage rate,ceteris paribus.

The percentage of income transfers that go to their intended recipients and purposes refers to the

Economics: the Core Issues

The Useconomy: a Global View

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The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

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Deficits and Debt

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The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

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Natural Monopolies: Deregulation

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Taxes: Equity Versus Efficiency

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