Question 1

The poverty threshold is defined as:

Accepted Answer

A)  less than $15,000. 
B)  the minimum annual income that is considered adequate to purchase the necessities of life. 
C)  a static and inaccurate figure, since it does not change when prices change. 
D)  $20,000 for both individuals and households. 
A)  less than $15,000. 
B)  the minimum annual income that is considered adequate to purchase the necessities of life. 
C)  a static and inaccurate figure, since it does not change when prices change. 
D)  $20,000 for both individuals and households.

Question 2

Temporary Assistance for Needy Families is a means-tested program that:

Accepted Answer

A)  offers assistance to anyone who is defined as below the poverty threshold. 
B)  provides limited assistance to poor households with children. 
C)  is essentially an in-kind benefit. 
D)  is the same thing as Medicaid. 
A)  offers assistance to anyone who is defined as below the poverty threshold. 
B)  provides limited assistance to poor households with children. 
C)  is essentially an in-kind benefit. 
D)  is the same thing as Medicaid.

Question 3

During the past 25 years the degree of income inequality in the United States has been rising. Which of the following 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 4

Which of the following is the BEST example of social insurance?

Accepted Answer

A)  liability insurance for automobiles 
B)  food stamps 
C)  housing subsidies 
D)  Social Security 
A)  liability insurance for automobiles 
B)  food stamps 
C)  housing subsidies 
D)  Social Security

Question 5

In the United States and other wealthy countries, a large part of the welfare state is devoted to payments for:

Accepted Answer

A)  health care. 
B)  unemployment insurance. 
C)  food stamps. 
D)  Temporary Aid to Needy Families. 
A)  health care. 
B)  unemployment insurance. 
C)  food stamps. 
D)  Temporary Aid to Needy Families.

Question 6

Jane works part-time and earns $11,000 per year. Because she is below the poverty line, she also receives $4,000 in various welfare benefits. Suppose she is offered a new job that would pay her $14,000 and would bring her earnings high enough so that she no longer qualified for any welfare benefits. This is what is known as a notch. Explain what is happening with Jane and how could we modify the system to eliminate the notch.

Accepted Answer

This is a notch because Jane would earn

Question 7

If you were to provide an economic policy without knowing your own economic status, you would be operating:

Accepted Answer

A)  under a 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 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 8

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 efficiency 
A)  adverse selection 
B)  income inequality 
C)  single-payer 
D)  equity versus efficiency

Question 9

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

Question 10

The Gini coefficient:

Accepted Answer

A)  varies between 0 and 1. 
B)  is also equal to the mean household income for a country. 
C)  is the same for most industrially developed countries. 
D)  is seldom used, since it does not help one understand income inequality. 
A)  varies between 0 and 1. 
B)  is also equal to the mean household income for a country. 
C)  is the same for most industrially developed countries. 
D)  is seldom used, since it does not help one understand income inequality.

Question 11

Medicaid is funded by:

Accepted Answer

A)  private charities. 
B)  the federal government only. 
C)  state governments only. 
D)  federal and state governments. 
A)  private charities. 
B)  the federal government only. 
C)  state governments only. 
D)  federal and state governments.

Question 12

In 2012, which of the following demographic groups had the HIGHEST poverty rate?

Accepted Answer

A)  African-Americans 
B)  Hispanics 
C)  Whites 
D)  female-headed families with no husband present 
A)  African-Americans 
B)  Hispanics 
C)  Whites 
D)  female-headed families with no husband present

Question 13

In the United States, income inequality fell:

Accepted Answer

A)  during the 1930s and 1940s. 
B)  after 1980. 
C)  during the years following World War II. 
D)  after 1917 and has remained consistent since then. 
A)  during the 1930s and 1940s. 
B)  after 1980. 
C)  during the years following World War II. 
D)  after 1917 and has remained consistent since then.

Question 14

Critics of Temporary Assistance for Needy Families argue that it creates perverse incentives such as:

Accepted Answer

A)  family breakup, since a family with both spouses present may not qualify for aid. 
B)  a reward for not seeking work. 
C)  the abandonment of children. 
D)  family breakup, a reward for not seeking work, and the abandonment of children. 
A)  family breakup, since a family with both spouses present may not qualify for aid. 
B)  a reward for not seeking work. 
C)  the abandonment of children. 
D)  family breakup, a reward for not seeking work, and the abandonment of children.

Question 15

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. 
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.

Question 16

Which of the following U.S. welfare programs is an in-kind benefit that is NOT means-tested?

Accepted Answer

A)  Medicaid 
B)  Medicare 
C)  food stamps 
D)  Social Security income 
A)  Medicaid 
B)  Medicare 
C)  food stamps 
D)  Social Security income

Question 17

Health care in the United States is DIFFERENT FROM that of other wealthy countries in all of the following ways EXCEPT that:

Accepted Answer

A)  Americans rely more on private health insurance. 
B)  Americans spend more per person on health care. 
C)  the United States is the only country in which large numbers of people lack health insurance. 
D)  the United States is the only country that provides government health care. 
A)  Americans rely more on private health insurance. 
B)  Americans spend more per person on health care. 
C)  the United States is the only country in which large numbers of people lack health insurance. 
D)  the United States is the only country that provides government health care.

Question 18

Payments from the government to assist individuals are called:

Accepted Answer

A)  taxes. 
B)  transfers. 
C)  the welfare state. 
D)  SCHIP. 
A)  taxes. 
B)  transfers. 
C)  the welfare state. 
D)  SCHIP.

Question 19

There are six households in a rural community. Each household earns $40,000 per year. Suppose that a new resident builds a mansion in the community and that the income in the new household is $4 million per year. After the new resident arrives, the median household income has _____ and the mean household income has _____.

Accepted Answer

A)  increased; increased 
B)  not changed; increased 
C)  increased; not changed 
D)  not changed; not changed 
A)  increased; increased 
B)  not changed; increased 
C)  increased; not changed 
D)  not changed; not changed

Question 20

John Rawls believed that:

Accepted Answer

A)  government has a small role in achieving an economically fair society. 
B)  we should do unto others as we would like them to do unto us if we were in the same place. 
C)  Robert Nozick's views of economic fairness are similar to his own view. 
D)  government has no right to force people with high incomes to support others with lower incomes. 
A)  government has a small role in achieving an economically fair society. 
B)  we should do unto others as we would like them to do unto us if we were in the same place. 
C)  Robert Nozick's views of economic fairness are similar to his own view. 
D)  government has no right to force people with high incomes to support others with lower incomes.

The poverty threshold is defined as:

Temporary Assistance for Needy Families is a means-tested program that:

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

Which of the following is the BEST example of social insurance?

In the United States and other wealthy countries, a large part of the welfare state is devoted to payments for:

If you were to provide an economic policy without knowing your own economic status, you would be operating:

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.

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

The Gini coefficient:

Medicaid is funded by:

In 2012, which of the following demographic groups had the HIGHEST poverty rate?

In the United States, income inequality fell:

Critics of Temporary Assistance for Needy Families argue that it creates perverse incentives such as:

Studies of family income over time reveal that:

Which of the following U.S. welfare programs is an in-kind benefit that is NOT means-tested?

Health care in the United States is DIFFERENT FROM that of other wealthy countries in all of the following ways EXCEPT that:

Payments from the government to assist individuals are called:

John Rawls believed that:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals 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 Common Resources

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 18: The Economics of the Welfare

The poverty threshold is defined as:

Temporary Assistance for Needy Families is a means-tested program that:

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

Which of the following is the BEST example of social insurance?

In the United States and other wealthy countries, a large part of the welfare state is devoted to payments for:

If you were to provide an economic policy without knowing your own economic status, you would be operating:

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.

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

The Gini coefficient:

Medicaid is funded by:

In 2012, which of the following demographic groups had the HIGHEST poverty rate?

In the United States, income inequality fell:

Critics of Temporary Assistance for Needy Families argue that it creates perverse incentives such as:

Studies of family income over time reveal that:

Which of the following U.S. welfare programs is an in-kind benefit that is NOT means-tested?

Health care in the United States is DIFFERENT FROM that of other wealthy countries in all of the following ways EXCEPT that:

Payments from the government to assist individuals are called:

John Rawls believed that:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals 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 Common Resources

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters