Question 1

Which of the following is true?

Accepted Answer

A) Healthcare in Canada and most of the European countries is a socialized industry. 
B) Socialization of the healthcare industry eliminates the problem of scarcity in the healthcare industry. 
C) The high-income countries of Europe are able to provide as much healthcare,free of charge,as their citizens want. 
D) All of the above are true. 
A) Healthcare in Canada and most of the European countries is a socialized industry. 
B) Socialization of the healthcare industry eliminates the problem of scarcity in the healthcare industry. 
C) The high-income countries of Europe are able to provide as much healthcare,free of charge,as their citizens want. 
D) All of the above are true.

Question 2

Under the current structure of Medicare,economic theory indicates that the movement of the baby boom generation into the retirement phase of life during the years following 2011 will

Accepted Answer

A) reduce the share of healthcare services paid for by a third party. 
B) push both healthcare prices and expenditures upward. 
C) increase the incentive of suppliers to provide healthcare services at a low cost. 
D) increase the incentive of consumers to economize on their use of healthcare. 
A) reduce the share of healthcare services paid for by a third party. 
B) push both healthcare prices and expenditures upward. 
C) increase the incentive of suppliers to provide healthcare services at a low cost. 
D) increase the incentive of consumers to economize on their use of healthcare.

Question 3

In countries such as Canada that have socialized health care,the government operates hospitals,and health-care services are financed through tax revenue.In these countries,

Accepted Answer

A) the government is able to provide as much health care,free of charge,as citizens would like. 
B) methods other than price,such as political rules and waiting lists,must be utilized to allocate health-care services. 
C) a large number of services,such as MRIs,that involve expensive equipment are performed. 
D) citizens are usually so satisfied with their health-care system that they never travel to other countries to purchase health-care services. 
A) the government is able to provide as much health care,free of charge,as citizens would like. 
B) methods other than price,such as political rules and waiting lists,must be utilized to allocate health-care services. 
C) a large number of services,such as MRIs,that involve expensive equipment are performed. 
D) citizens are usually so satisfied with their health-care system that they never travel to other countries to purchase health-care services.

Question 4

Real expenditures on Medicare and Medicaid

Accepted Answer

A) rose during the 1970s and 1980s,but they have been declining since 1990. 
B) fell during the 1970s and 1980s,but they have been increasing since 1990. 
C) increased at about the same rate as real GDP during the last three decades. 
D) have approximately doubled during each of the last three decades. 
A) rose during the 1970s and 1980s,but they have been declining since 1990. 
B) fell during the 1970s and 1980s,but they have been increasing since 1990. 
C) increased at about the same rate as real GDP during the last three decades. 
D) have approximately doubled during each of the last three decades.

Question 5

What percentage of U.S.healthcare expenditures is currently paid for by a third party,either the government or an insurance company?

Accepted Answer

A) less than 10 percent 
B) approximately 30 percent 
C) approximately 50 percent 
D) more than 85 percent 
A) less than 10 percent 
B) approximately 30 percent 
C) approximately 50 percent 
D) more than 85 percent

Question 6

Which of the following is true?

Accepted Answer

A) More than half of medical bills are paid for directly by consumers. 
B) Healthcare insurance provided by one's employer is counted as personal income. 
C) State mandated coverage of medical procedures like in-vitro fertilization,drug rehabilitation,and acupuncture,make health insurance more affordable. 
D) Regulations prevent consumers from purchasing a health insurance plan offered in another state. 
A) More than half of medical bills are paid for directly by consumers. 
B) Healthcare insurance provided by one's employer is counted as personal income. 
C) State mandated coverage of medical procedures like in-vitro fertilization,drug rehabilitation,and acupuncture,make health insurance more affordable. 
D) Regulations prevent consumers from purchasing a health insurance plan offered in another state.

Question 7

Which of the following is fully tax deductible (it is either subtracted or excluded from taxable income)under the current tax system of the United States?

Accepted Answer

A) out-of-pocket medical expenses 
B) healthcare insurance purchased through one's employer 
C) healthcare insurance purchased directly by an individual or family 
D) all of the above 
A) out-of-pocket medical expenses 
B) healthcare insurance purchased through one's employer 
C) healthcare insurance purchased directly by an individual or family 
D) all of the above

Question 8

Special savings accounts that individuals would pay into and then use to pay for medical expenses (or use to purchase a catastrophic health insurance policy)are called

Accepted Answer

A) Medicare accounts. 
B) comprehensive insurance plans. 
C) medical savings accounts. 
D) Health Maintenance Organizations (HMOs). 
A) Medicare accounts. 
B) comprehensive insurance plans. 
C) medical savings accounts. 
D) Health Maintenance Organizations (HMOs).

Question 9

As the share of healthcare expenditures paid for by third parties has grown,both healthcare prices and total expenditures have increased rapidly.Is this surprising?

Accepted Answer

A) Yes;third-party payments provide healthcare consumers with a strong incentive to economize,and therefore,the growth of expenditures is particularly surprising. 
B) No;third-party payments weaken the incentive of healthcare consumers to economize,and therefore,the rapid growth of expenditures is an expected result. 
C) Yes;the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party. 
D) No;the growth of third-party payments will reduce the demand for healthcare,which will lead to both higher prices and expenditure levels. 
A) Yes;third-party payments provide healthcare consumers with a strong incentive to economize,and therefore,the growth of expenditures is particularly surprising. 
B) No;third-party payments weaken the incentive of healthcare consumers to economize,and therefore,the rapid growth of expenditures is an expected result. 
C) Yes;the price increases are surprising because healthcare suppliers have a strong incentive to provide the services at a low price when they are paid for by a third party. 
D) No;the growth of third-party payments will reduce the demand for healthcare,which will lead to both higher prices and expenditure levels.

Question 10

Economic theory suggests that controlling health-care costs through rules and regulations imposed by the government or another third party is generally

Accepted Answer

A) more effective than using competition and the choices of consumers spending their own money to control costs. 
B) less effective than using competition and the choices of consumers spending their own money to control costs. 
C) only workable if the entire health-care sector is socialized (operated by the government). 
D) possible to implement successfully because these rules and regulations tend to be in harmony with the interests of both consumers and health-care providers. 
A) more effective than using competition and the choices of consumers spending their own money to control costs. 
B) less effective than using competition and the choices of consumers spending their own money to control costs. 
C) only workable if the entire health-care sector is socialized (operated by the government). 
D) possible to implement successfully because these rules and regulations tend to be in harmony with the interests of both consumers and health-care providers.

Question 11

Which of the following would help control the future costs of healthcare?

Accepted Answer

A) a new government program that would cover the cost of prescription drugs purchased by all healthcare consumers 
B) an increase in the share of healthcare expenditures financed with low co-payment insurance 
C) allowing consumers to purchase healthcare insurance from out-of-state providers 
D) an increase in the tax benefits of purchasing healthcare through one's employer 
A) a new government program that would cover the cost of prescription drugs purchased by all healthcare consumers 
B) an increase in the share of healthcare expenditures financed with low co-payment insurance 
C) allowing consumers to purchase healthcare insurance from out-of-state providers 
D) an increase in the tax benefits of purchasing healthcare through one's employer

Question 12

As the Medicare program is expanded to cover the cost of prescription drugs for the elderly,other things constant,this will lead to

Accepted Answer

A) an increase in demand and higher prices for prescription drugs. 
B) an increase in demand and lower prices for prescription drugs. 
C) reduction in demand and lower prices for prescription drugs. 
D) reduction in demand and higher prices for prescription drugs. 
A) an increase in demand and higher prices for prescription drugs. 
B) an increase in demand and lower prices for prescription drugs. 
C) reduction in demand and lower prices for prescription drugs. 
D) reduction in demand and higher prices for prescription drugs.

Question 13

Federal tax legislation makes it cheaper for individuals and families to pay for health care

Accepted Answer

A) by purchasing an insurance policy through their employer rather than paying for it directly with their own money. 
B) by purchasing an insurance policy through their employer rather than directly purchasing health insurance from the company of their choice. 
C) directly rather than through an insurance policy offered through their employer. 
D) by both a and b above. 
A) by purchasing an insurance policy through their employer rather than paying for it directly with their own money. 
B) by purchasing an insurance policy through their employer rather than directly purchasing health insurance from the company of their choice. 
C) directly rather than through an insurance policy offered through their employer. 
D) by both a and b above.

Question 14

Which of the following would help to avert a healthcare crisis?

Accepted Answer

A) requiring employers to pick up 100 percent of the healthcare costs for their employees 
B) discouraging medical savings accounts since these provide additional funds for medical care,and therefore,they are likely to drive up medical prices 
C) discouraging the purchase of health insurance plans with small co-payments 
D) structural changes that would increase the competitiveness of the health insurance and medical services markets 
A) requiring employers to pick up 100 percent of the healthcare costs for their employees 
B) discouraging medical savings accounts since these provide additional funds for medical care,and therefore,they are likely to drive up medical prices 
C) discouraging the purchase of health insurance plans with small co-payments 
D) structural changes that would increase the competitiveness of the health insurance and medical services markets

Question 15

Which of the following would increase the incentive of healthcare consumers to economize and help reduce the future growth of healthcare prices in the United States?

Accepted Answer

A) an increase in the share of healthcare costs paid for either directly or from personal medical savings accounts 
B) subsidies that would encourage consumers to purchase low co-payment insurance plans 
C) a new government program that would cover the cost of prescription drugs purchased by all healthcare consumers 
D) a reduction in the eligibility age for the coverage of Medicare from 65 to 55 years of age 
A) an increase in the share of healthcare costs paid for either directly or from personal medical savings accounts 
B) subsidies that would encourage consumers to purchase low co-payment insurance plans 
C) a new government program that would cover the cost of prescription drugs purchased by all healthcare consumers 
D) a reduction in the eligibility age for the coverage of Medicare from 65 to 55 years of age

Question 16

Which of the following would increase the incentive of consumers to economize and of producers to provide medical services at economical prices?

Accepted Answer

A) substitution of catastrophic health insurance plans for low deductible,low co-payment plans 
B) more reliance on medical savings accounts rather than insurance 
C) equalization of tax treatment between out-of-pocket medical expenses and employer-provided health insurance 
D) all of the above 
A) substitution of catastrophic health insurance plans for low deductible,low co-payment plans 
B) more reliance on medical savings accounts rather than insurance 
C) equalization of tax treatment between out-of-pocket medical expenses and employer-provided health insurance 
D) all of the above

Question 17

Which of the following would help control the future growth of healthcare prices and expenditures?

Accepted Answer

A) greater reliance on government financed healthcare reimbursement plans 
B) an increase in the share of healthcare expenditures financed with low co-payment insurance 
C) an increase in the share of healthcare cost paid for either directly or from personal medical savings accounts 
D) the finance of prescription drugs for the elderly with a low co-payment insurance plan under Medicare 
A) greater reliance on government financed healthcare reimbursement plans 
B) an increase in the share of healthcare expenditures financed with low co-payment insurance 
C) an increase in the share of healthcare cost paid for either directly or from personal medical savings accounts 
D) the finance of prescription drugs for the elderly with a low co-payment insurance plan under Medicare

Question 18

If governments provide free healthcare services,

Accepted Answer

A) this illustrates that governments can provide healthcare more economically than private firms. 
B) output and consumption of other goods will not be sacrificed. 
C) resources with alternative uses are allocated to healthcare and there is an opportunity cost of these resources. 
D) the opportunity cost of the resources used to supply healthcare is zero. 
A) this illustrates that governments can provide healthcare more economically than private firms. 
B) output and consumption of other goods will not be sacrificed. 
C) resources with alternative uses are allocated to healthcare and there is an opportunity cost of these resources. 
D) the opportunity cost of the resources used to supply healthcare is zero.

Question 19

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

Accepted Answer

A) equalizing the tax treatment of out-of-pocket medical expenses and the direct purchase of health insurance with that of health insurance purchased through an employer 
B) encouraging consumer use of health savings accounts and the direct payment of medical bills from the accounts 
C) encouraging the purchase of catastrophic health insurance and discouraging the purchase of policies with first-dollar coverage and small co-payments 
D) All of the reforms listed above could help to improve the situation. 
A) equalizing the tax treatment of out-of-pocket medical expenses and the direct purchase of health insurance with that of health insurance purchased through an employer 
B) encouraging consumer use of health savings accounts and the direct payment of medical bills from the accounts 
C) encouraging the purchase of catastrophic health insurance and discouraging the purchase of policies with first-dollar coverage and small co-payments 
D) All of the reforms listed above could help to improve the situation.

Question 20

Which of the following grew rapidly after the passage of the Medicare and Medicaid programs in the mid-1960s?

Accepted Answer

A) the share of healthcare expenditures financed directly by the consumer 
B) the share of healthcare expenditures financed by third parties 
C) the prices of healthcare relative to the prices of other goods and services 
D) both b and c 
A) the share of healthcare expenditures financed directly by the consumer 
B) the share of healthcare expenditures financed by third parties 
C) the prices of healthcare relative to the prices of other goods and services 
D) both b and c

Exam 37: The Economics of Healthcare

Which of the following is true?

Under the current structure of Medicare,economic theory indicates that the movement of the baby boom generation into the retirement phase of life during the years following 2011 will

In countries such as Canada that have socialized health care,the government operates hospitals,and health-care services are financed through tax revenue.In these countries,

Real expenditures on Medicare and Medicaid

What percentage of U.S.healthcare expenditures is currently paid for by a third party,either the government or an insurance company?

Which of the following is true?

Which of the following is fully tax deductible (it is either subtracted or excluded from taxable income)under the current tax system of the United States?

Special savings accounts that individuals would pay into and then use to pay for medical expenses (or use to purchase a catastrophic health insurance policy)are called

As the share of healthcare expenditures paid for by third parties has grown,both healthcare prices and total expenditures have increased rapidly.Is this surprising?

Economic theory suggests that controlling health-care costs through rules and regulations imposed by the government or another third party is generally

Which of the following would help control the future costs of healthcare?

As the Medicare program is expanded to cover the cost of prescription drugs for the elderly,other things constant,this will lead to

Federal tax legislation makes it cheaper for individuals and families to pay for health care

Which of the following would help to avert a healthcare crisis?

Which of the following would increase the incentive of healthcare consumers to economize and help reduce the future growth of healthcare prices in the United States?

Which of the following would increase the incentive of consumers to economize and of producers to provide medical services at economical prices?

Which of the following would help control the future growth of healthcare prices and expenditures?

If governments provide free healthcare services,

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

Which of the following grew rapidly after the passage of the Medicare and Medicaid programs in the mid-1960s?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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