Question 1

The purpose of the Supplemental Security Income program is

Accepted Answer

A)  to provide a minimum income for all households with children. 
B)  to provide a guaranteed minimum income for all Americans. 
C)  to provide a minimum income for the aged, blind, and the disabled. 
D)  to supplement Social Security for the elderly with medical problems. 
A)  to provide a minimum income for all households with children. 
B)  to provide a guaranteed minimum income for all Americans. 
C)  to provide a minimum income for the aged, blind, and the disabled. 
D)  to supplement Social Security for the elderly with medical problems.

Question 2

One problem with third-party financing of health care is that

Accepted Answer

A)  people have more incentive to utilize health care. 
B)  demand falls so that suppliers cannot take advantage of economies of scale. 
C)  it reduces the quality of health care people receive. 
D)  it discourages people from relying on their physicians' advice in making health care decisions. 
A)  people have more incentive to utilize health care. 
B)  demand falls so that suppliers cannot take advantage of economies of scale. 
C)  it reduces the quality of health care people receive. 
D)  it discourages people from relying on their physicians' advice in making health care decisions.

Question 3

Many argue the poor are getting poorer, at least in a relative sense. Evidence that contradicts this is that

Accepted Answer

A)  household income of the lowest twenty percent of households relative to the highest twenty percent of households has fallen over the last thirty years. 
B)  the official poverty level of income has increased over the years. 
C)  household spending of the lowest twenty percent of households relative to the highest twenty percent of households has held constant over the last thirty years. 
D)  the pretax distribution of income is more equal than the after-tax distribution of income. 
A)  household income of the lowest twenty percent of households relative to the highest twenty percent of households has fallen over the last thirty years. 
B)  the official poverty level of income has increased over the years. 
C)  household spending of the lowest twenty percent of households relative to the highest twenty percent of households has held constant over the last thirty years. 
D)  the pretax distribution of income is more equal than the after-tax distribution of income.

Question 4

Since World War II, the share of total income going to the bottom 20 percent of U.S. households has

Accepted Answer

A)  fallen by 20 percent. 
B)  increased by 10 percent. 
C)  remained constant. 
D)  more than doubled. 
A)  fallen by 20 percent. 
B)  increased by 10 percent. 
C)  remained constant. 
D)  more than doubled.

Question 5

The regular earnings profile of an individual throughout his or her lifetime is

Accepted Answer

A)  the Lorenz curve. 
B)  the age-earnings cycle. 
C)  wealth. 
D)  income-in-kind. 
A)  the Lorenz curve. 
B)  the age-earnings cycle. 
C)  wealth. 
D)  income-in-kind.

Question 6

In a competitive economy, workers will be paid according to their

Accepted Answer

A)  status. 
B)  age. 
C)  marginal productivity. 
D)  need. 
A)  status. 
B)  age. 
C)  marginal productivity. 
D)  need.

Question 7

Which program provides assistance to the aged, blind and disabled?

Accepted Answer

A)  Social Security Program 
B)  Supplemental Security Income program 
C)  TANF 
D)  Earned Income Tax Credit 
A)  Social Security Program 
B)  Supplemental Security Income program 
C)  TANF 
D)  Earned Income Tax Credit

Question 8

The Social Security system is a(n)

Accepted Answer

A)  ad valorem system. 
B)  ability to pay system. 
C)  progressive tax system. 
D)  pay-as-you-go system. 
A)  ad valorem system. 
B)  ability to pay system. 
C)  progressive tax system. 
D)  pay-as-you-go system.

Question 9

When measuring the benefits from investing in human capital

Accepted Answer

A)  the only benefits come from the increase in salary because of going to school. 
B)  in addition to the monetary benefits, the benefit from expanding horizons should be included. 
C)  we must include the costs of tuition and books but not the money made from part-time jobs. 
D)  we must include the foregone earnings in the benefit calculation. 
A)  the only benefits come from the increase in salary because of going to school. 
B)  in addition to the monetary benefits, the benefit from expanding horizons should be included. 
C)  we must include the costs of tuition and books but not the money made from part-time jobs. 
D)  we must include the foregone earnings in the benefit calculation.

Question 10

The way income is allocated among the population is called the

Accepted Answer

A)  income curve. 
B)  income spread. 
C)  distribution of income. 
D)  Gini allocation. 
A)  income curve. 
B)  income spread. 
C)  distribution of income. 
D)  Gini allocation.

Question 11

Approximately how much of aggregate national income in the United States is spent on health care every year since 2000?

Accepted Answer

A)  5 percent 
B)  10 percent 
C)  15 percent 
D)  30 percent 
A)  5 percent 
B)  10 percent 
C)  15 percent 
D)  30 percent

Question 12

The belief that everyone should have exactly the same amount of income is

Accepted Answer

A)  merit standard. 
B)  comparable-worth doctrine. 
C)  egalitarian principle. 
D)  Lorenz principle. 
A)  merit standard. 
B)  comparable-worth doctrine. 
C)  egalitarian principle. 
D)  Lorenz principle.

Question 13

Since the War on Poverty was started in 1965, the United States has spent more than $12 trillion on income maintenance programs. The effect has been to

Accepted Answer

A)  reduce poverty levels substantially. 
B)  reduce poverty levels moderately. 
C)  have virtually no effect on poverty levels. 
D)  increase poverty substantially. 
A)  reduce poverty levels substantially. 
B)  reduce poverty levels moderately. 
C)  have virtually no effect on poverty levels. 
D)  increase poverty substantially.

Question 14

Which of the following is a reason for economic discrimination to occur?

Accepted Answer

A)  differences in access to education 
B)  differences in gender 
C)  differences in the quality of education 
D)  barriers to entry in higher-paying occupations 
A)  differences in access to education 
B)  differences in gender 
C)  differences in the quality of education 
D)  barriers to entry in higher-paying occupations

Question 15

The productivity standard for the distribution of income can be thought of as

Accepted Answer

A)  rewarding people according to their ability to produce useful goods. 
B)  benefiting only the least productive worker. 
C)  proving that egalitarians are correct. 
D)  rewarding only the wealthy. 
A)  rewarding people according to their ability to produce useful goods. 
B)  benefiting only the least productive worker. 
C)  proving that egalitarians are correct. 
D)  rewarding only the wealthy.

Question 16

One reason some economists are critical of the Lorenz curve is because

Accepted Answer

A)  it reflects income before taxes. 
B)  it reflects income after taxes. 
C)  it reflects only the top bracket of taxpayers. 
D)  it reflects only the poor in the country. 
A)  it reflects income before taxes. 
B)  it reflects income after taxes. 
C)  it reflects only the top bracket of taxpayers. 
D)  it reflects only the poor in the country.

Question 17

The Social Security system is financed by

Accepted Answer

A)  a tax on individual retirement accounts. 
B)  a payroll tax paid only by employers. 
C)  a payroll tax paid by both employers and employees. 
D)  a tax on luxury goods. 
A)  a tax on individual retirement accounts. 
B)  a payroll tax paid only by employers. 
C)  a payroll tax paid by both employers and employees. 
D)  a tax on luxury goods.

Question 18

According to the text, the lower half of U.S. households earn about what percentage of total income?

Accepted Answer

A)  4 percent 
B)  9 percent 
C)  15 percent 
D)  28 percent 
A)  4 percent 
B)  9 percent 
C)  15 percent 
D)  28 percent

Question 19

In insurance markets, moral hazard occurs when the behavior of

Accepted Answer

A)  the insured person changes in a way that raises costs for the insurer, since the insured person no longer bears the full costs of that behavior. 
B)  the insurer changes in a way that raises costs for the insured person, since the insurer no longer bears the full costs of that behavior. 
C)  the insured person changes in a way that eliminates rising health care costs for the insurer, since the insured person no longer bears the full costs of that behavior. 
D)  the insured person has an incentive to under consume medical services, simply because the insured person no longer bears the full cost of medical services. 
A)  the insured person changes in a way that raises costs for the insurer, since the insured person no longer bears the full costs of that behavior. 
B)  the insurer changes in a way that raises costs for the insured person, since the insurer no longer bears the full costs of that behavior. 
C)  the insured person changes in a way that eliminates rising health care costs for the insurer, since the insured person no longer bears the full costs of that behavior. 
D)  the insured person has an incentive to under consume medical services, simply because the insured person no longer bears the full cost of medical services.

Question 20

If income were distributed according to the egalitarian principle of "to each exactly the same," then one problem would be that

Accepted Answer

A)  there would be little or no incentive for individuals to take risky, hazardous, or unpleasant jobs. 
B)  individuals would have an excess desire to invest in their own human capital. 
C)  too many individuals would want to take risky jobs. 
D)  productivity levels would probably become too high. 
A)  there would be little or no incentive for individuals to take risky, hazardous, or unpleasant jobs. 
B)  individuals would have an excess desire to invest in their own human capital. 
C)  too many individuals would want to take risky jobs. 
D)  productivity levels would probably become too high.

Exam 30: Income, Poverty, and Health Care

The purpose of the Supplemental Security Income program is

One problem with third-party financing of health care is that

Many argue the poor are getting poorer, at least in a relative sense. Evidence that contradicts this is that

Since World War II, the share of total income going to the bottom 20 percent of U.S. households has

The regular earnings profile of an individual throughout his or her lifetime is

In a competitive economy, workers will be paid according to their

Which program provides assistance to the aged, blind and disabled?

The Social Security system is a(n)

When measuring the benefits from investing in human capital

The way income is allocated among the population is called the

Approximately how much of aggregate national income in the United States is spent on health care every year since 2000?

The belief that everyone should have exactly the same amount of income is

Since the War on Poverty was started in 1965, the United States has spent more than $12 trillion on income maintenance programs. The effect has been to

Which of the following is a reason for economic discrimination to occur?

The productivity standard for the distribution of income can be thought of as

One reason some economists are critical of the Lorenz curve is because

The Social Security system is financed by

According to the text, the lower half of U.S. households earn about what percentage of total income?

In insurance markets, moral hazard occurs when the behavior of

If income were distributed according to the egalitarian principle of "to each exactly the same," then one problem would be that

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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