Question 1

Which of the following is TRUE with respect to disability insurance?

Accepted Answer

A)  Disability insurance provides compensation to workers injured on the job until they can return to work. 
B)  Workers can file for disability benefits even if they have no medical documentation. 
C)  States set the level of disability benefits. 
D)  Disability benefits are funded by a separate payroll tax. 
A)  Disability insurance provides compensation to workers injured on the job until they can return to work. 
B)  Workers can file for disability benefits even if they have no medical documentation. 
C)  States set the level of disability benefits. 
D)  Disability benefits are funded by a separate payroll tax. D

Question 2

There is evidence of moral hazard if,after a workers' compensation program is introduced:

Accepted Answer

A)  the incidence of injuries falls. 
B)  there is no change in the incidence of injuries. 
C)  there are more injuries that are easy to prove. 
D)  there are more injuries that are difficult to prove. 
A)  the incidence of injuries falls. 
B)  there is no change in the incidence of injuries. 
C)  there are more injuries that are easy to prove. 
D)  there are more injuries that are difficult to prove. D

Question 3

Which of the following is NOT true with respect to disability insurance (DI)?

Accepted Answer

A)  Individuals cannot receive benefits until they have been disabled for 12 consecutive months. 
B)  If granted,workers receive the same amount they would have received if they retired at the Full Benefit Age of 66 under the Social Security program. 
C)  The DI program provides insurance against career-ending disabilities. 
D)  The DI acceptance rate-the share of those applying who are accepted into the program-is only about one-third. 
A)  Individuals cannot receive benefits until they have been disabled for 12 consecutive months. 
B)  If granted,workers receive the same amount they would have received if they retired at the Full Benefit Age of 66 under the Social Security program. 
C)  The DI program provides insurance against career-ending disabilities. 
D)  The DI acceptance rate-the share of those applying who are accepted into the program-is only about one-third. A

Question 4

An increase in incidences of__________ when workers' compensation is available is consistent with a moral hazard issue

Accepted Answer

A)  missing limbs 
B)  back strain 
C)  deep cuts 
D)  broken bones 
A)  missing limbs 
B)  back strain 
C)  deep cuts 
D)  broken bones

Question 5

Which of the following is TRUE with respect to workers' compensation?

Accepted Answer

A)  When there is a qualifying injury,benefits are paid out whether the injury was the worker's or the firm's fault. 
B)  When there is a qualifying injury,benefits are only paid out if the injury was the firm's fault,as established in court. 
C)  When there is a qualifying injury,benefits are only paid out if the injury was the firm's fault,as established by a committee paid by the federal government. 
D)  When there is a qualifying injury,fewer benefits are paid out if the injury was the worker's fault than if it were the firm's fault. 
A)  When there is a qualifying injury,benefits are paid out whether the injury was the worker's or the firm's fault. 
B)  When there is a qualifying injury,benefits are only paid out if the injury was the firm's fault,as established in court. 
C)  When there is a qualifying injury,benefits are only paid out if the injury was the firm's fault,as established by a committee paid by the federal government. 
D)  When there is a qualifying injury,fewer benefits are paid out if the injury was the worker's fault than if it were the firm's fault.

Question 6

Which type of insurance is NOT publicly provided?

Accepted Answer

A)  workers' compensation 
B)  unemployment insurance 
C)  disability insurance 
D)  Medicare 
A)  workers' compensation 
B)  unemployment insurance 
C)  disability insurance 
D)  Medicare

Question 7

How does unemployment insurance in the United States compare with that provided by European countries? Be sure to answer in terms of both benefits and funding.

Accepted Answer

In European countries,unemployment benef

Question 8

Which of the following is TRUE?

Accepted Answer

A)  The unemployment insurance program is fully experience-rated. 
B)  The unemployment insurance program is partially experience-rated. 
C)  The unemployment insurance program is not experience-rated. 
D)  Firms pay an additional tax each time they lay off a worker. 
A)  The unemployment insurance program is fully experience-rated. 
B)  The unemployment insurance program is partially experience-rated. 
C)  The unemployment insurance program is not experience-rated. 
D)  Firms pay an additional tax each time they lay off a worker.

Question 9

In general,which of the following is TRUE about unemployment benefits?

Accepted Answer

A)  Benefits received are based on the average earnings in the recipient's state. 
B)  Benefits received are based on the previous earnings of each recipient. 
C)  The replacement rate is lower for low-income workers than for high-income workers. 
D)  Benefits are reduced for workers who file multiple claims. 
A)  Benefits received are based on the average earnings in the recipient's state. 
B)  Benefits received are based on the previous earnings of each recipient. 
C)  The replacement rate is lower for low-income workers than for high-income workers. 
D)  Benefits are reduced for workers who file multiple claims.

Question 10

Explain how the benefits and costs of unemployment insurance are related to the duration of unemployment.

Accepted Answer

The benefit of unemployment insurance is

Question 11

The moral hazard problem associated with unemployment insurance (UI)results in:

Accepted Answer

A)  a reduction in the number of workers who are eligible for UI. 
B)  an increase in the average duration of unemployment. 
C)  an increase in the average amount of weekly benefits. 
D)  a reduction in the number of firms participating in the program. 
A)  a reduction in the number of workers who are eligible for UI. 
B)  an increase in the average duration of unemployment. 
C)  an increase in the average amount of weekly benefits. 
D)  a reduction in the number of firms participating in the program.

Question 12

Suppose that you want to determine the extent to which disability insurance (DI)prevents people's working who,in the absence of the program,would have worked.You do this by employing the cross-sectional regression analysis technique described in Chapter 3 and comparing the work histories of those receiving DI with those who are not receiving DI benefits,controlling for observable characteristics.
(a)Is this method likely to be sufficient? Explain.
(b)Bound (1989)studied the moral hazard of disability insurance by examining the employment histories of workers who applied for benefits but were denied them,and then comparing their employment with the employment records of individuals who received disability insurance benefits. (This is a quasi-experimental approach.)How does this approach compare with that described in part a?

Accepted Answer

(a)No,since there are also unobserved ch

Question 13

Which of the following is NOT true with respect to the three-way comparison of unemployment insurance (UI),disability insurance (DI),and workers' compensation (WC)?

Accepted Answer

A)  The replacement rate is the highest for WC because benefits are not taxable. 
B)  Benefits are indefinite for DI and WC,subject to medical verification. 
C)  Verification is the most difficult for WC. 
D)  The qualifying events for DI and WC are essentially the same. 
A)  The replacement rate is the highest for WC because benefits are not taxable. 
B)  Benefits are indefinite for DI and WC,subject to medical verification. 
C)  Verification is the most difficult for WC. 
D)  The qualifying events for DI and WC are essentially the same.

Question 14

Which of the following benefits are taxed as regular income by the federal government?

Accepted Answer

A)  workers' compensation 
B)  unemployment insurance 
C)  disability insurance 
D)  food stamps 
A)  workers' compensation 
B)  unemployment insurance 
C)  disability insurance 
D)  food stamps

Question 15

Suppose that someone gets a large cut from sheet metal while hanging sheet metal on a paint line.The workers' compensation program would pay for the:

Accepted Answer

A)  medical expenses associated with treating the cut. 
B)  medical expenses only if the worker can prove that the accident was not her fault. 
C)  cost of a new health insurance policy if the worker becomes unemployed. 
D)  monetary value of the pain and suffering experienced by the worker. 
A)  medical expenses associated with treating the cut. 
B)  medical expenses only if the worker can prove that the accident was not her fault. 
C)  cost of a new health insurance policy if the worker becomes unemployed. 
D)  monetary value of the pain and suffering experienced by the worker.

Question 16

With respect to disability insurance,the decision for qualification is made at the _____ level,and the level of benefits is mandated at the _____ level.

Accepted Answer

A)  state; federal 
B)  federal; state 
C)  state; state 
D)  federal; federal 
A)  state; federal 
B)  federal; state 
C)  state; state 
D)  federal; federal

Question 17

Which of the following could be TRUE given the relationship between a firm's layoffs and its payroll tax for unemployment insurance relative to those of an average firm?

Accepted Answer

A)  Firms with twice as many layoffs pay twice as much in payroll taxes. 
B)  Firms with twice as many layoffs relative to the average firm pay 50% less in payroll taxes than the average firm. 
C)  Firms with twice as many layoffs pay 40% more in payroll taxes than the average firm. 
D)  Firms with twice as many layoffs pay more than twice as much in payroll taxes. 
A)  Firms with twice as many layoffs pay twice as much in payroll taxes. 
B)  Firms with twice as many layoffs relative to the average firm pay 50% less in payroll taxes than the average firm. 
C)  Firms with twice as many layoffs pay 40% more in payroll taxes than the average firm. 
D)  Firms with twice as many layoffs pay more than twice as much in payroll taxes.

Question 18

Unless the federal government passes specific legislation to change it,unemployment benefits are:

Accepted Answer

A)  extended to workers only during times when the economy is officially in recession. 
B)  extended to workers only in states with an unemployment rate above the national average. 
C)  available for a maximum of 26 weeks. 
D)  available for a maximum of 99 weeks. 
A)  extended to workers only during times when the economy is officially in recession. 
B)  extended to workers only in states with an unemployment rate above the national average. 
C)  available for a maximum of 26 weeks. 
D)  available for a maximum of 99 weeks.

Question 19

Suppose that Firm A has a low layoff rate while Firm B has a high layoff rate.Assume both of the firms employ the same number of workers on average.Under the current unemployment insurance program:

Accepted Answer

A)  both firms pay the same amount of unemployment insurance. 
B)  firm B subsidizes the layoffs of Firm A. 
C)  firm A subsidizes the layoffs of Firm B. 
D)  the average unemployment benefit to Firm B workers is reduced. 
A)  both firms pay the same amount of unemployment insurance. 
B)  firm B subsidizes the layoffs of Firm A. 
C)  firm A subsidizes the layoffs of Firm B. 
D)  the average unemployment benefit to Firm B workers is reduced.

Question 20

Which of the following is TRUE?

Accepted Answer

A)  The moral hazard associated with giving disability benefits to blind people is greater than that associated with giving disability benefits for back sprains. 
B)  Higher benefits should be paid out to people with easily verifiable disabilities than to those with disabilities that are not easily verifiable,since the moral hazard costs are lower for the former group. 
C)  The consumption-smoothing benefits of unemployment insurance are greater for those who regularly experience temporary unemployment than for those who do not. 
D)  The consumption-smoothing benefits of unemployment insurance cannot be achieved privately because workers cannot anticipate periods of unemployment. 
A)  The moral hazard associated with giving disability benefits to blind people is greater than that associated with giving disability benefits for back sprains. 
B)  Higher benefits should be paid out to people with easily verifiable disabilities than to those with disabilities that are not easily verifiable,since the moral hazard costs are lower for the former group. 
C)  The consumption-smoothing benefits of unemployment insurance are greater for those who regularly experience temporary unemployment than for those who do not. 
D)  The consumption-smoothing benefits of unemployment insurance cannot be achieved privately because workers cannot anticipate periods of unemployment.

Exam 14: Unemployment Insurance, disability Insurance, and Workers Compensation

Which of the following is TRUE with respect to disability insurance?

There is evidence of moral hazard if,after a workers' compensation program is introduced:

Which of the following is NOT true with respect to disability insurance (DI)?

An increase in incidences of__________ when workers' compensation is available is consistent with a moral hazard issue

Which of the following is TRUE with respect to workers' compensation?

Which type of insurance is NOT publicly provided?

How does unemployment insurance in the United States compare with that provided by European countries? Be sure to answer in terms of both benefits and funding.

Which of the following is TRUE?

In general,which of the following is TRUE about unemployment benefits?

Explain how the benefits and costs of unemployment insurance are related to the duration of unemployment.

The moral hazard problem associated with unemployment insurance (UI)results in:

Which of the following is NOT true with respect to the three-way comparison of unemployment insurance (UI),disability insurance (DI),and workers' compensation (WC)?

Which of the following benefits are taxed as regular income by the federal government?

Suppose that someone gets a large cut from sheet metal while hanging sheet metal on a paint line.The workers' compensation program would pay for the:

With respect to disability insurance,the decision for qualification is made at the _____ level,and the level of benefits is mandated at the _____ level.

Which of the following could be TRUE given the relationship between a firm's layoffs and its payroll tax for unemployment insurance relative to those of an average firm?

Unless the federal government passes specific legislation to change it,unemployment benefits are:

Suppose that Firm A has a low layoff rate while Firm B has a high layoff rate.Assume both of the firms employ the same number of workers on average.Under the current unemployment insurance program:

Which of the following is TRUE?

Why Study Public Finance

Theoretical Tools of Public Finance

Empirical Tools of Public Finance

Budget Analysis and Deficit Financing

Externalities- Problems and Solutions

Externalities in Action- Environmental and Health Externalities

Public Goods

Cost-Benefit Analysis

Political Economy

State and Local Government Expenditures

Education

Social Insurance- the New Function of Government

Social Security

Health Insurance I- Health Economics and Private Health Insurance

Health Insurance Ii- Medicare, medicaid, and Health Care Reform

Income Distribution and Welfare Programs

Taxation- How It Works and What It Means

The Equity Implications of Taxation- Tax Incidence

Taxes on Labor Supply

Taxes on Savings

Taxes on Risk Taking and Wealth

Taxation of Business Income

Fundamental Tax Reform and Consumption Tax

Filters

With respect to disability insurance,the decision for qualification is made at the _ level,and the level of benefits is mandated at the _ level.