Question 1

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.E) A) and B)
F) None of the above

Question 2

Which of the following was not mentioned in the book as a possible factor in increasing income inequality in the United States since 1968?

Accepted Answer

A)  increases in immigration
B)  growth in international trade
C)  technological change
D)  a reduction in the number of people attending collegeE) B) and D)
F) B) and C)

Question 3

Redistribution programs are means tested.To qualify for such a program, a person must demonstrate that:

Accepted Answer

A)  his or her family is larger than the mean family size for the country as a whole.
B)  his or her average (or mean)  family income has fallen (or not gone up)  during the past three years.
C)  he or she is making serious efforts to get a job, even though he or she is currently unemployed.
D)  his or her income (or means)  is below a certain specified level.E) All of the above
F) B) and C)

Question 4

Programs designed to provide benefits to people whose income falls below some minimum are called:

Accepted Answer

A)  means-tested programs.
B)  relative income programs.
C)  absolute income programs.
D)  nominal income programs.E) None of the above
F) A) and C)

Question 5

Progress in medical science has contributed to health care costs.

Accepted Answer

A)  increasing
B)  decreasing
C)  constant
D)  randomly fluctuatingE) A) and B)
F) C) and D)

Question 6

The provision of specific goods and services (rather than cash)  to needy people is:

Accepted Answer

A)  the income effect.
B)  the wealth effect.
C)  in-kind benefits.
D)  Rawlsian assistance.E) All of the above
F) A) and D)

Question 7

Insurance companies attempt to minimize adverse selection by:

Accepted Answer

A)  relying on the government to pay for health insurance.
B)  screening and employment-based health insurance.
C)  relying on the free market to allocate risk efficiently.
D)  charging high premiums to young, healthy people.E) C) and D)
F) B) and D)

Question 8

Some of the major causes of poverty are lack of education, bad luck, lack of English language proficiency, and:

Accepted Answer

A)  racial and gender discrimination.
B)  geographic region.
C)  differences in religious preference.
D)  government restrictions.E) B) and C)
F) All of the above

Question 9

A negative income tax is a type of tax structure that taxes firms even if they have negative income.True

Accepted Answer

A) True 
 B)False

Question 10

Studies of family income over time reveal that:

Accepted Answer

A)  most people in the lowest quintile tend to stay there over 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.E) A) and D)
F) B) and D)

Question 11

A high-income household is taxed a certain amount of money.A low-income household receives financial assistance in the same amount from government.The marginal dollar of the financial assistance to the family and the taxes paid by the high-income family are:

Accepted Answer

A)  the same, since it is the same amount of money.
B)  different, since the marginal dollar is worth more to the low-income family.
C)  different, since the high-income family will find the marginal dollars lost will keep them from buying necessities.
D)  unimportant in determining the impact of this plan on the welfare state.E) None of the above
F) C) and D)

Question 12

Children in low-income families which can't afford insurance are covered by:

Accepted Answer

A)  Medicare.
B)  Medicaid.
C)  SCHIP (State Children's Insurance Health Program) 
D)  the Veteran's Administration.E) A) and C)
F) None of the above

Question 13

Private health insurance is funded by:

Accepted Answer

A)  the government.
B)  tax contributions to Medicare.
C)  people who are extremely ill who pay very high premiums.
D)  members of a large pool of individuals, each paying a fixed premium to a private company that agrees to pay most of the medical expenses of the members.E) None of the above
F) All of the above

Question 14

Among the reasons for a welfare state is a desire to alleviate income inequality and to:

Accepted Answer

A)  achieve economic equality for all households.
B)  eliminate poverty.
C)  alleviate economic insecurity.
D)  maintain economic fairness.E) B) and C)
F) A) and B)

Question 15

People with more education have a lower poverty rate.False

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a leading cause of poverty in the United States?

Accepted Answer

A)  lack of adequate employment
B)  lack of education
C)  the welfare system
D)  discriminationE) B) and D)
F) A) and B)

Question 17

A definition of poverty that compares the individual's level of income with the level of income received by other individuals in the country:

Accepted Answer

A)  is an absolute measure of poverty.
B)  would show that poverty has remained constant in the United States for the past 50 years.
C)  is a relative measure of poverty.
D)  is a relatively little used measure.E) All of the above
F) A) and B)

Question 18

Community rating is a regulation that requires:

Accepted Answer

A)  cities to give ratings to movies shown in local theaters.
B)  insurance companies to offer the same policies for the same premium to everyone, regardless of medical history.
C)  insurance companies to charge higher premiums to healthy people.
D)  insurance companies to charge higher premiums to the sickest people in the community.E) None of the above
F) A) and C)

Question 19

If a nation's Gini coefficient is rising over time, it is an indicator of:

Accepted Answer

A)  an increase in the poverty rate.
B)  a decrease in the poverty rate.
C)  an increase in income inequality.
D)  a decrease in income inequality.E) A) and D)
F) C) and D)

Question 20

People may be uninsured for all of the following reasons except that:

Accepted Answer

A)  their employer does not provide health insurance.
B)  they are too old to qualify for health insurance.
C)  they are relatively healthy and choose to save their money rather than buy insurance.
D)  they are unemployed and can't afford to purchase insurance.E) A) and C)
F) None of the above

Exam 18: The Economics of the Welfare State

Studies of family income over time reveal that:

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Community rating is a regulation that requires:

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Redistribution programs are means tested.To qualify for such a program, a person must demonstrate that:

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Programs designed to provide benefits to people whose income falls below some minimum are called:

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If a nation's Gini coefficient is rising over time, it is an indicator of:

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Insurance companies attempt to minimize adverse selection by:

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Some of the major causes of poverty are lack of education, bad luck, lack of English language proficiency, and:

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Which of the following is not a leading cause of poverty in the United States?

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

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Private health insurance is funded by:

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Progress in medical science has contributed to health care costs.

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Among the reasons for a welfare state is a desire to alleviate income inequality and to:

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People may be uninsured for all of the following reasons except that:

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Children in low-income families which can't afford insurance are covered by:

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A definition of poverty that compares the individual's level of income with the level of income received by other individuals in the country:

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Which of the following was not mentioned in the book as a possible factor in increasing income inequality in the United States since 1968?

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The provision of specific goods and services (rather than cash) to needy people is:

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People with more education have a lower poverty rate.False

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A negative income tax is a type of tax structure that taxes firms even if they have negative income.True

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A high-income household is taxed a certain amount of money.A low-income household receives financial assistance in the same amount from government.The marginal dollar of the financial assistance to the family and the taxes paid by the high-income family are:

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