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Name: __________________________ Date: _____________
1.
Government payments to individuals for which no good or service is exchanged are:
A)
spending.
B)
purchases.
C)
spending on goods and services.
D)
transfer payments.
2.
Which transaction is a transfer payment?
A)
The government pays an employee by making a direct transfer to the employee’s
bank account.
B)
An army officer transfers part of her pay to the government to pay her taxes.
C)
A senior citizen receives a Social Security payment.
D)
Government spends additional funds on infrastructure.
3.
An example of a social insurance program is:
A)
expenditure on national defense.
B)
Social Security payments to the disabled.
C)
the food stamp program.
D)
purchasing a new city police car.
4.
Which example BEST illustrates social insurance?
A)
liability insurance for automobiles
B)
food stamps
C)
housing subsidies
D)
Social Security
5.
Children raised in poverty are more likely to live in poverty as adults than are other
children because low income is highly correlated with:
I. higher high school dropout rates.
II. a greater risk of mental problems and behavioral disorders.
III. higher rates of illness and hospitalization.
A)
I only
B)
II only
C)
III only
D)
I, II, and III
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6.
Given that the definition of poverty has not been adjusted to reflect the long-term rise in
average incomes, you would expect _____ in the percentage of the population living
below the poverty line.
A)
a decrease
B)
an increase
C)
no change
D)
It is impossible to determine how the percentage of the population living in poverty
might change.
7.
Which factor is NOT a leading cause of poverty in the United States?
A)
lack of adequate employment
B)
lack of education
C)
the welfare system
D)
discrimination
8.
Which factor is NOT a major cause of poverty in the United States?
A)
inadequate educational attainment
B)
discrimination
C)
lack of adequate health coverage
D)
welfare
9.
The percentage of the population that falls below the poverty threshold is called the:
A)
poor rate.
B)
poverty rate.
C)
homeless rate.
D)
absolute number of people in poverty.
10.
In 2015, _____ of the U.S. population was living in poverty.
A)
approximately 13%
B)
20% to 24%
C)
25% to 29%
D)
more than 30%
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11.
Which factor is/are associated with poverty?
I. lack of adequate employment
II. lack of education
III. lack of proficiency in English
A)
I and II only
B)
I and III only
C)
II and III only
D)
I, II, and III
12.
The poverty threshold is adjusted each year to reflect:
A)
changes in the cost of living.
B)
changes in the size of the average family.
C)
the long-term rise in the average standard of living.
D)
changes in the cost of living and changes in the size of the average family.
13.
In 2015, which demographic group had the HIGHEST poverty rate?
A)
African-Americans
B)
Hispanics
C)
Whites
D)
female-headed families with no husband present
14.
In 2016, the poverty threshold for a household with one person was:
A)
$11,880.
B)
$21,100.
C)
$24,300.
D)
$38,000.
15.
America’s Gini coefficient is _____ than that of most _____ nations.
A)
higher; developing
B)
higher; other wealthy
C)
just a little lower; other wealthy
D)
not lower; developing
16.
During the past 25 years, the degree of income inequality in the United States has been
rising. Which factor is NOT a possible reason for this phenomenon?
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
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17.
Economists believe that looking at the distribution of income by quintiles at one
moment overstates the true inequality of income because:
A)
it ignores the effect of taxes.
B)
it ignores the effect of transfer payments.
C)
families near the bottom of the distribution in any given year may be having an
unusually bad year, while those at the top may be having an unusually good one.
D)
families near the bottom of the distribution in any given year are often having an
unusually good year, while those at the top are often having an unusually bad one.
18.
Studies of family income over time reveal that:
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.
19.
The _____ is widely used to measure income inequality.
A)
Gini coefficient
B)
median household income
C)
poverty rate
D)
ability-to-pay principle
20.
The _____ identifies the level of income at which half of the households in the
population earn more and half of the population earns less.
A)
median household income
B)
mean household income
C)
poverty level
D)
Gini coefficient
21.
If a nation’s Gini coefficient is rising over time, it is an indicator of a(n):
A)
increase in the poverty rate.
B)
decrease in the poverty rate.
C)
increase in income inequality.
D)
decrease in income inequality.
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22.
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 _____.
A)
increased; increased
B)
not changed; increased
C)
increased; not changed
D)
not changed; not changed
23.
Over the past two decades, the share of income going to the richest Americans has
_____ than the share going to the poorest Americans.
A)
risen faster
B)
risen more slowly
C)
fallen faster
D)
fallen more slowly
24.
In the United States in the first two decades following World War II:
A)
income distribution became less equal.
B)
income-equality measures stayed the same.
C)
income distribution became more equal.
D)
there was no way to determine income distribution.
25.
In the United States since World War II, the distribution of income has:
A)
become more nearly equal.
B)
become more unequal.
C)
stayed about the same.
D)
changed first toward equality and then, after 1968, toward greater inequality.
26.
Which factor was NOT mentioned in the textbook as possibly increasing income
inequality in the United States since 1968?
A)
increases in immigration
B)
growth in international trade
C)
technological change
D)
a reduction in the number of people attending college
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27.
A factor that has been associated with the increase in income inequality in the United
States is:
A)
the growth in technology.
B)
the reduction in the percentage of the population over the age of 65.
C)
the smaller gap between the wages of skilled and unskilled workers.
D)
affirmative action programs.
28.
A factor that has been associated with the increase in income inequality in the United
States is the:
A)
decrease in households headed by single women.
B)
reduction in the percentage of the population over age 65.
C)
increase in immigration.
D)
slowdown in technological change.
29.
Which factor is one that has been associated with the increase in income inequality in
the United States?
A)
a decrease in households headed by single women
B)
a reduction in the percentage of the population over age 65
C)
a smaller gap between the wages of skilled and unskilled workers
D)
the way technological change has affected labor demand
30.
A popular choice for the MOST important cause of the increase in income inequality in
recent years is:
A)
the elimination of many income redistribution programs.
B)
rapid technological change.
C)
the failing education system.
D)
the failing education system and rapid technological change.
31.
Food stamps, Medicaid, and housing subsidies are all:
A)
negative income taxes.
B)
unemployment benefits.
C)
in-kind transfers.
D)
part of the Temporary Assistance for Needy Families program.
32.
A _____ program is one for which the recipient qualifies on the basis of _____.
A)
social insurance; income
B)
means-tested; age
C)
means-tested; income
D)
social insurance; need
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33.
Which program provides in-kind transfers?
A)
the Earned Income Tax Credit
B)
Temporary Assistance for Needy Families
C)
Social Security
D)
Medicaid
34.
Redistribution programs are means-tested. To qualify for such a program, a person must
demonstrate that:
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)
though unemployed, he or she is making serious efforts to get a job.
D)
his or her income (or means) is below a certain specified level.
35.
Which U.S. welfare program is an in-kind benefit that is NOT means-tested?
A)
Medicaid
B)
Medicare
C)
food stamps
D)
Social Security income
36.
When a welfare program is provided to those whose income falls below some minimum,
it is said to be:
A)
means-tested.
B)
an in-kind benefit.
C)
a monetary benefit.
D)
a negative income tax.
37.
Food stamps are an example of:
A)
a negative income tax.
B)
an in-kind benefit.
C)
a monetary benefit.
D)
unemployment insurance.
38.
Measured by the amount of money spent by the U.S. government, which U.S. welfare
program is the LARGEST?
A)
food stamps
B)
unemployment insurance
C)
Medicare
D)
Social Security
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39.
_____ programs are designed to provide benefits to people whose income falls below
some minimum.
A)
Means-tested
B)
Relative income
C)
Absolute income
D)
Nominal income
40.
The provision of specific goods and services (rather than cash) to needy people by way
of welfare programs is:
A)
the income effect.
B)
the wealth effect.
C)
in-kind benefits.
D)
Rawlsian assistance.
41.
The largest _____ program in the United States is _____.
A)
social insurance; Medicaid
B)
social insurance; Social Security payments to retired persons
C)
means-tested; farmers’ aid
D)
means-tested; Social Security payments to retired persons
42.
The negative income tax:
A)
describes a badly designed tax system.
B)
is a system in which low incomes are taxed at a higher rate than are high incomes.
C)
is a program in which low-income working families receive income supplements,
rather than having to pay taxes.
D)
is the minimum tax that must be paid by a business, even if it has a negative
income (or a loss).
43.
Compared with a generation ago, the monetary benefits from public aid programs,
adjusted for inflation, are:
A)
zero.
B)
lower.
C)
higher.
D)
about the same.
44.
_____ is a means-tested program.
A)
Expenditure on national defense
B)
Social Security payments to the disabled
C)
The food stamp program
D)
Purchasing a new city police car
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45.
Critics of Aid to Families with Dependent Children argue that it creates perverse
incentives such as:
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)
a reward for not seeking work, and the abandonment of children.
46.
Which U.S. welfare program is a means-tested, in-kind benefit?
A)
Social Security
B)
Temporary Assistance to Needy Families
C)
food stamps
D)
unemployment insurance
47.
_____ is/are a means-tested monetary benefit in a welfare program.
A)
Food stamps
B)
Medicaid
C)
Temporary Assistance for Needy Families
D)
Unemployment insurance
48.
Which program is NOT an antipoverty program?
A)
the Earned Income Tax Credit
B)
Temporary Assistance for Needy Families
C)
Social Security
D)
Medicaid
49.
Which U.S. welfare program is a monetary benefit that is NOT means-tested?
A)
Earned Income Tax Credit
B)
Social Security
C)
food stamps
D)
Medicaid
50.
In most wealthy countries, excluding the United States, the government pays _____ of
medical costs.
A)
100%
B)
70% to 80%
C)
30% to 40%
D)
less than 20%
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51.
In the United States, the government pays _____ of all medical costs.
A)
100%
B)
between 70% and 80%
C)
approximately 50%
D)
less than 20%
52.
In the United States, individuals pay directly (out of pocket) _____ of medical costs.
A)
100%
B)
between 70% and 80%
C)
50%
D)
less than 15%
53.
Becky works for a large grocery store that provides a health insurance program to all
workers. This is an example of:
A)
Medicaid.
B)
employment-based health insurance.
C)
government health insurance.
D)
a single-payer health care system.
54.
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.
A)
adverse selection
B)
income inequality
C)
single-payer
D)
equity versus efficiency
55.
In 2014, health care expenditures in the United States were approximately _____ per
person.
A)
$500
B)
$1,200
C)
$9,500
D)
$12,000
56.
In 2014, health care expenditures in the United States accounted for _____ of GDP.
A)
approximately 1%
B)
15% to 20%
C)
40% to 50%
D)
over 80%
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57.
Private health insurance is funded by:
A)
the government.
B)
tax contributions to Medicare, which come primarily from the richest individuals in
a population.
C)
extremely ill people, 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 some portion of the medical expenses of the members.
58.
Sometimes healthy people drop their health insurance, leaving only sicker people to buy
insurance. This phenomenon creates a situation known as:
A)
moral hazard.
B)
an efficient free market outcome.
C)
adverse selection.
D)
maximizing profits.
59.
Insurance companies attempt to minimize adverse selection by:
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.
60.
When adverse selection occurs, healthy people pay premiums that are _____ their actual
health care costs.
A)
higher than
B)
equal to
C)
less than
D)
positively correlated to
61.
An advantage of employment-based insurance is that it:
A)
reduces moral hazard.
B)
helps reduce the problem of adverse selection.
C)
increases government tax revenues.
D)
guarantees better care than is provided by government insurance such as Medicare.
62.
An advantage for an individual of having employment-based insurance is that it:
A)
increases moral hazard.
B)
increases the likelihood of adverse selection.
C)
increases government tax revenues.
D)
receives favorable tax treatment.
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63.
Most Americans receive their health insurance through:
A)
Medicare.
B)
Medicaid.
C)
their employer.
D)
direct purchase.
64.
The U.S. government health insurance program for people aged 65 years and older is:
A)
Medicare.
B)
Medicaid.
C)
the Veterans Administration.
D)
health savings accounts.
65.
The means-tested U.S. government health insurance program is:
A)
Medicare.
B)
Medicaid.
C)
the Veterans Administration.
D)
health savings accounts.
66.
Medicaid is funded by:
A)
private charities.
B)
the federal government only.
C)
state governments only.
D)
federal and state governments.
67.
As of 2015, approximately _____ of working-age adult Americans have no health
insurance.
A)
1% to 10%
B)
11% to 20%
C)
21% to 50%
D)
over 50%
68.
Children in low-income families that can’t afford insurance but are above the poverty
threshold are covered by:
A)
Medicare.
B)
Medicaid.
C)
SCHIP (State Children’s Insurance Health Program)
D)
the Veteran’s Administration.
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69.
People who are uninsured are likely NOT so because:
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.
70.
A way in which health care in the United States does NOT differ from health care in
other wealthy countries is that:
A)
people rely more on private health insurance.
B)
individuals spend more on health care.
C)
significant numbers of people lack health insurance.
D)
it provides government health care.
71.
Which country has a single-payer system funded through taxes in which the government
is the principal payer of medical bills for all of its citizens?
A)
the United States
B)
Canada
C)
France
D)
Great Britain
72.
Which country has a health care system that directly employs health care workers and
runs hospitals and clinics that are free to the public?
A)
the United States
B)
Canada
C)
France
D)
Great Britain
73.
Which country gives all of its citizens a choice between private doctors and hospitals
and care in a system run directly by the government?
A)
the United States
B)
Canada
C)
France
D)
Great Britain
74.
Which country does NOT provide health care to all of its citizens?
A)
the United States
B)
Canada
C)
France
D)
Great Britain