Page 1
1.
Government payments to individuals for which no good or service exchanged are:
A)
spending.
B)
purchases.
C)
spending on goods and services.
D)
transfer payments.
2.
Which of the following transactions 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)
All of these are transfer payments.
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 of the following is the BEST example of 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 higher:
A)
high school dropout rates.
B)
risk of mental problems and behavioral disorders.
C)
rates of illness and hospitalization.
D)
high school dropout rates, risk of mental problems and behavioral disorders, and
rates of illness and hospitalization.
Page 2
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 of the following 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 of the following 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 line is called the:
A)
poor rate.
B)
poverty rate.
C)
homeless rate.
D)
absolute number of people in poverty.
10.
In 2012 _____ of the U.S. population was living in poverty.
A)
approximately 15%
B)
20% to 24%
C)
25% to 29%
D)
more than 30%
11.
Which of the following LACK(S) is (are) associated with poverty?
A)
adequate employment
B)
education
C)
proficiency in English
D)
adequate employment, education, and proficiency in English
Page 3
12.
The poverty line 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 2012, which of the following demographic groups had the HIGHEST poverty rate?
A)
African-Americans
B)
Hispanics
C)
Whites
D)
female-headed families with no husband present
14.
In 2014 the poverty threshold for a household with one person was about:
A)
$11,670.
B)
$21,100.
C)
$25,600.
D)
$38,000.
15.
America’s Gini coefficient is _____ than that of most _____.
A)
higher; developing nations
B)
higher; other wealthy nations
C)
just a little lower; other wealthy nations
D)
no lower; developing nations
16.
During the past 25 years the degree of income inequality in the United States has been
rising. Which of the following 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
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.
Page 4
18.
In the United States, the mobility between income groups is:
A)
relatively high.
B)
not important because less than 1% of the population lives below the poverty line.
C)
difficult because of public assistance programs.
D)
very rare.
19.
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.
20.
There is considerable _____ among the quintiles of the distribution of income, with
many families moving from _____ quintiles and others moving from _____ quintiles.
A)
immobility; lower to higher; higher to lower
B)
mobility; higher to lower; lower to higher
C)
immobility; lower to even lower; higher to even higher
D)
stability; lower to higher; higher to higher
21.
The _____ is widely used to measure income inequality.
A)
Gini coefficient
B)
median household income
C)
poverty rate
D)
ability-to-pay principle
22.
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
23.
If a nation’s Gini coefficient is rising over time, it is an indicator of:
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.
Page 5
24.
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
25.
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
26.
In the United States in the first two decades following World War II:
A)
income distribution in the United States became less equal.
B)
income equality measures stayed the same.
C)
income distribution became more nearly equal.
D)
there was no way to determine income distribution.
27.
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.
28.
Which of the following was NOT mentioned in the textbook as a possible factor in
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
Page 6
29.
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.
30.
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.
31.
Among the following, which factor 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
32.
A popular explanation 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.
33.
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.
34.
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
Page 7
35.
Which of the following programs provides in-kind transfers?
A)
the Earned Income Tax Credit
B)
Temporary Assistance for Needy Families
C)
Social Security
D)
Medicaid
36.
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.
37.
Which of the following U.S. welfare programs is an in-kind benefit that is NOT
means-tested?
A)
Medicaid
B)
Medicare
C)
food stamps
D)
Social Security income
38.
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.
39.
Food stamps are an example of:
A)
a negative income tax.
B)
an in-kind benefit.
C)
a monetary benefit.
D)
unemployment insurance.
40.
Measured by the amount of money spent by the U.S. government, which of the
following U.S. welfare programs is the largest?
A)
food stamps
B)
unemployment insurance
C)
Medicare
D)
Social Security
Page 8
41.
_____ 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
42.
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.
43.
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
44.
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 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).
45.
Compared to a generation ago, benefits from public aid programs, adjusted for inflation,
are:
A)
zero.
B)
less.
C)
more.
D)
about the same.
Page 9
46.
_____ 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
47.
Critics of Temporary Assistance for Needy Families 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)
family breakup, a reward for not seeking work, and the abandonment of children.
48.
Which of the following U.S. welfare programs is a means-tested in-kind benefit?
A)
Social Security
B)
Temporary Assistance to Needy Families
C)
food stamps
D)
unemployment insurance
49.
_____ is (are) a means-tested monetary benefit in in a welfare program.
A)
Food stamps
B)
Medicaid
C)
Temporary Assistance for Needy Families
D)
Unemployment insurance
50.
Which of the following programs is NOT an antipoverty program?
A)
the Earned Income Tax Credit
B)
Temporary Assistance for Needy Families
C)
Social Security
D)
Medicaid
51.
Which of the following U.S. welfare programs is a monetary benefit that is NOT
means-tested?
A)
Earned Income Tax Credit
B)
Social Security
C)
food stamps
D)
Medicaid
Page 10
52.
The age group in the United States which has undergone the largest reduction in the
poverty rate because of government programs was:
A)
65 years old and older.
B)
young and middle-aged adults.
C)
children 6 to 18 years old.
D)
children under 6 years old.
53.
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%
54.
In the United States, the government pays _____ of medical costs.
A)
100%
B)
between 70% and 80%
C)
approximately 50%
D)
less than 20%
55.
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%
56.
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.
Page 11
57.
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
58.
In 2012, health care expenditures in the United States were approximately _____ per
person.
A)
$500
B)
$1,000
C)
$9,000
D)
$12,000
59.
In 2012, 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%
60.
Private health insurance is funded by:
A)
the government.
B)
tax contributions to Medicare.
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.
61.
Sometimes healthy people drop their health insurance, leaving only sicker people to buy
insurance. This creates a situation known as:
A)
moral hazard.
B)
an efficient free market outcome.
C)
adverse selection.
D)
maximizing profits.
Page 12
62.
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.
63.
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
64.
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.
65.
An advantage of 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.
66.
Most Americans receive their health insurance through:
A)
Medicare.
B)
Medicaid.
C)
their employer.
D)
direct purchase.
67.
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.
Page 13
68.
The means-tested U.S. government health insurance program is:
A)
Medicare.
B)
Medicaid.
C)
the Veterans Administration.
D)
health savings accounts.
69.
Medicaid is funded by:
A)
private charities.
B)
the federal government only.
C)
state governments only.
D)
federal and state governments.
70.
Approximately _____ of Americans have no health insurance.
A)
1% to 10%
B)
11% to 20%
C)
21% to 50%
D)
over 50%
71.
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.
72.
People may be uninsured for all of the following reasons EXCEPT that:
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.
73.
Health care in the United States is DIFFERENT FROM that of other wealthy countries
in all of the following ways EXCEPT that:
A)
Americans rely more on private health insurance.
B)
Americans spend more per person on health care.
C)
the United States is the only country in which large numbers of people lack health
insurance.
D)
the United States is the only country that provides government health care.
Page 14
74.
Which of the following countries 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)
United States
B)
Canada
C)
France
D)
Great Britain
75.
Which of the following countries has a health care system that directly employs health
care workers and runs hospitals and clinics that are free to the public?
A)
United States
B)
Canada
C)
France
D)
Great Britain
76.
Which of the following countries gives all of its citizens a choice between private
doctors and hospitals and care in a system run directly by the government?
A)
United States
B)
Canada
C)
France
D)
Great Britain
77.
Which of the following countries does NOT provide health care to all of its citizens?
A)
United States
B)
Canada
C)
France
D)
Great Britain
78.
Some nations, including Canada, have adopted a health care system in which the
government pays the medical bills. This is known as a(n) _____ system.
A)
employment-based
B)
private health insurance
C)
means-tested
D)
single-payer
79.
Progress in medical science has contributed to _____ health care costs.
A)
increasing
B)
decreasing
C)
constant
D)
randomly fluctuating
Page 15
80.
Community rating is a regulation that requires:
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.
81.
The problem with community rating is that it:
A)
causes moral hazard.
B)
results in poor-quality health care.
C)
is very unpopular with health care providers.
D)
may cause adverse selection.
82.
The individual mandate is the requirement that:
A)
each health care provider must provide care for Medicare patients.
B)
each health care provider must provide care for Medicaid patients.
C)
each individual must purchase health insurance.
D)
everyone must go to school for at least 12 years.
83.
To ensure that low and middle income families have health insurance, the Affordable
Care Act of 2010 _____ low- and middle-income families _____.
A)
provides government subsidies to; to make insurance more affordable
B)
requires that all; be covered by Medicare
C)
requires that all; be covered by Medicaid
D)
forces; to find employers that provide health insurance
84.
Poverty can be defined either in absolute terms or in relative terms.
A)
True
B)
False
85.
The poverty threshold is the same regardless of the number of members in a household.
A)
True
B)
False
86.
People with more education have a lower poverty rate.
A)
True
B)
False
Page 16
87.
In the United States, inequality has increased over the past 25 years, in part because of
rapid technological change.
A)
True
B)
False
88.
Technological change in the United States over the past three decades has increased the
demand for skilled labor and decreased the demand for unskilled labor.
A)
True
B)
False
89.
Means-tested programs are available only to those with sufficiently low income. An
example of a means-tested program is Temporary Assistance for Needy Families.
A)
True
B)
False
90.
A negative income tax is levied on firms even if they have negative income.
A)
True
B)
False
91.
Poverty tends to be more prevalent for those over age 65 than for those under age 18.
A)
True
B)
False
92.
How do poverty programs differ from social insurance programs?
93.
What are some of the causes of poverty in the United States?
94.
Why do economists generally regard median income as a better measure of a typical
American’s well-being than mean income?
Page 17
Use the following to answer question 95:
95.
(Table: Individual Earnings) The table Individual Earnings shows the income of 10
workers.
A) Compute the mean and median income.
B) Draw up a new table that arranges the workers into quintiles from the lowest to the
highest income.
C) Add a column to the table that shows the percentage of total income going to the
workers in each quintile.
96.
Since about 1950, the share of income going to the richest 10% of Americans has
steadily increased. What explains this trend?
97.
Critics of traditional welfare programs often cite a disincentive to work as a flaw in the
policy. Why would these critics be in favor of the Earned Income Tax Credit (EITC)?
And why is the EITC described as a negative income tax?
98.
Explain what is meant by the adverse selection problem, which has the potential to
doom a private health insurance company to failure.
99.
What are the fundamental differences between the Medicare and Medicaid programs?
100.
How have advancements in medicine contributed to the soaring cost of health care in the
United States? Isn’t medical progress a good thing?
Page 18
101.
Jane works part-time and earns $11,000 per year. Because she is below the poverty line,
she also receives $4,000 in various welfare benefits. Suppose she is offered a new job
that would pay her $14,000 and would bring her earnings high enough so that she no
longer qualified for any welfare benefits. This is what is known as a notch. Explain what
is happening with Jane and how could we modify the system to eliminate the notch.
102.
The welfare state can:
A)
take up a large share of government spending in wealthy countries.
B)
be referred to as Social Security.
C)
take up only a small share of government spending in wealthy countries.
D)
affect only low-income households.
103.
Payments from the government to assist individuals are called:
A)
taxes.
B)
transfers.
C)
the welfare state.
D)
SCHIP.
104.
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 value of the
marginal dollar of the financial assistance to the family and the taxes paid by the
high-income family are:
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’s lost income will keep them from buying
necessities.
D)
unimportant in determining the impact of this plan on the welfare state.
105.
Poverty programs are aimed at:
A)
keeping people from earning less than $10,000.
B)
people who have run into problems paying for high-priced gas.
C)
reducing the percentage of families living below the poverty line.
D)
Social Security recipients.
106.
A social insurance program is aimed at:
A)
keeping people from earning less than $10,000.
B)
people who have encountered unexpected financial distress.
C)
reducing the percentage of families living below the poverty line.
D)
households with children.
Page 19
107.
Among the reasons for a welfare state is a desire to alleviate income inequality and to:
A)
achieve economic equality for all households.
B)
eliminate poverty.
C)
alleviate economic insecurity.
D)
maintain economic fairness.
108.
The ability-to-pay principle is a good justification for:
A)
the welfare state.
B)
the income tax structure.
C)
government transfers.
D)
the welfare state, the income tax structure, and government transfers.
109.
Political conservatives and liberals:
A)
both oppose programs associated with the welfare state.
B)
generally agree on their support of programs associated with the welfare state but
disagree on the appropriate extent of these programs.
C)
have conflicting views; conservatives support programs associated with the welfare
state, while liberals oppose such programs.
D)
have conflicting views; liberals support programs associated with the welfare state,
while conservatives oppose such programs.
110.
Programs associated with the welfare state are believed to cause deadweight loss, since
they:
A)
affect the amount of disposable income that households below the poverty line
have to spend.
B)
affect incentives to work and to save.
C)
are supported by many political parties.
D)
are based on the ability-to-pay principle.
111.
John Rawls believed that:
A)
government has a small role in achieving an economically fair society.
B)
we should do unto others as we would like them to do unto us if we were in the
same place.
C)
Robert Nozick’s views of economic fairness are similar to his own view.
D)
government has no right to force people with high incomes to support others with
lower incomes.
Page 20
112.
If you were to provide an economic policy without knowing your own economic status,
you would be operating:
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.
113.
The poverty threshold is defined as:
A)
less than $15,000.
B)
the minimum annual income that is considered adequate to purchase the necessities
of life.
C)
a static and inaccurate figure, since it does not change when prices change.
D)
$20,000 for both individuals and households.
114.
The poverty threshold depends upon:
A)
only the major wage earner’s annual income.
B)
the size and composition of a family.
C)
only the size of the family.
D)
only the composition of the family.
115.
Since 1967 the percentage of the population living below the poverty line has:
A)
not fluctuated.
B)
steadily increased.
C)
steadily decreased.
D)
fluctuated, but not in any consistent direction.
116.
A definition of poverty that compares the individual’s level of income with that of other
individuals in the country:
A)
is an absolute measure.
B)
would show that poverty has remained constant in the United States for the past 50
years.
C)
is a relative measure.
D)
is a relatively little used measure.
117.
Compared to other countries of comparable wealth, the United States has:
A)
unusually high poverty rates.
B)
similar levels of poverty.
C)
relatively low levels of poverty.
D)
low levels of poverty only when relative measures of poverty are used.
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118.
Some of the major causes of poverty are lack of education, bad luck, lack of proficiency
in English, and:
A)
racial and gender discrimination.
B)
geographic region.
C)
differences in religious preference.
D)
government restrictions.
119.
In the United States, income inequality fell:
A)
during the 1930s and 1940s.
B)
after 1980.
C)
during the years following World War II.
D)
after 1917 and has remained consistent since then.
120.
The period during the 1930s and 1940s when income inequality fell sharply is called
the:
A)
Great Compression.
B)
Gini coefficient.
C)
new Gilded Age.
D)
U.S. welfare state.
121.
The rising income gap among highly educated workers in the United States:
A)
is an important feature of the increase in income inequality.
B)
has not been a cause of concern for income inequality policy makers.
C)
is less of a concern than the effect of increased immigration on income inequality.
D)
has been present for the past 80 years.
122.
Increases in income inequality in the United States are partially attributed to:
A)
equal and rising increases in the salaries of low-wage workers.
B)
the impact of technological innovation on the demand for labor.
C)
a drop in international trade’s effects on the economy.
D)
stricter immigration policies.
123.
If the median household income in 2010 was $49,445:
A)
the average income for a U.S. household was $49,445.
B)
poverty rates fell during this period.
C)
half of the households in the United States earned less than $49,445, and half
earned more than $49,445.
D)
incomes in the United States were rising.
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124.
The mean household income is:
A)
the income of households lying at the exact middle of the income distribution.
B)
the average income across all households.
C)
the income level that policy makers wish to achieve for all households on average.
D)
also the poverty threshold level.
125.
The Gini coefficient:
A)
varies between 0 and 1.
B)
is also equal to the mean household income for a country.
C)
is the same for most industrially developed countries.
D)
is seldom used, since it does not help one understand income inequality.
126.
For the United States in 2012, a Gini coefficient of 0.47 suggests that:
A)
the United States has almost achieved income equality.
B)
the average household income is $49,445.
C)
compared to most European countries, the United States has unusually high levels
of income inequality.
D)
the median household income for the United States is $49,445.
127.
Much of the rise in income inequality in the past 20 years in the United States comes
from:
A)
a rising gap among the incomes of highly educated workers.
B)
the use of median income levels instead of mean income levels.
C)
a predictable rising gap between the incomes of highly educated and less well
educated workers.
D)
declining government controls on wage supports.
128.
A sudden loss of income and a significant increase in costly medical expenses are
examples of:
A)
economic insecurity.
B)
economic inequality.
C)
poverty thresholds.
D)
the Great Compression.
129.
Means-tested programs:
A)
provide benefits for all.
B)
are poverty programs that specifically help those with low incomes.
C)
provide benefits only for households that earn below the mean household income
in the United States for a given year.
D)
provide only in-kind benefits.
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130.
Programs that are not means-tested:
A)
provide benefits for people regardless of income level.
B)
specifically help those with low incomes.
C)
provide benefits only for households that earn below the mean household income
in the United States for a given year.
D)
provide only in-kind benefits.
131.
Which program was introduced in 1990 to replace the means-tested program Aid to
Families with Dependent Children?
A)
Social Security
B)
Medicare
C)
food stamps
D)
Temporary Assistance to Needy Families
132.
Temporary Assistance for Needy Families is a means-tested program that:
A)
offers assistance to anyone who is defined as below the poverty threshold.
B)
provides limited assistance to poor households with children.
C)
is essentially an in-kind benefit.
D)
is the same thing as Medicaid.
133.
Unemployment insurance is a(n) _____ that is _____.
A)
monetary transfer; means-tested
B)
monetary transfer; not means-tested
C)
in-kind benefit; means-tested
D)
in-kind benefit; not means-tested
134.
In the United States and other wealthy countries, a large part of the welfare state is
devoted to payments for:
A)
health care.
B)
unemployment insurance.
C)
food stamps.
D)
Temporary Aid to Needy Families.
135.
In 2012, the largest share of health care costs was paid for by:
A)
the government.
B)
private insurers.
C)
private individuals.
D)
charities.
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136.
The adverse selection death spiral occurs when private insurance companies:
A)
charge higher-than-average prices for health insurance, which in turn drives off
healthy individuals and leaves only sicker, high-cost individuals, resulting in yet
higher premiums the following period.
B)
find themselves with only healthy individuals to insure.
C)
offer health insurance at average cost, which results in losses to the company.
D)
refuse to insure very sick individuals.
137.
Employment-based insurance:
A)
is provided by companies to their employees.
B)
is provided only to those who are not working.
C)
consistently runs into the problem of adverse selection death spiral.
D)
does not receive benefits from the U.S. government.
138.
Medicare is health insurance coverage provided to:
A)
all Americans age 65 and older and is means-tested.
B)
individuals who fall below the poverty threshold and is means-tested.
C)
all Americans age 65 and older and is not means-tested.
D)
individuals who fall below the poverty threshold and is not means-tested.
139.
In the United States, if someone does not have health insurance, it is likely that this
person:
A)
is college educated.
B)
is a low-income worker whose employer does not provide coverage and who
cannot afford private coverage.
C)
is very ill.
D)
will not have to worry, since government assistance is available without a means
test.
140.
Health care expenditures in the United States are _____ than in other countries such as
Canada and France, and the government share of health care in the United States is
_____ than in those countries.
A)
higher; higher
B)
higher; lower
C)
lower; lower
D)
lower; higher
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141.
The notch problem occurs when a poor family that has been receiving aid:
A)
has an increase in earnings that reduces means-tested aid from programs, hence
reduces their combined incomes.
B)
finds that it no longer needs aid but is unable to refuse it.
C)
is unable to receive more aid when its earnings fall even lower.
D)
faces lower marginal tax rates on additional earnings.
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