32) The official number of poor in the United States
A) is higher today than at any other time in our history.
B) has risen steadily since 1981.
C) was lowest in the late 1960s.
D) is lowest today.
33) Originally, the threshold income level used to determine official poverty statistics was based
on
A) a per capita income of $3000 in 1955 prices.
B) the lowest income of the second quartile of families in the country.
C) an income three times greater than necessary to purchase a nutritionally adequate diet.
D) figures developed by a committee in the American Economic Association.
34) Which of the following statements is TRUE?
A) A growing economy should see a decline in relative poverty but not in absolute poverty.
B) A growing economy should see a decline in absolute poverty but not in relative poverty.
C) A growing economy should see a decline in both absolute and relative poverty.
D) A growing economy is usually unrelated to changes in either absolute or relative poverty.
35) Which of the following statements is FALSE?
A) The official absolute poverty level in the United States is far above the average income of
many countries in the world.
B) In a relative sense, the problem of poverty will always exist.
C) An equal distribution of income would eliminate relative poverty.
D) An equal distribution of income would eliminate absolute poverty.
36) Many argue the poor are getting poorer, at least in a relative sense. Evidence that contradicts
this is that
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.
37) The official poverty level is based on pretax income including cash. Which of the following
statements is correct regarding this official specification of poverty?
A) This is a good definition of poverty since it is made up of the income from productive
resources.
B) This is not a good definition of poverty because our tax structure consists of different tax
brackets based on income.
C) This is not a good definition of poverty because it does not include in-kind subsidies.
D) This is a good definition of poverty because it is easy to measure.
38) Social Security is
A) an insurance program operated by the federal government.
B) a retirement program that invests the person’s contributions into interest-earning financial
assets so the proceeds can fund the person’s retirement.
C) a social insurance program that guarantees that an elderly person will never fall below the
poverty level.
D) an intergenerational transfer program that only vaguely relates to past earnings.
39) The income transfers that a person receives from Social Security
A) is not related to the amount that they have contributed.
B) is a yearly proportion of the amount contributed.
C) is the same for everyone whether they contributed to the system or not.
D) depends entirely on the amount received from private pensions.
40) Which program provides assistance to the aged, blind and disabled?
A) Social Security Program
B) Supplemental Security Income program
C) TANF
D) Earned Income Tax Credit
41) The government program that provides aid to families in need is
A) TANF.
B) Social Security program.
C) Supplemental Security Income program.
D) Earned Income Tax Credit.
42) Which income maintenance program was started to support the nation’s farmers?
A) Supplemental Security Income
B) food stamps
C) Earned Income Tax Credit program
D) AFDC
43) The program that was created to provide rebates of Social Security taxes to low-income
workers is
A) Supplemental Security Income.
B) food stamps.
C) Earned Income Tax Credit program.
D) TANF.
44) 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
A) reduce poverty levels substantially.
B) reduce poverty levels moderately.
C) have virtually no effect on poverty levels.
D) increase poverty substantially.
45) In an attempt to reduce the poverty rate, there has recently been a movement away from
income maintenance programs to
A) Supplemental Security Income programs.
B) reducing the age a person can retire at.
C) encouraging people to get jobs.
D) incorporating the Lorenz policy in decisions.
46) The USDA threshold income level was originally based on the cost of
A) housing.
B) transportation.
C) basic clothing.
D) a nutritionally adequate food plan.
47) Which of the following groups of U.S. residents would likely qualify for SSI benefits?
A) college students
B) incarcerated murderers
C) the disabled
D) new federal retirees
48) The ________ program was created in 1975 to provide rebates of Social Security taxes to
low-income workers.
A) food stamp
B) SSI
C) TANF
D) EITC
49) Which of the following statements is FALSE regarding the definition of poverty?
A) A threshold income level is used to define poverty.
B) Adjustments to the poverty level are made on the basis of changes in the Consumer Price
Index.
C) Real incomes in the United States have been growing at a compounded annual rate of almost
2 percent per capita.
D) Poverty cannot be defined in relative terms.
50) In a growing economy, it is possible to eliminate
A) absolute poverty.
B) relative poverty.
C) both absolute and relative poverty.
D) either absolute nor relative poverty.
51) All of the following are governmental efforts to decrease poverty EXCEPT
A) Supplemental Security Income.
B) the earned income program.
C) transfer payments.
D) tariffs.
52) The official poverty rate in the United States includes
A) less than 5 percent of the population.
B) between 10 and 15 percent of the population.
C) between 20 to 25 percent of the population.
D) over 35 percent of the population.
53) The poverty income threshold in the United States was originally calculated by
A) multiplying a nutritionally adequate food plan for emergency use by 4.
B) multiplying a nutritionally adequate food plan for emergency use by 2.
C) multiplying a nutritionally adequate food plan for emergency use by 3.
D) multiplying a nutritionally adequate food plan for emergency use by 5.
54) Which of the following is NOT a program designed to attack poverty?
A) Supplementary Security Income
B) food stamps
C) Social Security
D) federal corporate income tax
55) Official poverty rates in the last 40 years have
A) fallen dramatically.
B) risen dramatically.
C) stayed roughly the same.
D) been eliminated.
56) The official definition of poverty is
A) exactly the 10 percent of U.S. residents with the lowest incomes.
B) exactly the 20 percent of U.S. residents with the lowest incomes.
C) exactly the 50 percent of U.S. residents with the lowest incomes.
D) a relative measure.
57) The federal government began officially measuring poverty in the
A) 1860s.
B) 1900s.
C) 1980s.
D) 1960s.
58) The incidence of absolute poverty is reduced by
A) annual recalculations of the poverty line.
B) government welfare programs.
C) economic growth.
D) the size of the budget deficit.
59) All of the following aim to reduce income inequality EXCEPT
A) Social Security payments.
B) earned income tax credits.
C) regressive taxes.
D) food stamp programs.
60) Attempts to alleviate poverty have included all of the following income-maintenance
programs EXCEPT
A) Social Security.
B) temporary assistance to needy families.
C) 401(k) plans.
D) food stamps.
61) Some economists argue that the official poverty figures overstate poverty in this country.
Why?
62) How can absolute poverty be eliminated? How can relative poverty be eliminated? Does the
elimination of one lead to the elimination of the other? Explain.
63) Describe four of the five major income maintenance programs in the United States that were
discussed in the text.
30.4 Health Care
1) Which of the following is considered a “third party” within the medical services industry?
A) the patient
B) the private insurance company
C) the for-profit hospital
D) the medical provider, i.e., physician
2) According to the text, the portion of total U.S. national income spent on health care was about
________ in 2015 as opposed to about ________ in 1965.
A) 34 percent; 17 percent
B) 17 percent; 34 percent
C) 6 percent; 17 percent
D) 17 percent; 6 percent
3) Today the portion of total U.S. national income spent on health care is about
A) 7 percent.
B) 17 percent.
C) 34 percent.
D) 51 percent.
4) An important contributor to rising U.S. health care costs in recent years is
A) less interest on the part of Americans to stay physically fit.
B) the increasing proportion of the population that smokes.
C) an easing of standards at medical schools that has permitted unqualified people to become
physicians.
D) the aging of the population.
5) The percentage of national income spent on health care
A) has steadily decreased since 1965.
B) has steadily increased since 1965.
C) increased until the end of the 1970s and then decreased in the 1980s and 2000s.
D) decreased until the end of the 1970s and then increased in the 1980s and 2000s.
6) The impact of technological change in the health care area has been to
A) reduce the quality of health care while raising the costs.
B) reduce the cost of health care.
C) increase the quality of health care while decreasing the costs.
D) increase both the quality of health care and the costs of health care.
7) A problem with third-party financing of so much of health care is that
A) it reduces the quality of health care received by most people.
B) it discourages physicians from getting second opinions and running enough tests to be sure
the right procedure is followed.
C) it causes the demand for medical services to increase, which causes health care costs to
increase.
D) it discourages people from relying on the judgments of physicians in making decisions about
health care.
8) Among the reasons that health care expenditures have grown so rapidly in the United States
over the last two decades are all of the following EXCEPT
A) an emphasis on wellness programs and preventive medicine.
B) the aging of the U.S. population.
C) expensive new medical technologies.
D) third-party financing.
9) An individual with no deductible on his or her health insurance policy will tend to engage in a
lifestyle that is less healthy than a person with a $2,000 insurance deductible. This is said to be a
problem of
A) healthy selection.
B) moral hazard.
C) wellness training.
D) blue-zoning.
10) The top 5 percent of health care users in the United States account for
A) 30 percent of all health costs.
B) over 50 percent of all health costs.
C) over 75 percent of all health costs.
D) almost 90 percent of all health costs.
11) Which of the following is NOT a reason for rising health care expenditures in the United
States over the last 40 years?
A) aging of the population
B) technological change
C) third-party financing of health care expenditures
D) discovery of new diseases
12) The impact of technological change in the health-care area has been to
A) increase both the quality of health care and the monetary costs of health care.
B) increase the monetary costs of health care and decrease the quality of health care.
C) decrease the monetary costs of health care while decreasing the quality of health care.
D) increase longevity but decrease quality of life.
13) Rising health care spending is a problem confronting the federal government because
A) it is the government’s job to make sure everyone receives the health care they need.
B) federal spending on health care has increased rapidly over the last thirty years.
C) the federal-funded VA hospitals have been expanding faster than government revenues can
provide for.
D) the medical expenses of federal employees has been rising at a rate much faster than for non-
federal workers.
14) An example of third-party financing of health care is
A) patients paying for their visit to the doctor.
B) patients not going to the doctor in order to save money.
C) a patient going to another doctor for a second or a third opinion.
D) Medicare.
15) One problem with third-party financing of health care is that
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.
16) What impact do private insurance companies and Medicare have on national medical costs?
A) Medical costs go up because insurance leads to an increase in the quantity demanded of
medical services.
B) Medical costs go up because insurance will lead to the reduction in the supply of medical
services due to the amount of paperwork required.
C) Medical cost are unaffected by insurance companies.
D) Medical costs go down because the insurance company pays the bill.
17) Other things being equal, a national health insurance program would
A) generate higher life expectancies and lower infant mortality rates.
B) generate lower life expectancies and higher infant mortality rates.
C) increase total health care expenditures.
D) increase the quality of life.