Question 1

When adverse selection occurs, healthy people pay premiums that are their actual health care costs.

Accepted Answer

A)  greater than
B)  equal to
C)  less than
D)  positively correlated to

Question 2

Which of the following is associated with poverty?

Accepted Answer

A)  lack of adequate employment
B)  lack of education
C)  lack of proficiency in English
D)  lack of adequate employment, lack of education, and lack of proficiency in English

Question 3

Programs that are not means tested:

Accepted Answer

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.

Question 4

The adverse selection death spiral occurs when private insurance companies:

Accepted Answer

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.

Question 5

In most wealthy countries excluding the United States, the government pays of all medical costs.

Accepted Answer

A)  100%
B)  between 70% and 80%
C)  between 30% and 40%
D)  less than 20%

Question 6

The notch problem occurs when a poor family that has been receiving aid:

Accepted Answer

A)  has an increase in earnings that reduces means-tested aid from programs.
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.

Question 7

When healthy people drop their health insurance, leaving only sicker people to buy insurance, this is called:

Accepted Answer

A)  moral hazard
B)  an efficient free market outcome.
C)  adverse selection.
D)  maximizing profits.

Question 8

Medicaid is funded by:

Accepted Answer

A)  private charities.
B)  the federal government only.
C)  state governments only.
D)  federal and state governments.

Question 9

An advantage of employment-based insurance is that it:

Accepted Answer

A)  reduces moral hazard.
B)  helps reduce the problem of adverse selection.
C)  increases government tax revenues.
D)  guarantees care that is higher quality than that provided by government insurance such as Medicare.

Question 10

In the United States and other wealthy countries, a large part of the welfare state is devoted to payments for:

Accepted Answer

A)  health care.
B)  unemployment insurance.
C)  food stamps.
D)  Temporary Aid to Needy Families.

Question 11

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

Accepted Answer

A)  educational attainment
B)  discrimination
C)  lack of adequate health coverage
D)  welfare

Question 12

Which of the following American welfare programs is a monetary benefit that is not tested?

Accepted Answer

A)  Earned Income Tax Credit
B)  Social Security
C)  food stamps
D)  Medicare

Question 13

Some nations, like Canada, have adopted a health care system in which the government pays the medical bills.This is known as a(n) :

Accepted Answer

A)  employment-based system.
B)  private health insurance system.
C)  means-tested system.
D)  single-payer system.

Question 14

Which of the following American welfare programs is a means-tested in-kind benefit?

Accepted Answer

A)  Social Security
B)  Temporary Assistance to Needy Families
C)  food stamps
D)  unemployment insurance

Question 15

Government payments to individuals for which no good or service is produced for the government in exchange are:

Accepted Answer

A)  government spending.
B)  government purchases.
C)  government spending on goods and services.
D)  transfer payments.

Question 16

Economists believe that looking at the distribution of income by quintiles at one point in time overstates the true inequality of income because:

Accepted Answer

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.

Question 17

The individual mandate is the requirement that:

Accepted Answer

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.

Question 18

In the United States, income inequality fell:

Accepted Answer

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.

Question 19

The period during the 1930s and 1940s when income inequality fell sharply is referred to as the:

Accepted Answer

A)  Great Compression.
B)  Gini coefficient.
C)  new Gilded Age.
D)  U.S.welfare state.

Question 20

The rising income gap among highly educated workers in the United States:

Accepted Answer

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.

Exam 18: The Economics of the Welfare State

When adverse selection occurs, healthy people pay premiums that are their actual health care costs.

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In the United States and other wealthy countries, a large part of the welfare state is devoted to payments for:

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Programs that are not means tested:

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The rising income gap among highly educated workers in the United States:

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Which of the following American welfare programs is a means-tested in-kind benefit?

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An advantage of employment-based insurance is that it:

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The individual mandate is the requirement that:

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Which of the following is associated with poverty?

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In the United States, income inequality fell:

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Government payments to individuals for which no good or service is produced for the government in exchange are:

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Economists believe that looking at the distribution of income by quintiles at one point in time overstates the true inequality of income because:

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When healthy people drop their health insurance, leaving only sicker people to buy insurance, this is called:

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The adverse selection death spiral occurs when private insurance companies:

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Some nations, like Canada, have adopted a health care system in which the government pays the medical bills.This is known as a(n) :

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Which of the following American welfare programs is a monetary benefit that is not tested?

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In most wealthy countries excluding the United States, the government pays of all medical costs.

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Medicaid is funded by:

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The period during the 1930s and 1940s when income inequality fell sharply is referred to as the:

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The notch problem occurs when a poor family that has been receiving aid:

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

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