ECO/405 Week 11 Quiz

ECO 405 Week 11 Quiz – Strayer

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Quiz 10 Chapter 14 and 15

Government Spending, Taxation, And The National Debt: Who Wins And Who Loses?

Multiple Choice Questions

1. The Fears Of People Concerning The Size Of Government Are A. Always Without Any FoundationB. Well-Founded In Some Instances And Not Well-Founded In Some InstancesC. Difficult To AppreciateD. Due To Low Income And Low Educational Levels Of Many PeopleE. Based Solely On Economic Efficiency

2. The Fears Of People Concerning Distribution Of Taxes Are Related To A. Equity Or Justice In TaxationB. Ample Evidence That There Are Tax Inequities In The Tax System At All Levels Of GovernmentC. The Complete Lack Of Understanding That People Have About The Purpose Of TaxesD. Both (A) And (B)E. All Of The Above

3. Total Government Expenditures Currently Represent Approximately What Percentage Of Gdp? A. 20%B. 30%C. 40%D. 50%E. 10%

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4. A Cash Payment From The Government To An Individual, Based On Need, Is An Example Of A A. Transfer PaymentB. Government Purchase Of A ServiceC. Government Purchase Of A GoodD. Transaction PaymentE. Government Receipt

5. A Payment From The Government To A Federal Employee Is A A. Transfer PaymentB. Government Purchase Of A ServiceC. Government Purchase Of A GoodD. Transaction PaymentE. Government Receipt

6. An Efficient Level Of Government Expenditures Is That Level Where A. Total Costs Are MinimizedB. Total Benefits Are MaximizedC. Marginal Benefits Are Equal To Marginal CostsD. Marginal Benefits Are Greater Than Marginal CostsE. Marginal Benefits Are Less Than Marginal Costs

7. Public Goods And Services Have Characteristics That Make Them A. Possible To Exclude People From Consuming ThemB. Less Available For One Person When Another Consumes ThemC. Easy To Provide Through Private MarketsD. All Of The AboveE. None Of The Above

8. The Size Of Government Is Growing At A. A Slower Rate Than The Rest Of The EconomyB. Approximately The Same Rate As The Rest Of The EconomyC. A Faster Rate Than The Rest Of The EconomyD. Twice The Rate Of The Rest Of The EconomyE. A Negative Rate

9. Assuming Negative Externalities In Production, The Type Of Government Action That Could Bring About An Efficient Level Of Production Would Be A. A Tax Levied On Each Unit Produced Equal To Marginal External CostsB. A Tax Levied On Each Unit Produced Greater Than Marginal External CostsC. A Subsidy To Consumers Equal To Marginal External BenefitsD. A Subsidy To Consumers Greater Than Marginal External BenefitsE. None Of The Above

10. Assuming Positive Externalities In Consumption, The Type Of Government Action That Could Bring About An Efficient Level Of Production Would Be A. A Tax Levied On Each Unit Produced Equal To Marginal External CostsB. A Tax Levied On Each Unit Produced Greater Than Marginal External CostsC. A Subsidy On Each Unit Consumed Equal To Marginal External BenefitsD. A Subsidy On Each Unit Consumed Greater Than Marginal External BenefitsE. None Of The Above

11. Shifting Income From Those Who Are Relatively Productive To Those Who Are Relatively Unproductive, Say Through Taxes And Subsidies, Must Be Based On A. Sound Economic PrinciplesB. The Laws Of Demand And SupplyC. The Values Of People As To What Constitutes A "Fair" Distribution Of IncomeD. Marginal Cost And Marginal BenefitE. Both (A) And (D)

12. A National Crime Lab Used To Prevent Criminal Activity Nationwide Is An Example Of A A. Negative ExternalityB. Positive ExternalityC. Transfer PaymentD. Public GoodE. Private Good

13. Tax Equity Means That A. All People Should Pay Equal TaxesB. Only The "Rich" Should Pay TaxesC. People In The Same Economic Circumstances Should Pay Equal Taxes, And People In Different Economic Circumstances Should Pay Unequal TaxesD. The Distribution Of Income After Taxes Should Be EqualE. None Of The Above

14. An Efficient Tax Would Be A Tax For Which A. The Excess Burden" From Taxes Is ZeroB. Taxes Should Have A Neutral Effect On The Operation Of The EconomyC. Taxes Should Be Levied At Progressive RatesD. (A) And (B)E. All Of The Above

15. According To The Equimarginal Principle, The Efficient Level Of Government Expenditures Occurs When The Benefit Of The Last Dollar Spent For Each Government Purchase Is A. Greater Than The Benefit Of The Last Dollar Spent In The Private SectorB. Less Than The Benefit Of The Last Dollar Spent In The Private SectorC. Equal To The Benefit Of The Last Dollar Spent In The Private SectorD. Paid For Out Of Current Tax CollectionsE. None Of The Above

16. An Efficient Level Of Government Expenditures Is That Level At Which A. Marginal Benefits Exceed Marginal CostsB. Total Benefits Equal Total CostsC. The Net Benefits To Society Are MaximizedD. The Total Costs Are MinimizedE. None Of The Above

17. Where Marginal Benefits Are Greater Than The Marginal Costs, Government Expenditures Should A. Be IncreasedB. Remain The SameC. Be Decreased Then Increased To Their Original LevelD. Be Increased Then Decreased To Their Original LevelE. Do None Of The Above

18. Characteristics Of Public Goods And Services Include Which Of The Following? A. The Demand For These Goods And Services Is Divisible On The Basis Of Individual Quantity DemandedB. The Supply Of These Goods And Services Is Generally Not Divisible Into Small UnitsC. These Goods And Services Are Easily Provided By The Market SystemD. The Costs Of These Goods Fall On Other Than The BuyerE. None Of The Above

19. Which Of The Following Is An Example Of A Public Good Or Service? A. A Public HighwayB. Free Cheese Offered By The GovernmentC. Food StampsD. Social SecurityE. Automobiles

Questions 20 - 24 Refer To The Graph Below.

20. Assuming No External Benefits Or Costs, The Efficient Price And Quantity Would Be A. P2, Q2

B. P2, Q1

C. P1, Q1

D. P0, Q0

E. P0, Q2

21. Suppose There Are External Benefits Associated With The Production Of The Good. The Efficient Price And Quantity Are A. P2, Q2

B. P2, Q1

C. P1, Q1

D. P0, Q0

E. P0, Q2

22. If External Benefits Are Associated With The Consumption Of The Good, Consumers Could Be Induced To Purchase The Efficient Quantity If The Price Were Set At A. P2

B. P1

C. P0

D. 0E. None Of The Above

23. To Assure Consumers Purchase The Efficient Quantity When There Are Positive External Benefits, The Government Would Lower Price To A. P2

B. P1

C. P2- P1

D. P0- P1

E. P0

24. Marginal External Benefits Are Represented On The Graph As The Distance A. AbB. Q2aC. EaD. CfE. Af

25. Which Of The Following Is The Major Tax Source Of The Federal Government? A. Income TaxesB. Excise TaxesC. Property TaxesD. Wealth TaxesE. Sales Taxes

26. A Progressive Tax Rate Means That The Ratio Of Tax Collections To Income A. Falls As Income RisesB. Rises As Income RisesC. Remains The Same As Income RisesD. Either (A) And (B)E. May Fall, Rise, Or Remain The Same As Income Rises

27. In The Us, Major Sources Of Tax Revenues Are: A. Income Taxes At The Federal Level, Property Taxes At The State LevelB. Sales Taxes At The Federal Level And Income Taxes And Property Taxes At The State LevelC. Income Taxes At The Federal Level And Income And Sales Taxes At The State LevelD. Income Taxes At The Federal Level And Payroll Taxes At The State Level

28. The Ability To Pay The Principle Of Taxation Suggests That People With More Income Should Pay More Taxes. This Means That A. Progressive Income Rates Are Consistent With The Ability To Pay PrincipleB. Proportional Income Rates Are Consistent With The Ability To Pay PrincipleC. Regressive Income Rates May Or May Not Be Consistent With The Ability To Pay Principle Depending On The Rate Of RegressionD. Sales Taxes Are Consistent With The Ability To Pay PrincipleE. None Of The Above


29. The Demand Curve For This Product Can Be Described As A. Perfectly ElasticB. Perfectly InelasticC. Unitary ElasticD. Hyper ElasticE. Price Elastic

30. Given Demand Curve D, If An Output Tax Per Unit Of P- P2 Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward? A. NoneB. One-FourthC. HalfD. AllE. It Can Not Be Determined

31. Which Of The Following Shifts Represents The Effect Of An Output Tax Levied On This Good? A. D To D1

B. D1 To DC. S To S1

D. S1 To SE. None Of The Above

32. Which Of The Following Shifts Represents The Effect Of A Tax On This Good Levied Independent Of Output? A. D To D1



33. Given Demand Curve D, If A Tax Independent Of Output Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward? A. NoneB. One-FourthC. HalfD. AllE. Cannot Be Determined


34. The Demand Curve For This Product Can Be Described As A. Perfectly ElasticB. Perfectly InelasticC. Unitary ElasticD. Hyper ElasticE. Price Elastic

35. Given Demand Curve D, If An Output Tax Per Unit Of P- P1 Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward? A. NoneB. One-FourthC. HalfD. AllE. Cannot Be Determined

36. Which Of The Following Shifts Represents The Effect Of An Output Tax Levied On This Good? A. D To D1



37. Which Of The Following Shifts Represents The Effect Of A Tax On This Good Levied Independent Of Output? A. D To D1



38. Given Demand Curve D, If A Tax Independent Of Output Is Levied On This Good, How Much Of The Tax Will Be Shifted Forward? A. NoneB. One-FourthC. HalfD. AllE. Cannot Be Determined

39. An Output Tax Will Be Shifted Completely A. Backward If Demand Is Price InelasticB. Forward If Demand Is Perfectly Price InelasticC. Forward If Demand Is Price ElasticD. Backward, Regardless Of ElasticityE. All Of The Above

40. A Tax Levied Independent Of Output, Such As A Tax Levied On Net Income Of Corporations, Will A. Be Shifted If Demand Is More Elastic Than SupplyB. Be Shifted If Supply Is More Elastic Than DemandC. Not Be Shifted In The Short Run If The Most Profitable Output Has Been Selected Before The TaxD. Be Shifted In The Short Run If The Most Profitable Output Has Been Selected Before The TaxE. Do None Of The Above

41. Government Borrowing Is Argued To Have The Effect Of Raising Interest Rates—The "Crowding-Out Effect." In Conjunction With Government Spending, Does Government Spending And Borrowing Have A Positive Or Negative Impact On The Economy? A. Negative, Since Borrowing Exceeds SpendingB. A Positive Impact, Since Expenditures Often Exceed BorrowingC. A Neutral Effect, Since The Budget Is Always In BalanceD. Government Spending And Borrowing Have A Minimal Effect On The EconomyE. Government Spending And Borrowing Must Be Considered Separately

42. The Gasoline Tax Is Often Used To Illustrate The Benefits Received Principle Of Taxation Because A. Everyone Benefits From The Gasoline TaxB. Those Who Pay The Tax Receive Benefits, Since The Revenues Are Used For Road And Highway Construction And MaintenanceC. The Amount We Pay Is Consistent With Our IncomesD. Everyone Knows When They Pay The TaxE. The Gasoline Tax Is A Poor Example Of The Benefits Received Principle

43. Vertical Equity Implies That A. People In Different States Should Pay The Same TaxesB. People With Comparable Incomes Should Pay The Same TaxesC. People In Different Economic Circumstances Should Pay Different AmountsD. Taxes Should Rise As The Size Of Your Family IncreasesE. Taxes Should Be Based Upon How Tall The Taxpayer Is

44. Proportional Tax Rates Mean That The Ratio Of Tax Collection To Income A. Falls As Income RisesB. Rises, As Income RisesC. Remains The Same As Income RisesD. Rises As Income FallsE. Falls As Income Falls

45. Regressive Tax Rates Mean That The Ratio Of Tax Collections To Income A. Falls As Income RisesB. Rises As Income RisesC. Remains The Same As Income RisesD. Remains The Same As Income FallsE. Falls As Income Falls

46. The Us Federal Personal Income Tax Is An Example Of A(N) A. Regressive Tax Rate StructureB. Proportional Tax Rate StructureC. Progressive Tax Rate StructureD. More Regressive Than Proportional Tax Rate StructureE. Equitable Tax Rate Structure

47. If Demand For A Product Is Perfectly Inelastic, An Output Tax Will Be Shifted A. Completely BackwardB. Completely ForwardC. Completely To The PoorD. Completely To The RichE. Completely To The Producer

48. A Tax That Is Shifted Forward Is A Tax That Falls On A. The Consumer In The Form Of Higher PricesB. The Producer Through Lower SalesC. The GovernmentD. Foreign InvestorsE. None Of The Above

49. A Tax That Is Shifted Backward Is A Tax That Falls On A. The Consumer In The Form Of Higher PricesB. The Owners Of Resources In The Form Of Lower Resource PricesC. The GovernmentD. Foreign InvestorsE. None Of The Above

50. At The Federal Level, The Largest Revenue Generating Tax Is The A. Corporate Income TaxB. Personal Income TaxC. Property TaxD. Sales TaxE. Customs Duty

51. If The Ratio Of Tax Collections To Income Rises As Income Rises, Then The Tax Rate Is A. RegressiveB. ProportionalC. ProgressiveD. Regressive Then ProportionalE. None Of The Above

52. The Federal Government Lowered Tax Rates In A. 1986 And 2001B. 1986C. 2001D. Neither YearE. 1909 And Has Raised Them Ever Since

53. Suppose There Are Two Individuals Who Each Earn $25,000 Per Year. One Individual Pays $2,500 In Taxes And The Other Pays $2,000. This Is A Violation Of A. The Benefits Received PrincipleB. The Ability To Pay PrincipleC. Vertical EquityD. Horizontal EquityE. None Of The Above

54. Suppose One Individual Earns $25,000 Per Year And Another Individual Earns $15,000 Per Year. If The Individual Earning $25,000 Per Year Pays $750 More Per Year In Taxes Than The Person Earning $15,000, This Is An Illustration Of A. The Benefits Received PrincipleB. The Ability To Pay PrincipleC. The Equal Tax Treatment PrincipleD. The Equitable Payment DoctrineE. None Of The Above

55. If We Levy A Tax On Profits That Is Neither Shifted Neither Forward Nor Backward, It Is A. An Output TaxB. An Input TaxC. A Tax Independent Of OutputD. A Tax Dependent On OutputE. None Of The Above

56. The Federal Tax System In The United States Can Be Described As A. RegressiveB. Highly ProgressiveC. Slightly ProgressiveD. ProportionalE. None Of The Above

57. A Tax System That Will Not Alter The Distribution Of Income Is A. ProportionalB. RegressiveC. Slightly ProgressiveD. Very ProgressiveE. None Of The Above

58. Which Of The Following Countries Has The Lowest Taxes Collected (As A Percent Of Gdp)? A. The United StatesB. GermanyC. ItalyD. FranceE. The United Kingdom

59. The Highest Effective Federal Tax Rate In The United States Is Approximately A. 10%B. 15%C. 20%D. 24%E. 34%

60. The Highest Effective Federal Tax Rate In The United States Falls On Which Income Category? A. The Lowest QuintileB. The Middle QuintileC. The Top 10%D. The Top 5%E. The Top 1%

61. The Single Most Important Source Of Tax Revenue For The Local Governments In The United States Is The A. Real Property TaxB. Personal Income TaxC. National Sales TaxD. Cigarette TaxE. Inheritance Tax

62. Enforcement And Collection Of Personal Income Taxes Is The Responsibility Of The A. Treasury DepartmentB. Individual State GovernmentsC. Federal Reserve SystemD. Internal Revenue ServiceE. Department Of Labor

63. The Federal Government Uses Taxes To A. Generate RevenueB. Encourage Saving For Education And RetirementC. Discourage Certain BehaviorsD. Promote The Purchase Of HousesE. Do All Of The Above

64. The 1986 Tax Reform Act ________ The Number Of Tax Brackets And _______ The Highest Tax Bracket. A. Increased; IncreasedB. Increased; DecreasedC. Decreased; IncreasedD. Decreased; DecreasedE. Decreased; Did Not Change

65. Since 2004, The Highest Personal Income Tax Bracket Has Been A. 10%B. 15%C. 25%D. 28%E. 35%

66. The Economic Growth And Taxpayer Relief Reconciliation Act Passed By Congress And Signed By President George W. Bush Did Which Of The Following? A. Immediately Cut Federal Tax Rates By One-ThirdB. Gave A $300 Check To Each TaxpayerC. Decreased The Tax On Income From Financial InvestmentsD. Decreased The Federal Budget DeficitE. Increased The Number Of Personal Income Tax Brackets

67. The First Budget Surplus Since 1969 Occurred In A. 1993B. 1995C. 1998D. 1999E. 2000

68. The Budget Surpluses Of The Late 1990’s And The Early 2000’s Could Be Attributed To Which Of The Following Government Policies? A. The Value Added Tax ActB. The Tax Reform Act Of 1986C. The Economic Growth And Taxpayer Relief Reconciliation ActD. Increased Government DebtE. All Of The Above

69. If A Government Bond With A Maturity Value Of $10,000 Sells For $9,000 And Pays Annual Interest Of $1,000, What Is The Rate Of Interest On The Bond? A. 1%B. 10%C. 11.1%D. 88.9%E. 90%

70. An Increase In Government Borrowing Will Cause Which Of The Following? A. A Decrease In The Demand For Loanable FundsB. A Decrease In The Supply Of BondsC. An Increase In The Interest RateD. An Increase In The Price Of BondsE. All Of The Above

71. Federal Debt Reduction Will Cause Which Of The Following? A. A Decrease In The Interest RateB. An Increase In Private InvestmentC. A Decrease In The Supply Of BondsD. An Increase In The Price Of BondsE. All Of The Above

72. The Federal Government Ended Its Most Recent Period Of Budget Surpluses And Returned To Deficits In A. 1999B. 2000C. 2001D. 2002E. 2003

73. The Federal Deficit Was Increased In 2002 As A Result Of A. The 2001 RecessionB. The War On TerrorismC. The 2001 Tax CutD. Increased Defense SpendingE. All Of The Above

74. Retiring The Federal Debt Will A. Decrease The Supply Of Government BondsB. Increase Government Bond PricesC. Lower The Interest Rate On Government BondsD. Decrease The Demand For MoneyE. Do All Of The Above

True / False Questions

75. The Fears That People Have Concerning Government Are Related To The Size Of Government And The Distribution Of Taxes.

76. Some Of The Fears That People Have Concerning Government Are Well-Founded And Some Are Not.

77. Government Expenditures Have Grown Faster Than The Gdp Since 1958, Representing About Fifty Percent Of Gdp Today.

78. Government Transfer Payments, Such As Public Assistance Payments And Social Security Payments, Have Been A Constant Percentage Of The Gdp Since 1960.

79. Government Purchases Of Goods And Services Have Remained A Constant Percentage Of The Gdp For The Last Two Decades.

80. Before An Intelligent Decision Can Be Made About Whether Government Is Too Large Or Small, The Benefits And Costs Must Be Weighed.

81. An Efficient Level Of Government Expenditures Is That Level Where Net Benefits To Society Are Maximized.

82. Public Goods And Services Can Be Supplied In The Market Because They Are Easily Divisible Into Small Units And Can Be Priced To The Individual Demander.

83. The Existence Of Externalities In Production Or Consumption Does Not Negate The Possibility That These Goods And Services Can Be Supplied Efficiently In The Market.

84. A Great Deal Of Government Activity Is Based On The Idea That People In Society Should Determine The Extent To Which The Distribution Of Income Should Be Altered.

85. The Major Tax Source Of The Federal Government Is The Highly Regressive Sales Tax.

86. The Federal Income Tax System Results In A Mildly Progressive Tax Structure.

87. The Major Tax Source Of State Governments Is The Property Tax.

88. Progressive Income Tax Rates Are Consistent With The Ability To Pay Principle Of Taxation But Are Inconsistent With The Tax Criterion Of Economic Efficiency.

89. The Relative Tax Treatment Doctrine Would Call For All Taxpayers To Pay Equal Taxes.

90. Since Gasoline Taxes Are Used Primarily To Finance Highways, Gasoline Taxes Can Be Defended On The Benefits Received Principle Of Taxation.

91. The Excess Tax Burden Is In The Form Of The Loss In Private Production That May Take Place If Incentives To Work And To Produce Are Discouraged.

92. A Tax Levied On Each Unit Produced Will Likely Be Shifted Forward And Backward Depending Upon The Elasticities Of Demand And Supply.

93. If An Output Tax Is Levied On A Product That Has A Perfectly Elastic Demand, The Tax Will Be Shifted Completely To The Consumer In The Form Of Higher Prices.

94. Federal Budget Deficits Occurred Throughout The 1970's And 1980's But In The Late 1990's Deficits Turned Into Budget Surpluses.

95. The Tax Reform Act Of 1986 Increased The Highest Marginal Tax Rate To 50% From 38%.

96. In General, A Tax Levied On Net Income Of A Corporation Would Be Shifted To Consumers In The Short Run.

97. Tax Equity Would Probably Be Reduced If Federal Tax Exclusions, Such As Interest On State And Local Government Securities, Were Eliminated.

98. Demand For Public Goods And Services Is Not Generally Divisible On The Basis Of Individual Quantity Demanded.

99. The Tax Base Is What A Tax Is Levied On, Such As Income, Sales, Or The Value Of Property.

100. Regressive Tax Rates Mean That The Ratio Of Tax Collection To Income Rises As Income Rises.

101. Tax Equity Means That All People Should Pay Equal Taxes.

102. An Output Tax Will Be Shifted Completely Forward If Demand Is Price Elastic.

103. According To The Equimarginal Principle, The Efficient Level Of Government Expenditures Occurs When The Benefit Of The Last Dollar Spent For Each Purchase Is Greater Than The Last Dollar Of Cost.

104. When Marginal Benefits Equal Marginal Costs Then Net Benefits Are Maximized.

105. Horizontal Equity Means That People In Identical Economic Positions Should Pay Equal Taxes.

106. Transfer Payments Are Government Expenditures For Currently Produced Goods And Services.

107. In The Absence Of Externalities, Government Actions Are Needed To Ensure The Efficiency Of The Market System.

108. According To The Equal Tax Treatment Doctrine, People In Identical Economic Circumstances Should Pay Equal Taxes.

109. The Equal Tax Treatment Doctrine Pertains To Vertical Equity.

110. The Federal Tax System Is Much More Progressive Than Is Generally Believed.

111. The Economic Growth And Taxpayer Relief Reconciliation Act, The Job Creation And Worker Assistance Act, And The Jobs And Growth Tax Relief Act Each Reduced Effective Tax Rates On Income.

112. The United States Has Not Had A Federal Budget Surplus Since The 1960s.

113. The Personal Income Tax Is The Single Most Important Source Of Tax Revenue For The Federal Government Of The United States.

114. The Enforcement And Collection Of The Personal Income Tax Is The Responsibility Of The Internal Revenue Service.

115. There Are Currently 14 Tax Brackets Ranging From 11% To 50%.

116. The Federal Government Uses The Tax Code To Encourage Certain Behaviors.

117. Bond Prices And Interest Rates Are Inversely Related.

118. The First Budget Surplus Since 1969 Occurred In 1998.

119. A Budget Deficit Occurs When Tax Revenues Exceed Government Spending.

120. A Lower Interest Rate Encourages Private Investment Spending.

121. The National Debt Is The Sum Of Past Budget Deficits.

122. The Government Owes Almost One Third Of The National Debt To Itself.

123. An Increase In Government Borrowing Increases The Demand For Loanable Funds.

124. An Increase In Government Borrowing Increases The Supply Of Loanable Funds.

125. The Federal Budget Has Been In Deficit Each Year Since The Beginning Of The 1970s.

Chapter 15

Social Security And Medicare: How Secure Is Our Safety Net For The Elderly?

Multiple Choice Questions

1. Government Programs That Guarantee Citizens Financial Benefits For Events Beyond Their Personal Control And That Are Financed Through Tax Revenues Are Called A. Social Insurance ProgramsB. Entitlement ProgramsC. Private Insurance ProgramsD. Welfare ProgramsE. Transfer Programs

2. The Largest Social Insurance Program In The United States Is A. Temporary Assistance For Needy FamiliesB. Social SecurityC. MedicaidD. Federal Flood InsuranceE. Job Corps

3. The Most Significant Factor That Threatens The Financial Stability Of The Social Security System Is The A. Increasing Number Of Young WorkersB. Relatively High Rates Of Social Security TaxesC. Population Bulge Created By The "Baby Boom" GenerationD. Generosity Of Current Social Security BenefitsE. Threat Of Foreign Workers Entering The U.S. Due To Nafta

4. Which Of The Following Nations Was The First To Offer Its Citizens A Modern Social Insurance Program? A. United StatesB. Great BritainC. RussiaD. GermanyE. Japan

5. In The United States, Social Security Was Established In When President Signed The Social Security Act Into Law. A. 1903; Theodore RooseveltB. 1929; Herbert HooverC. 1965; Lyndon JohnsonD. 1865; Abraham LincolnE. 1935; Franklin Roosevelt

6. Which Of The Following Statements Is Concerning The Scope Of The Social Security Program? A. Social Security Has Narrowed Its Scope Over Time To Focus On The Economic Stability Of The IndividualB. The Scope Of Social Security Has Remained Constant Throughout Its HistoryC. Social Security Has Broadened Its Scope Over Time To Focus On The Economic Stability Of The FamilyD. The Scope Of Social Security Has Always Focused On The Family UnitE. None Of The Above

7. How Many Americans Receive A Monthly Check From The Social Security Administration? A. Fewer Than 10 MillionB. More Than 50 MillionC. About 27 MillionD. Roughly 38 MillionE. More Than 100 Million

8. As Originally Designed, Social Security Was To Be Financed As A A. Private Insurance ProgramB. Pure Income Transfer ProgramC. Pay-As-You-Go Insurance ProgramD. Fully-Funded Insurance ProgramE. Means-Tested Benefits Program

9. How Are Social Security Tax Revenues Allocated Today? A. They Are Used To Pay Today's Social Security Beneficiaries, And Any Extra Is Placed Into The Social Security Trust FundB. All Of Today's Revenues Are Placed In The Social Security Trust Fund To Pay For Tomorrow's BeneficiariesC. Tax Revenues Are Placed Into Accounts For Each Worker Who Will Draw Upon The Balance When They RetireD. The Revenues Are Invested In Government Securities And In The Stock MarketE. No One Really Knows

10. Current Projections Estimate That The Social Security Trust Fund Will Be Completely Depleted A. In Late 2003B. During 2010-2020C. In About 100 YearsD. Around 2100E. Before 2040

11. Given The Way Social Security Is Financed, Which Of The Following Is ? A. Social Security Results In A Transfer Of Income From The Old To The YoungB. Social Security Results In A Transfer Of Income From The Young To The OldC. Social Security Has A Neutral Effect On The Nation's Income DistributionD. The Purchasing Power Of The Elderly Has Been Diminished By Social Security TaxesE. (A) And (D)

12. Social Security Taxes Are A. Paid Only By WorkersB. Levied On Salaries And WagesC. Paid Only By EmployersD. Paid By Both Workers And EmployersE. (B) And (D)

13. Currently, The Total Combined Tax Rate Collected By Social Security Is A. 21.6% Of EarningsB. 15.3% Of EarningsC. 7.65% Of EarningsD. 6.20% Of EarningsE. 1.45% Of Earnings

14. Which Of The Following Is Concerning Social Security's Retirement Benefit Structure? A. All Eligible Retired Workers Are Entitled To The Same BenefitsB. High Wage Workers Receive A Greater Percentage Of Past Earnings In Benefits Than Low Wage WorkersC. Retired Female Workers Are Entitled To Higher Benefits Than Retired Male WorkersD. Low Wage Workers Receive A Greater Percentage Of Past Earnings In Benefits Than Do High Wage WorkersE. Retired Workers Living In Cities Receive Larger Benefits Than Those Living In Rural Areas

15. Most Of Today's College Student Population Will Be Eligible To Receive Full Social Security Retirement Benefits When They Reach The Age Of A. 62B. 65C. 67D. 70E. 72

16. The Cost Of Living Adjustment (Cola) Employed By Social Security Is Based On The A. Current Level Of GdpB. Local Rate Of InflationC. Consumer Price IndexD. Producer Price IndexE. Annual Poverty Threshold

17. How Many Elderly Households Receive Social Security Benefits? A. More Than 90%B. Less Than 50%C. About 75%D. Only About 15%E. None Of The Above

18. Which Of The Following Statements Is ? A. 20% Of Elderly Households Receive Social Security As Their Only Source Of IncomeB. Approximately 90% Of Elderly Households Receive Social Security BenefitsC. Just Under 30% Of Elderly Households Receive Private Pension BenefitsD. For Nearly Two Thirds Of Elderly Households, Social Security Represents More Than 50% Of Total IncomeE. None Of The Above. All Are

19. If People Choose To Work Fewer Hours Because The Social Security Tax Reduces Their Real Wage, Their Behavior Is Dominated By The A. Substitution EffectB. Bequest EffectC. Income EffectD. Wealth EffectE. Real Wage Effect

20. If People Choose To Work More Hours Because The Social Security Tax Reduces Their Real Wage, Their Behavior Is Dominated By The A. Substitution EffectB. Bequest EffectC. Income EffectD. Wealth EffectE. Real Wage Effect

21. Empirical Evidence Suggests That Social Security Has _______ The Overall Supply Of Labor. A. Had No Effect OnB. ReducedC. IncreasedD. StimulatedE. Done None Of The Above To

22. Social Security May Increase The Level Of Personal Saving Due To A. The Retirement EffectB. The Bequest EffectC. The Wealth Substitution EffectD. (A) And (B)E. (B) And (C)

23. Empirical Studies Indicate That Social Security Has A. Increased The Level Of Personal SavingsB. Had A Neutral Effect On The Level Of Personal SavingsC. Reduced The Level Of Personal SavingsD. Increased The Number Of Older WorkersE. Raised The Average Age At Which Workers Choose To Retire

24. The Effect Of Social Security On Personal Savings Is Important Because A. The Level Of Savings Determines The Pool Of Investment FundsB. Savings Are Necessary To Finance The Social Security Trust FundC. Personal Savings Are Negatively Related To Economic GrowthD. Savings Are A Major Source Of Income For All Elderly HouseholdsE. The Level Of Savings Reflects The Magnitude Of Future Consumption

25. Why Can't Social Security Rely On A Strict Pay-As-You-Go Financial Structure? A. The Current Generation Of Workers Is Too Small To Support Future RetireesB. A Pay-As-You-Go Financial Structure Is Inherently UnstableC. The Current Generation Of Retirees Will Bankrupt The System Before The "Baby Boom" RetiresD. Inflation Erodes The Value Of Contributions That Must Be Saved To Pay Future RetireesE. None Of The Above

26. The Most Simple And Direct Way To Postpone The Looming Social Security Financial Crisis Is To A. Invest Social Security Taxes In The Stock MarketB. Raise Social Security Taxes And/Or Lower BenefitsC. Privatize The Social Security AdministrationD. Eliminate The Social Security System And Force Everyone To Buy Private InsuranceE. Subsidize Social Security With General Tax Revenues

27. The Most Significant Argument Against Privatizing Social Security Is That A. Benefits Would Have To Be CutB. It Has Not Worked In Other CountriesC. Future Benefits Levels Cannot Be GuaranteedD. It Is Too Complicated To Be PracticalE. Taxes Would Have To Be Raised

28. Why Do Some People Favor Investing The Social Security Trust Fund In The Stock Market? A. Because For Most Beneficiaries The Historic Return On Their Social Security Taxes Has Been Less Than What Would Have Been Earned If Those Dollars Were Invested In The Stock MarketB. Because Investment In The Stock Market Will Guarantee Higher Rates Of Return Over The Long Run For All RetireesC. Because Investments In The Stock Market Carry Very Little Risk And Offer The Potential For Excessive Short-Run Gains With Little Or No Potential For LossD. Because The Stock Market Offers The Safest Form Of InvestmentE. All Of The Above


29. The Results Of The Retirement Effect Are Illustrated On The Graph As A Movement From Point A. E To FB. A To CC. E To GD. F To EE. None Of The Above

30. The Results Of The Bequest Effect Are Illustrated On The Graph As A Movement From Point A. E To FB. A To CC. E To GD. F To EE. None Of The Above

31. The Results Of The Wealth Substitution Effect Are Illustrated On The Graph As A Movement From Point A. E To FB. A To CC. E To GD. F To EE. None Of The Above

32. A Change In Consumption From Ce To Cf Could Be Caused By Which Of The Following? A. The Bequest EffectB. The Retirement EffectC. The Wealth Substitution EffectD. All Of The AboveE. None Of The Above

33. A Movement From Point E To Point F As A Result Of Social Security Would Result In Which Of The Following Costs To Society? A Long-Run Movement To A. Ppc Cd Rather Than GhB. Ppc Gh Rather Than CdC. Point B Rather Than Point AD. Point A Rather Than Point BE. If To Cf

34. If I Start Saving More During My Working Life Because I Anticipate Retiring Earlier Thanks To Social Security, I Am Exhibiting Which Of The Following Effects? A. RetirementB. BequestC. Wealth SubstitutionD. Opportunity CostE. None Of The Above

35. If I Spend More Each Year Because I Know That I Will Receive Social Security Payments When I Retire, I Am Exhibiting Which Of The Following Effects? A. RetirementB. BequestC. Wealth SubstitutionD. Opportunity CostE. None Of The Above

36. If I Put Extra Into A Savings Account So That I Can Leave Assets To My Children To Compensate Them For Their Payments Into The Social Security System, I Am Exhibiting Which Of The Following Effects? A. RetirementB. BequestC. Wealth SubstitutionD. Opportunity CostE. None Of The Above

37. If Inflation Increases, What Will Happen To The Social Security Cola? It Will A. ExpireB. IncreaseC. DecreaseD. Be Divided Among Social Security RecipientsE. Be Added To The Social Security Trust Fund

38. "An Agreement To Pay A Premium To A Company In Return For A Guarantee Of Financial Benefits In The Event Of An Undesired Circumstance" Defines A. Social InsuranceB. Private InsuranceC. Private InvestmentD. Asset ManagementE. Retirement Savings

39. Social Insurance Uses Tax Revenues To Guarantee Citizens Financial Benefits For Events Including A. Old AgeB. DisabilityC. Poor HealthD. Death Of A SpouseE. All Of The Above

40. If A Program's Benefits Are Funded By Interest Earned On Accumulated Payments, It Is Which Type Of System? A. An Investment SystemB. A Fully Funded SchemeC. An Interest SchemeD. A Pay-As-You-Go SystemE. An Endowed System

41. If A Program's Benefits Are Funded Out Of Current Payments, It Is Which Type Of System? A. An Investment SystemB. A Fully Funded SchemeC. A Pyramid SchemeD. A Pay-As-You-Go SystemE. An Endowed System

42. When Was The Medicare Program Established? A. 1935B. 1945C. 1955D. 1965E. 1975

43. Today, The Health Care Sector Of The U.S. Economy Accounts For About Percent Of National Income. A. 3B. 5C. 8D. 12E. 18

44. A Person With Health Insurance Will Tend To A. Have A Lower Demand For Health Care ServicesB. Have A Much Greater Concern For Preventive CareC. Buy A Lower Quantity Of Health Care At A Higher PriceD. Demand More Health Care Services Than A Person Without InsuranceE. Do None Of The Above

45. The Payment And Delivery Of Health Care Service Under A Managed Care System Is Based On A. A Fee-For-Service Market PrincipleB. A Prearranged Schedule Of Fixed PricesC. The Ability To Pay PrincipleD. Price Negotiation Between The Consumer And ProviderE. None Of The Above

46. The Medicare Program A. Was Established As A Socialistic Takeover Of Health Care ProvidersB. Has Reduced The Demand For Health Care ServicesC. Affects Persons 65 And Older, Regardless Of IncomeD. Enrolls All Poor People Regardless Of AgeE. Does None Of The Above

47. Part C Of The Medicare Program (Medicare + Choice) A. Provides Health Care Plan Choices To The Beneficiaries Of MedicareB. Restricts Medicare Beneficiaries To A Simple Fee-For-Service Health Care PlanC. Provides Comprehensive Health Insurance Coverage For All Poor PeopleD. Is Only Available To Disabled Retirees Receiving Social SecurityE. Does None Of The Above

48. A Potential Benefit Of Managed Care Plans To Medicare Enrollees Is That These Plans A. Typically Require Less Cost SharingB. Provide A Higher Quality Of Health CareC. Provide A Greater Quantity Of Health CareD. Require Less Paper WorkE. Do All Of The Above

49. Part A Of The Medicare Program (Hospital Insurance) Is Financed Primarily By A. A Monthly PremiumB. A 2.9% Tax Levied On Wages And SalariesC. An Allocation From General Tax RevenuesD. User Fees Paid By PatientsE. Insurance Deductibles

50. What Percent Of The Average Health Care Dollar Spent In The United States Comes Directly From The Consumer? A. 100B. 83C. 50D. 34E. 12

51. Which Of The Following Factors Has Contributed Most To The Tremendous Increase In Health Care Expenditures Experience In The U.S. During The Past Fifty Years? A. Health Care InflationB. The Aging Of The PopulationC. Increased Public Support For Health CareD. Private Health InsuranceE. Growth In Medicaid

52. Which Of The Following Receives The Largest Share Of Expenditures Made On Health Care In The United States? A. PhysiciansB. Nursing HomesC. HospitalsD. Personal Health Care Product And Service ProvidersE. Pharmacies

53. In A Fee-For-Service Health Care System, Consumers Pay The A. Insurance Company A Fee Every Time They Use A ServiceB. Full Cost Of The Services They ReceiveC. Hmo When They Receive CareD. Doctor A Small Payment Called A "Co-Pay."E. Prearranged, Fixed Fee For Services They Receive

54. How Are Payments To Health Care Providers Determined Under A Managed Care System? By The A. GovernmentB. MarketC. Insurance Company And The ProviderD. Provider And The ConsumerE. Ama (American Medical Association)

55. Which Of The Following Is An Example Of A Managed Health Plan? A. HmoB. PpoC. PosD. Physicians NetworkE. All Of The Above


56. With A Market Allocation Of Medical Services, Equilibrium Quantity Will Be A. 0B. 50C. 2,000D. 2,800E. 4,000

57. If Medical Care Is Provided Free Of Charge, What Quantity Will Be Demanded? A. 0B. 2,000C. 2,800D. 4,000E. An Infinite Amount

58. If Medical Care Is Provided Free Of Charge, What Quantity Will Be Supplied? A. 0B. 50C. 2,000D. 2,800E. 4,000

59. The Supply Of Medical Services In This Market Is A. ElasticB. InelasticC. Unit ElasticD. Price ElasticE. Infinite

60. Under Most Insurance Systems, Patients Are Responsible For Which Of The Following Payments For Health Care Services? A. DeductibleB. Co-InsuranceC. Fee-For-Service ChargesD. All Of The AboveE. None Of The Above

61. A Patient May Be Required To Pay A Percentage Of The Cost Of Their Health Care Above The Fixed Fee They Pay. This Is Known As A. The DeductibleB. Co-InsuranceC. Fee-For-ServiceD. The Health Care TaxE. Medicare Tax

62. If Your Insurance Company Agrees To Pay A Fixed Fee For You To Receive A Given Treatment (For Example, $5,000 For An Appendectomy), The Company Is Using Which Of The Following? A. A Fee-For-Service SystemB. A Managed Care SystemC. A Co-Insurance SystemD. A Prospective Payment SystemE. A Social Insurance System

63. If Your Deductible Is $200 And You Pay Co-Insurance Of 20%, How Much Will You Have To Pay For A $3,000 Hospital Stay? A. $200B. $560C. $600D. $760E. $800

64. If Your Deductible Is $400 And You Have Co-Insurance Of 25%, How Much Will You Have To Pay For A $5,000 Hospital Stay? A. $400B. $1,150C. $1,250D. $1,550E. $1,650


65. If Patients Pay The Full Price For Office Visits, What Price Will Be Charged In The Market? A. $0B. $25C. $50D. $75E. More Than $75

66. If Patients Pay The Full Price For Of Office Visits, How Many Office Visits Will They Make? A. 0B. 30C. 50D. 70E. More Than 70

67. If A Third Party Guarantees A Maximum Patient Price Of $25, What Quantity Of Office Visits Will Patients Demand? A. 0B. 30C. 50D. 70E. More Than 70

68. If A Third Party Guarantees A Maximum Patient Price Of $25, What Total Price Must Be Paid Per Office Visit To Assure The Quantity Of Office Visits Demanded Will Be Provided? A. $0B. $25C. $50D. $75E. More Than $75

69. If A Third Party Guarantees A Maximum Patient Price Of $25, How Much Must The Third Party Pay Per Office Visit? A. $0B. $25C. $50D. $75E. More Than $75

70. Health Insurance Results In A. An Increase In The Quantity Of Health Care DemandedB. An Increase In The Quantity Of Health Care ProvidedC. An Increase In The Total Cost Of Providing Health CareD. All Of The AboveE. None Of The Above

71. The Medicare Modernization Act, Passed In 2003, Established A. The First Long Term Care Coverage For Medicare RecipientsB. Lowered Deductibles For Most Medicare RecipientsC. Added A Prescription Drug Benefit To The Medicare ProgramD. Instituted Stringent Price Controls On The Fees Doctors And Hospitals Can ChargeE. Restricted The Benefits That High Income Medicare Recipients Can Receive

72. The Prescription Drug Benefit That Is Part Of The Medicare Modernization Act Of 2003 Requires That Recipients Pay: A. A Monthly PremiumB. A Co-PayC. A DeductibleD. All Of The AboveE. None Of The Above, These Benefits Are Provided To Recipients At No Charge

True / False Questions

73. Social Insurance Is Private Insurance Purchased By The Government.

74. Programs That Provide Citizens With Benefits For Events That Are Beyond An Individual Person's Control Are Called Social Insurance Programs.

75. Both Social Security And Medicare Are Social Insurance Programs.

76. The Major Underlying Factor That Endangers Social Security's Financial Stability Is The Population Bulge Created By The "Baby Boom" Generation.

77. The United States Was The First Nation To Provide Social Insurance Programs For Its Citizens.

78. The Original Design Of The Social Security System Called For A Pay-As-You-Go Financing Scheme.

79. The Social Security Act Was Signed Into Law By President Franklin Roosevelt In 1935.

80. Over Time, Social Security Has Evolved To Focus More On The Family And Less On The Individual.

81. Currently, About 20 Million Americans Receive Social Security Benefits.

82. All American Citizens Are Entitled To Receive Social Security And Medicare Benefits When They Retire.

83. Today, Social Security Is Financed Under A Pay-As-You-Go Financial System.

84. All Current Social Security Taxes Collected By The Government Are Used To Pay Current Beneficiaries, With Nothing Left Over.

85. Social Security And Medicare Are Financed Through A Flat Tax On Wages Paid Up To A Predetermined Limit.

86. Workers And Their Employers Share The Burden Of Social Security Taxes.

87. The Social Security Trust Fund Currently Has A Negative Balance.

88. Social Security Benefits Are Adjusted Each Year For Inflation Using The Consumer Price Index (Cpi).

89. About 50% Of All Elderly Households Receive Some Form Of Social Security Benefits.

90. Today, In The Aggregate, Social Security Accounts For Over 35% Of Senior Citizens' Income.

91. Without Social Security, Nearly 50 Percent Of Elderly Households Would Live Below The Poverty Threshold.

92. The Substitution Effect Of Social Security Taxes Causes Some People To Work More Hours.

93. The Income Effect Of Social Security Taxes Causes Some People To Work Less Hours.

94. Studies Show That Social Security Has Caused Some Workers To Retire Earlier Than They Would If Social Security Did Not Exist.

95. The Bequest Effect Of Social Security Causes Some People To Save Less During Their Lifetimes.

96. The Empirical Evidence Suggests That, Overall; Social Security Causes People To Increase Their Personal Savings.

97. Because Social Security Increases Savings, More Funds Are Available For Investment In The Overall Economy.

98. Current Estimates Indicate That The Social Security Trust Fund Will Be Depleted Before 2040.

99. A Modest Increase In Taxes Could Postpone Social Security's Financial Crisis For Decades.

100. Privatization Of The Social Security System Would Reduce The Financial Risks Faced By Retiring Workers.

101. Chile And Other Nations Have Successfully Privatized All Or Part Of Their Social Insurance Programs.

102. Oasdi Is Social Security's Medical Insurance Program.

103. The Most Important Factor Explaining The Growth In Personal Health Care Expenditures On Hospital And Physician Services Is Higher Prices For These Services.

104. Third-Party Payments Increase The Efficiency Of Medical Markets.

105. A Dominant Feature Of The U.S. Health Care Industry Is Price Competition Among Providers.

106. Medicare And Medicaid Have Reduced The Demand For Health Care Services.

107. The Purpose Of A Prearranged Payment And Delivery System, Such As A Managed Care Plan, Is To Take Away Any Incentive For The Provider To Supply Unnecessary Care.

108. The Demand For Health Services Is Characterized By Well-Informed Consumers.

109. The Medicare Program Affects Persons Aged 65 And Older, Regardless Of Their Income Level.

110. A Consumer With Health Insurance Is Likely To Buy More Health Services Than One Who Is Not Insured.

111. A Reduction In The Price Of Medical Services Will Cause The Demand Curve To Shift To The Right.

112. Health Care Providers Are Paid The Amount Of A Patient's Deductible By The Health Insurance Company.

113. The Amount A Patient Must Pay Above The Deductible Is Known As Co-Insurance.

114. Projections Indicate That The Medicare Hi Program Will Be Depleted Of Funds By 2025.

115. More Than 70% Of All Privately Insured Employees Are Covered By Managed Care Plans.

116. The Medicare Program Could Be Secured By An Increase In The Payroll Tax That Supports The Program.

117. The Medicare Program Could Be Secured By Increasing Premiums, Deductibles And Co Payments.

118. Medicare's Fee-For-Service Plan Provides Incentives For Supplying Excessive Services.

119. Managed Care Plans Provide Incentives For Supplying Excessive Services.

120. Third-Party Payments For Health Care Increase The Quantity Of Services Demanded.

121. Third-Party Payments For Health Care Decrease The Price Consumers Pay For Services.

122. The Fee-For-Service Delivery And Payment System Is The Primary Means By Which Most Elderly Americans Receive Their Health Care.

123. Third-Party Payments For Health Care Result In Less Usage Of The Health Care System.

124. Managed Care Leads To Higher Costs Of Providing Health Care Services.

125. Investments Of Social Security Tax Payments Result In High Returns On The Contributions Made By Taxpayers.

Documents

ECO/405 Week 11 Quiz