Question 1

Which of the following is least likely to be the case?

Accepted Answer

A)   Food stamps encourage the production of more food.
B)   Housing subsidies encourage the production of additional housing.
C)   Medicare changes the mix of output away from medical services.
D)   Student loans change the mix of output in favor of educational services.E) None of the above
F) B) and C) C

Question 2

Use the following formula to answer the indicated question: Benefit amount = Maximum award - 0.6 (Wages in excess of ceiling)  Charles is retired and earns $10,000 per year working part-time.He is entitled to a maximum Social Security retirement benefit of $14,000.Social Security regulations allow him to earn $8,000 and still get maximum benefits.If he increases the number of hours he works and thus increases his earnings to $20,000, his total income will increase by

Accepted Answer

A)   $4,000.
B)   $6,000.
C)   $10,000.
D)   $28,000.E) A) and C)
F) A) and B)

Question 3

In-kind transfers

Accepted Answer

A)   Are a payment for work.
B)   Increase the poverty index.
C)   Are one way to reduce the moral hazards of the welfare system.
D)   Provide the direct transfer of goods and services.E) B) and C)
F) B) and D)

Question 4

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.4 [Wages - (Work expenses + Child care costs) ] Suppose Emily works 1,800 hours per year at a wage of $8 per hour, has child care expenses of $4,000 per year, and has work expenses of $1,000.If the state maximum welfare benefit is $12,000 per year, based on the welfare formula given, Emily's welfare benefit will be

Accepted Answer

A)   $8,240.
B)   $2,600.
C)   $3,760.
D)   Zero because her income exceeds the limit.E) A) and D)
F) All of the above

Question 5

Means-tested income transfer programs are referred to as

Accepted Answer

A)   In-kind transfer programs.
B)   Welfare programs.
C)   Cash transfer programs.
D)   Social insurance programs.E) A) and B)
F) A) and C)

Question 6

The creation of the Social Security program caused a decrease in the labor force participation rate.

Accepted Answer

A) True 
 B)False

Question 7

Medicaid and food stamps are received by

Accepted Answer

A)   Anyone that applies.
B)   Only the elderly.
C)   Only the poor.
D)   Mostly upper-income households in the United States due to inequities in the system.E) B) and C)
F) C) and D)

Question 8

The existence of income transfer programs is likely to

Accepted Answer

A)   Result in recipients having fewer children.
B)   Change the distribution of income but not the mix of output.
C)   Decrease the supply of labor.
D)   Discourage people from overusing health care services.E) B) and D)
F) A) and C)

Question 9

Which of the following is an example of an in-kind transfer?

Accepted Answer

A)   Income transfers.
B)   TANF.
C)   Medicaid.
D)   Social Security.E) B) and D)
F) A) and B) C

Question 10

Which of the following student aid programs is likely to have the highest target efficiency?

Accepted Answer

A)   Direct payment of tuition to the university.
B)   Direct cash payments to the student.
C)   Low-interest loans.
D)   Job opportunities for students.E) A) and C)
F) A) and B)

Question 11

Income transfer programs can change the mix of output.

Accepted Answer

A) True 
 B)False

Question 12

Explain why Social Security and Medicare aren't welfare programs.

Accepted Answer

Social Security and Medicare a...

Question 13

Social Security payments depend on an individual's wages, but the benefits formula is progressive.

Accepted Answer

A) True 
 B)False

Question 14

Suppose a poverty program provides a basic benefit of $6,000, zero deductions, and a marginal tax rate of 0.6.The breakeven level of income is

Accepted Answer

A)   $10,000.
B)   $3,600.
C)   $6,000.
D)   $2,400.E) None of the above
F) A) and C)

Question 15

Lower marginal tax rates for welfare programs will

Accepted Answer

A)   Decrease the incentive to work.
B)   Decrease total welfare costs.
C)   Make more people eligible for welfare.
D)   Increase the moral hazard associated with welfare.E) B) and C)
F) A) and C)

Question 16

Suppose a poverty program has a basic benefit of $10,000, and a family can earn up to $20,000 before losing all welfare benefits.The marginal tax rate is ____ percent.

Accepted Answer

A)   2.0
B)   0.5
C)   0.2
D)   0.10E) A) and B)
F) A) and C) B

Question 17

If welfare benefits equal the poverty gap for each household in poverty, then the

Accepted Answer

A)   Effective marginal tax rate for welfare recipients is 100 percent.
B)   Poor have a strong incentive to begin working.
C)   The poverty gap will become greater.
D)   Production possibilities curve will shift to the right.E) All of the above
F) C) and D)

Question 18

The existence of income transfer programs indicates that the market mechanism has failed.

Accepted Answer

A) True 
 B)False

Question 19

A goal of income transfer programs is to do all of the following except

Accepted Answer

A)   Alter the distribution of income.
B)   Reduce income inequalities.
C)   Change the mix of output.
D)   Change how output is produced.E) B) and D)
F) A) and C)

Question 20

The higher the marginal tax rate for a given welfare program, the greater the damage to the work incentives of recipients, ceteris paribus.

Accepted Answer

A) True 
 B)False

Exam 20: Transfer Payments: Welfare and Social Security

Which of the following is least likely to be the case?

Correct Answer
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C

Correct Answer
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In-kind transfers

Correct Answer
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Means-tested income transfer programs are referred to as

Correct Answer
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The creation of the Social Security program caused a decrease in the labor force participation rate.

Correct Answer
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Medicaid and food stamps are received by

Correct Answer
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The existence of income transfer programs is likely to

Correct Answer
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Which of the following is an example of an in-kind transfer?

Correct Answer
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C

Which of the following student aid programs is likely to have the highest target efficiency?

Correct Answer
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Income transfer programs can change the mix of output.

Correct Answer
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Explain why Social Security and Medicare aren't welfare programs.

Correct Answer
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Social Security and Medicare a...
View Answer

Social Security payments depend on an individual's wages, but the benefits formula is progressive.

Correct Answer
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Suppose a poverty program provides a basic benefit of $6,000, zero deductions, and a marginal tax rate of 0.6.The breakeven level of income is

Correct Answer
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Lower marginal tax rates for welfare programs will

Correct Answer
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Suppose a poverty program has a basic benefit of $10,000, and a family can earn up to $20,000 before losing all welfare benefits.The marginal tax rate is ____ percent.

Correct Answer
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B

If welfare benefits equal the poverty gap for each household in poverty, then the

Correct Answer
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The existence of income transfer programs indicates that the market mechanism has failed.

Correct Answer
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A goal of income transfer programs is to do all of the following except

Correct Answer
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The higher the marginal tax rate for a given welfare program, the greater the damage to the work incentives of recipients, ceteris paribus.

Correct Answer
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Exam 20: Transfer Payments: Welfare and Social Security

Which of the following is least likely to be the case?

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

In-kind transfers

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Means-tested income transfer programs are referred to as

Correct AnswerverifiedShow Answer

The creation of the Social Security program caused a decrease in the labor force participation rate.

Correct AnswerverifiedShow Answer

Medicaid and food stamps are received by

Correct AnswerverifiedShow Answer

The existence of income transfer programs is likely to

Correct AnswerverifiedShow Answer

Which of the following is an example of an in-kind transfer?

Correct AnswerverifiedC

Which of the following student aid programs is likely to have the highest target efficiency?

Correct AnswerverifiedShow Answer

Income transfer programs can change the mix of output.

Correct AnswerverifiedShow Answer

Explain why Social Security and Medicare aren't welfare programs.

Correct AnswerverifiedSocial Security and Medicare a...View AnswerShow Answer

Social Security payments depend on an individual's wages, but the benefits formula is progressive.

Correct AnswerverifiedShow Answer

Suppose a poverty program provides a basic benefit of $6,000, zero deductions, and a marginal tax rate of 0.6.The breakeven level of income is

Correct AnswerverifiedShow Answer

Lower marginal tax rates for welfare programs will

Correct AnswerverifiedShow Answer

Suppose a poverty program has a basic benefit of $10,000, and a family can earn up to $20,000 before losing all welfare benefits.The marginal tax rate is ____ percent.

Correct AnswerverifiedB

If welfare benefits equal the poverty gap for each household in poverty, then the

Correct AnswerverifiedShow Answer

The existence of income transfer programs indicates that the market mechanism has failed.

Correct AnswerverifiedShow Answer

A goal of income transfer programs is to do all of the following except

Correct AnswerverifiedShow Answer

The higher the marginal tax rate for a given welfare program, the greater the damage to the work incentives of recipients, ceteris paribus.

Correct AnswerverifiedShow Answer

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C

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C

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Social Security and Medicare a...
View Answer

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B

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