ECO 110 Test 3

One significant feature of a "single-payer" system lacking in the U.S. system is

universal coverage.

Cartels are considered ______ because each participant is motivated to ______.

unstable; work in their own interest to produce more

Suppose a plant has 1000 employees, half of whom are from a minority population. Suppose further that, in order to cut costs, a manager must layoff 100 employees. If she chooses only non-minority workers to lay off, because an analysis of productivity data suggests they are, on average, 5% less efficient then she is

using statistical discrimination and it is illegal.

The distribution of aid to the poor between in- kind and in-cash is

weighted slightly toward in-kind benefits

If the deductible is $500 and the co-payment is 20%, on a covered expense of $1000 the individual will pay ________, and their insurance company will pay ________.

$600; $400

If you have a $2000 covered health expense, a deductible of $500, and a 20% co-pay, then you pay _____ and the insurance company pays _____.

$800, $1200

Using a poverty line of $12,500, under the current system of calculating the poverty rate, which of the following people are considered to be in poverty and probably ought not to be?

A New York City family whose combined income is $13,000

In which type of mortgage to you build equity the fastest?

A traditional constant-payment, 20 percent- down mortgage

Which of the following forms of private insurance is likely to have the lowest premiums and least doctor choice flexibility?

An HMO

In which type of mortgage do you neither build nor lose equity?

An interest-only mortgage

Which of the following is a significant change in public policy in the U.S. since the 1980s?

Decline in tax rates on capital gains

Which of the following is the group with the highest poverty rate?

Female-headed households with children

Which of the following is a reason behind increase in household income and wealth inequalities in the U.S?

Increase in robotic production

Which of the following is a benefit of income inequality?

It motivates people to be at the high end of income distribution.

Which Federal Government program(s) pay(s) for the health needs of people who are old and poor?

Medicare and Medicaid

Which of the following nations is NOT part of OPEC?

Mexico

Which of the following is a cost of high-income inequality?

Social disorder

Which of the following had the effect of decreasing income inequality?

The increase in the female labor force participation rate

The Obama administration's stimulus package was

a balance between tax cuts, spending on projects, and shoring up the unemployment and welfare systems.

The stimulus package proposed in 2009 by newly-elected President Obama included

a combination of tax changes and significant increases in federal government spending.

A housing bubble occurs when _________

a home's expected future price

A physician whose job is to determine if a patient needs to be referred to a specialist is called

a primary care physician.

Which of the following forms of affirmative action is unconstitutional?

a quota for hiring minority teachers in a public school district seeking to have a more diverse faculty

The key reason hurricanes affect gasoline prices is

a significant portion of U.S. refining capacity is located along the Gulf of Mexico.

The evidence is that welfare reform in 1996 resulted in ____ welfare rolls.

a substantial decrease in

Doing something that is not necessarily discriminatory on its face but impacts some groups more negatively than others is called

adverse impact discrimination.

Suppose a shipping company required all applicants to lift fifty-pound boxes on and off a truck for an hour to test their strength and endurance and suppose that resulted in 50-out-of-100 black applicants being hired and 10-out-of-100 white applicants being hired. If this test measured the performance required on the job then this would be an example of

adverse impact discrimination.

A deductible is the

amount of covered expense that an individual will have to pay before the insurance company pays anything.

If a woman does not get an interview for a job requiring heavy lifting because the manager has noted that the average women can lift less than the average man, this is

an illegal example of statistical discrimination.

The benefits of income inequality are

associated with rewarding hard work and work that society values.

In the years prior to the recession the economy was growing

at about its typical rate.

When government agents are sent as actors into a bank to test whether loans are more likely to be granted to whites than blacks, they are using a statistical technique called

auditing.

Housing prices peaked

before the recession of 2007-2009 began.

Since the 1980s, mortgages allowing less than 20% down payment have appeared, requiring

borrowers to insure the lender against loss in case of default.

An asset price "bubble" is created when

buyers base their purchase decision upon their expectation that the asset's price will rise.

Affirmative action

can take many forms.

When a group of competitors joins together to form a monopoly, they are forming a

cartel.

The notion that the United States is the "land of opportunity" where who your parents are and how much they earn is unrelated to your income is (relative to other industrial powers)

clearly shown in the data to be inaccurate.

The large decrease in gasoline prices during 2014-2015 was attributable to

directional drilling. hyperaccurate seismologic mapping. hydraulic fracturing.

The incentives built into nearly all welfare programs

discourage work.

The risk-averse person will buy health insurance

even if the expected health costs are less than the insurance premium.

The problem of the "third-party payer" arises in health care in the form of

government and/or private insurance paying a significant part of the costs.

Social discord resulting from income inequality can be lessened if there is (are)

high levels of intergenerational income mobility. high levels of income mobility of individuals.

To get at the large pool of oil embedded in porous rock deep below North Dakota, a process known as ________ is employed.

hydraulic fracturing (fracking)

The majority of people with private health insurance get it

in groups.

The majority of proven world oil reserves are

in the Persian Gulf region.

The costs of income inequalities in an economy can be reduced to an extent if there is ________.

income mobility

Publicly provided health insurance for the poor will

increase the total amount of health care consumed.

The earnings of African Americans relative to whites has

increased from 50 percent in the 1950s to around 60 percent in the 1970s,

Discretionary fiscal policy designed to counteract a reduction in aggregate demand might include

increased government infrastructure spending.

The decrease in gasoline price volatility in 2015 and 2016 was a result of

increased supply elasticity.

Evidence suggests that the 1996 Welfare reform laws increased work by welfare recipients through

increased use of work requirements and incentives.

HMO insurance

is less expensive than fee-for-service insurance.

Many economists suggest that absent legal mechanisms of discrimination, the wage paid to whites and blacks will converge because

it will be in the interest of profit-minded employers to hire blacks, thus bidding up their wages.

Compared to the traditional mortgage amortization schedule, "interest-only" mortgages and "negative-amortization" mortgages require

larger principal payments later in the mortgage.

Among the most important demand side factors explaining homes prices would be the

level of mortgage interest rates.

Fundamentally, housing prices are a function of the home's

location and amenities.

If a health economist is worried that a system of health insurance will break down because of the problem of adverse selection, that economist may focus on ________ as a solution to that problem.

mandation

Looking at differences in median income to find evidence of current employment discrimination overlooks the fact that

men work more hours per week on average.

When neither the patient nor the doctor is cost conscious as a result of health insurance, economists label this the

moral hazard problem.

A bursting of a housing bubble could create more problems than the NASDAQ crash in 2000 because the housing bubble involves

more people

The type of mortgage that allows you to make the lowest possible payment is called a(n)

negative-amortization mortgage.

In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit-default swaps, it is clear that the ________ structure increased homeownership rates and that the ________ structure was riskier to the health of the overall economy.

newer; newer

The 1960s "war on poverty" is generally credited with

only a part of the drop in the poverty rate during the decade.

In order to compare the price of gasoline in the 1970s with the price in any other year, you have to adjust for

overall inflation.

A cartel is formed when

perfect competitors in the same industry collude to form a monopoly.

Because of an increase in the work-force participation rate for women, the availability of uncompensated child care (free care by aunts, sisters, and grandmothers) has become less available to poor women. So, as a consequence, the fact that child care must now be paid for suggests that the

poverty line should be revised upward.

Medical care inflation is likely to be easily overstated (if you look simply at the increase in the cost of a hospital stay) because that calculation ignores

quality increases.

The Federal Reserve's response to the recession of 2007-2008 was

quick but not obviously effective in shortening the recession.

Cartels are not stable because it is in the interest of each of the members to ________ beyond what is in the cartel's general interest.

raise production

The most obvious pattern in poverty rates is the degree to which they are higher during

recessions.

In order to maintain high prices, a cartel must get its members to

reduce production.

The main effect on the economy of the financial sector crisis in late 2008 was

reduced aggregate demand.

When government agents use real-life data on bank loans to determine if whites and blacks are treated equally, they are using the statistical technique called

regression

Nations with single payer systems typically have

relative equality in the access to basic care.

The primary motivation for the purchase of any insurance lies in the fact that most people are

risk averse.

The unemployment rate for African-Americans is, across age categories,

several percentage points higher than that of whites.

The job losses during this recession were

significant and rapid.

The government, in the form of Medicare, Medicaid and the Children's Health Insurance Program pay for ____ of health care costs.

slightly less than half

If a job requires a level of strength that the average woman cannot typically achieve, then interviewing and hiring no women would be an example of

statistical discrimination.

The poverty line is

that level of income just sufficient to provide a family with a minimally adequate standard of living.

The heaviest concentration of proven oil reserves is found in Alaska.

the Persian Gulf.

In-cash transfers differ from in-kind transfers in that

the former is more cost-effective and less bureaucratic.

When tax filings increase faster than increases in population, and when nearly all the extra filings are from individuals in the lower 99 percent income group,

the number of people in the top 1 percent group increases more than it would otherwise.

The poverty rate is

the percentage of people in households with income under the poverty line.

The negative impacts of high income inequality on the society will be less significant if

the poor believe that their poverty is a result of choices they made.

The lowering of the federal funds rate to nearly zero in 2008 is an example of the use of

the traditional tools of monetary policy.

The stability of cartel prices is challenged because

though they increase profits, they are vulnerable to those that seek to make more profit by breaking the agreements that generated them.