Macroeconomics 222: Social Insurance Programs
The statutory and economic incidence of social security taxes are almost always identical for workers. Select one: True False
False
Workers are usually only willing to contribute to pension funds that are not fully-funded. Select one: True False
False
A paternalistic rationale for social insurance would be when someone believes that, because Angela will not voluntarily save for future retirement, requiring her to contribute to social security is really intended to help her through government policy. Select one: True False
True
Bob receives a positive transfer he receives more from the Social Security system than his contributions would otherwise have funded. Select one: True False
True
Social Security operates on a pay-as-you-go funding requirement that is required only to meet the current year's outflow of benefits. Select one: True False
True
The Social Security Trust Funds consist of accumlated surpluses over time. Select one: True False
True
When the current year's Social Security taxes are less than benefits, a deficit occurs. Select one: True False
True
When the current year's Social Security taxes exceed benefits, a surplus occurs. Select one: True False
True
Suppose Mary earns $100,000 in her job as an economist for a major oil company. What is her personal social insurance tax bill in 2014? Select one: a. $7,650 b. $10,000 c. $15,300 d. none of these
a. $7,650
Which of the following individuals will tend to receive more positive income transfers from the Social Security program? Select one: a. An individual who earned the minimum wage throughout their working life. b. An individual who earned above-average income throughout their lifetime.
a. An individual who earned the minimum wage throughout their working life.
When unemployment insurance causes some workers to quit their jobs only because they wish to collect benefits, what is said to occur? Select one: a. moral hazard b. none of these c. forbearance d. adverse selection
a. moral hazard
Which of the following would extend the ability of Social Security to make payments in a given year? Select one: a. none of these b. increase in retirees relative to workers c. increase in SS benefits d. lower retirement age e. decrease in SS tax rates
a. none of these
Social Security is required to follow which type of funding requirement? Select one: a. pay-as-go b. fully funded
a. pay-as-go
Which of the following occurs when social security tax collections exceed benefits in a given year? Select one: a. social security surplus b. social security deficit
a. social security surplus
What happens to the Social Security Trust Fund when there is deficit in the Social Security account? Select one: a. trust fund falls b. trust fund rises c. trust fund stays the same
a. trust fund falls
Suppose Mary earns $100,000. What is her employer's social insurance tax bill in 2014? Select one: a. none of these b. $7,650 c. $10,000 d. $15,300
b. $7,650
All of the following are social insurance programs except: Select one: a. Social Security b. Defense c. Medicare d. Unemployment Insurance
b. Defense
Suppose in a given year Social Security taxes of $500M were collected and SS benefits of $400M were dispensed. Which of the following would be a true statement under these conditions? Select one: a. SS trust fund would rise by $900M b. SS surplus of $100M would arise c. SS deficit of $100M would arise d. SS trust fund would rise by $500M e. none of these
b. SS surplus of $100M would arise
Suppose in a given year Social Security taxes of $500M were collected and Social Security benefits of $600M were paid. Which would be a true statement under these conditions? Select one: a. a SS surplus of $100M would arise b. a SS deficit of $100M would arise c. the SS Trust Fund would rise by $1.1B d. none of these e. the SS Trust Fund would rise by $500M
b. a SS deficit of $100M would arise
Which of the following best describes a well-run private pension plan? Select one: a. pay-as-you-go b. fully funded
b. fully funded
Which of the following long-run effects is likely from the Social Security program to the extent that it lowers national saving? Select one: a. raises GDP growth b. lowers GDP growth c. exerts no effect on GDP growth
b. lowers GDP growth
The "adverse selection" problem would suggest which of the following individuals would be most likely to apply for health insurance? Select one: a. older healthy stockbroker b. older stockbroker with chronic illnesses c. young healthy stockbroker d. young healthy college student
b. older stockbroker with chronic illnesses
Suppose Mary is self-employed and earns $160,000 . On how much income must she pay the social security tax in 2014? (Just the social security portion; not the medicare portion). Select one: a. $100,000 b. $120,000 c. $117,000 d. none of these
c. $117,000
Suppose Mary earns $100,000. What is the combined social insurance tax bill in 2014? (That is, paid by Mary and her employer). Select one: a. none of these b. $7,650 c. $15,300 d. $10,000
c. $15,300
Suppose in a given year that Soc. Security taxes of $800M were collected and Soc. Security benefits of $900M were paid. Which would be a true statement under these conditions? Select one: a. SS surplus of $100M would arise b. SS trust fund would rise by $800M c. SS trust fund would fall by $100M d. SS trust fund would rise by $1.5B
c. SS trust fund would fall by $100M
When an insurance company finds that "bad risks" are more likely to insure than "good risks" this is called: Select one: a. marginal risk b. asymetric information c. adverse selection d. moral hazard
c. adverse selection
When an insurance company finds that people who are insured take less care of their insured property this is called: Select one: a. asymetric information b. marginal risk c. moral hazard d. adverse selection
c. moral hazard
Mary earns $100,000. What "economic incidence" of this tax does she bear in 2014? Assume she is the "typical" worker. Select one: a. none of these b. $10,000 c. $7,650 d. $15,300
d. $15,300
Which of the following is not one of the rationales for social insurance? Select one: a. paternalism b. lack of private markets c. equity d. all of these are rationales
d. all of these are rationales
Which of the following would be a means of funding benefits during a year in which social security runs a deficit? Select one: a. decrease taxes on corporations b. raise benefit payments c. decrease social security tax rates d. raise the retirement age
d. raise the retirement age