ECON 40 EXAM 4 (Ch. 19 & 20)

Medicare is an example of

A direct cash transfer payment.

The taxation principle that says people with higher incomes should pay more in taxes than those with lower incomes is called

A regressive tax system.

Moral hazard is

An incentive to engage in undesirable behavior.

Which of the following is a welfare program?

Food stamps.

A 7.25 percent sales tax

Is a regressive tax because poor individuals consume a higher percentage of their income than high-income individuals.

A flat tax

Is a single-rate tax system.

Welfare benefits reduce the need to work and result in a shift in the

Labor demand curve to the right.

The argument against greater equality in the distribution of income in the United States hinges basically on

Loss of incentives.

Which of the following programs is the second-largest federal income transfer program?

Medicare

When the Census Bureau counts the number of poor Americans, it counts

Only money income.

In general, lower marginal tax rates provide incentives to

Produce more output.

Welfare support creates a moral hazard by

Reducing the need to work.

A tax system in which tax rates fall as incomes rise is Flat.

Regressive.

Personal income is

The income received by households before payment of personal taxes.

Wealth refers to

The market value of assets people own.

Which of the following is a goal of an in-kind transfer program but not a cash transfer program?

To change the market's answer to the FOR WHOM question.

Means-tested income transfer programs are referred to as

Welfare programs.

The official poverty index is based on

family size and income

Transfer payments are

payments that do not require a good or service in exchange.

Which of the following programs is the largest federal income transfer program?

social security