Chapter 11. Poverty, Inequality, and the Welfare State

Programs that are not means-tested: A. provide benefits for people regardless of income level. B. specifically help those with low incomes. C. provide benefits only for households that earn below the mean household income in the United States for a given year. D. provide only in-kind benefits.

A

The adverse selection death spiral occurs when private insurance companies: A. charge higher-than-average prices for health insurance, which in turn drives off healthy individuals and leaves only sicker, high-cost individuals, resulting in yet higher premiums the following period. B. find themselves with only healthy individuals to insure. C. offer health insurance at average cost, which results in losses to the company. D. refuse to insure very sick individuals.

A

The welfare state can: A. take up a large share of government spending in wealthy countries. B. be referred to as Social Security. C. take up only a small share of government spending in wealthy countries. D. affect only low-income households.

A

A popular explanation for the most important cause of the increase in income inequality in recent years is: A. the elimination of many income redistribution programs. B. rapid technological change. C. the failing education system. D. the failing education system and rapid technological change.

B

Becky works for a large grocery store that provides a health insurance program to all workers. This is an example of: A. Medicaid. B. employment-based health insurance. C. government health insurance. D. a single-payer health care system.

B

Compared to a generation ago, benefits from public aid programs, adjusted for inflation, are: A. zero. B. less. C. more. D. about the same.

B

Programs associated with the welfare state are believed to cause deadweight loss, since they: A. affect the amount of disposable income that households below the poverty line have to spend. B. affect incentives to work and to save. C. are supported by many political parties. D. are based on the ability-to-pay principle.

B

There are six households in a rural community. Each household earns $40,000 per year. Suppose that a new resident builds a mansion in the community and that the income in the new household is $4 million per year. After the new resident arrives, the median household income has _____ and the mean household income has _____. A. increased; increased B. not changed; increased C. increased; not changed D. not changed; not changed

B

A definition of poverty that compares the individual's level of income with that of other individuals in the country: A. is an absolute measure. B. would show that poverty has remained constant in the United States for the past 50 years. C. is a relative measure. D. is a relatively little used measure.

C

For the United States in 2012, a Gini coefficient of 0.57 suggests that: A. the United States has almost achieved income equality. B. the average household income is $53,657. C. compared to most European countries, the United States has unusually high levels of income inequality. D. the median household income for the United States is $53,657.

C

In the United States in the first two decades following World War II: A. income distribution in the United States became less equal. B. income equality measures stayed the same. C. income distribution became more nearly equal. D. there was no way to determine income distribution.

C

Sometimes healthy people drop their health insurance, leaving only sicker people to buy insurance. This creates a situation known as: A. moral hazard. B. an efficient free market outcome. C. adverse selection. D. maximizing profits.

C

Health care in the United States is DIFFERENT FROM that of other wealthy countries in all of the following ways EXCEPT that: A. Americans rely more on private health insurance. B. Americans spend more per person on health care. C. the United States is the only country in which large numbers of people lack health insurance. D. the United States is the only country that provides government health care.

D

The problem with community rating is that it: A. causes moral hazard. B. results in poor-quality health care. C. is very unpopular with health care providers. D. may cause adverse selection.

D

Which of the following is (are) associated with poverty? A. adequate employment B. education C. proficiency in English D. adequate employment, education, and proficiency in English

D

Which of the following is NOT a major cause of poverty in the United States? A. inadequate educational attainment B. discrimination C. lack of adequate health coverage D. welfare

D

Which program was introduced in 1990 to replace the means-tested program Aid to Families with Dependent Children? A. Social Security B. Medicare C. food stamps D. Temporary Assistance to Needy Families

D