Question

1: The primary cost of the Social Security program is the

A :Redistribution of income from younger to older workers.

B: Financial costs of administering the program.

C: Benefits paid.

D: Reduction in total output the program causes because of work disincentives.

2:Social insurance programs

A:Involve an income eligibility test.

B:Are a type of welfare program.

C:Are means-tested.

D: Are event-conditional.

3: A market failure exists when an imperfection in

A: Welfare programs prevents an optimal outcome.

B: The market mechanism prevents an optimal outcome.

C :Federal government policies prevents an optimal outcome.

D: State government policies prevents an optimal outcome.

4: The poverty gap is the

A: Difference between the income of a household in poverty and the average income.

B: Difference between the incomes of the richest and poorest households.

C: Percentage of families under the poverty level.

D: Shortfall between actual income and the poverty threshold.

5: Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - Wages A welfare system based on the welfare formula given

A: Will increase the number of people eligible for welfare.

B: Has an effective marginal tax rate of 50 percent for welfare recipients.

C: Will increase work incentives.

D: Will increase the risk of moral hazard.

6: The breakeven level of income is the

A: Level of income at which welfare eligibility ceases.

B: Amount of income a person must have to reach the poverty line.

C: Level of income at which an individual household begins to have some discretionary income.

D: Lowest level of income at which in-kind benefits are no longer necessary.

7: In-kind transfers include

A: Public housing and Medicare.

B: Social Security benefits and housing subsidies.

C: Medicaid and unemployment benefits.

D: Transfer payments and food stamps.

8: U.S. poverty is more about ________ deprivation than ________ deprivation.

A: absolute; significant

B: meaningful; mild

C: relative; absolute

D: insignificant; relative

9: Which of the following statements is true?

A: U.S. GDP per capita is five times larger than the world average.

B: The poorest nations of the world have average incomes of $5,000.

C: According to world standards, 12 percent of Americans are poor.

D: "Extreme poverty" refers to an income of less than $2 per day.

10: U.S. per capita GDP is roughly how much larger than the world average?

A: Four times as large.

B: Twice as large.

C: Three times as large.

D: Five times as large.

11: According to the World Bank, roughly 800 million people are classified as being in ________ poverty.

A: extreme

B: tremendous

C: severe

D: subsistence

12: According to the World Bank, ________ people are classified as being in severe poverty.

A:800 million

B:100,000 million

C:2.5 billion

D:500,000 million

13: The Millennium Poverty Goal is the United Nations' goal of reducing the global rate of extreme poverty to ________ percent by 2015.

A: 0

B: 10

C: 15

D: 5

14: Economic growth

A: Cannot be sustained over time.

B: Causes the production possibilities curve to shift inward.

C: Refers to an increase in output.

D: Means that capacity has decreased in the short run.

15: An increase in total output or real GDP is

A: The Millennium Poverty Goal.

B: The inequality trap.

C: Economic growth.

D: Productivity growth.

16: An increase in production possibilities is known as

A: Upward mobility.

B: Predictable growth.

C: Economic growth.

D: Factor expansion.

17: In the poorest nations, agriculture is likely to contribute as much as ________ percent to total output.

A: 30

B: 85

C: 10

D: 55

Answer 1

1) The primary cost of social security is the cost of reduction in output because of the work disincentive. This would mean that if there are unemployment benefits or any such benefits, the people would want to remain unemployed if the benefits and wages in the labor market are less attractive. This would reduce the output and overall productivity because people are having an incentive even when they are unemployed.

Answer would be option D)

2) Social insurance programs are event conditional programs. Event conditional programs imply that the contracts are executed on the fulfillment of conditions.

Eg: If there is a life insurance policy, it would be executed only when the premium was being paid regularly and the person whose insurance It was, died, which would be subjected to conditions like the type of death, age or illness of the person etc.

Answer would be option D)Event conditional.

3) Market failure is when the market fails to allocate the optimal outcome which could be due to externalities or the unaccounted benefits and costs.

Answer is option B)

4) Poverty gap is the gap between the actual income and poverty line ie the shortfall of the income with respect to the poverty line.

Answer would be option D)