Question

1.   The Social Security retirement system:

a.    is a fully funded pension system.

b.   is a tax-financed system that pays benefits from taxes that are invested to return principal and interest to workers when they retire.

c.    is a tax-financed retirement system that finances pensions by taxing workers each year and transferring the bulk of revenues obtained directly to retirees.

d.   does not use taxes on workers to pay pensions to retirees.

The growth in hourly wages over the past 50 years has averaged about 2 percent per year. How­ever, the growth in Social Security pensions has far exceeded this 2-percent rate. The growth in tax revenue to finance Social Security benefits in excess of 2 percent per year can be accounted for by:

a.    increases in payroll tax rates.

b.   use of other taxes beside the payroll tax to pay Social Security benefits.

c.    an increase in the number of workers paying Social Security taxes.

d.   either (a) or (b)

e.    either (a) or (c)

6. Which of the following can decrease tax rates necessary to pay pensions for a pay-as-you-go pension system?

a.    an increase in replacement rates

b.   a decrease in the retirement age

c.    an increase in the size of the work force

d.   an increase in the number of retirees

7.   Social Security tax rates can be reduced if:

a.    taxable wages decline.

b.   the retirement age is lowered.

c.    the retirement age is raised.

d.   the work force decreases in size.

10.    Which of the following could help decrease the rate of increase of spending on health care in the United States?

a.    a reduction in the deductibles on private health insurance policies

b.   an increase in the coinsurance rate on health insurance and subjecting a larger volume of ser­vices to coinsurance

c.    extension of Medicaid insurance to all persons who are poor

d.   a reduction in the coinsurance rate on health insurance and subjecting a smaller volume of ser­vices to coinsurance

11. Which of the following is an example of the “moral hazard of health insurance”?

a.    an increase in the number of surgeries prescribed for benign prostate disease beyond the point at which the marginal benefit equals the marginal cost

b.   a decreased willingness of individuals to go to the doctor for minor ailments because of increases in coinsurance rates

c.    an underallocation of resources to medical care because of monopoly power of hospitals

d.   experience rating of health insurance groups by health insurers

12.   A third-party payment system for health care:

a.    results because of externalities in the production of health care services.

b.   encourages more than the efficient amount of resources to be allocated to health care.

c.    encourages patients and health care providers to economize on the use of health care resources.

d.   means that patients pay the full price for health care services they consume.

Answer 1

1. Answer is b where tax finance system that pays benifits from the taxes which are invested

2. Answer is C that is increase in the number of workers that pays social security taxes.

6. Answer is C that is increase in the size of the work force

7. Answer is C if the retirement age is raised.

10. Answer is A that is reduction in the deductebles in the privates health insurance.

11. Answer is C that is underallcation of resources ofmedical care because of monopoly power of hospitals.

12. Answer is C that is encourages patients and health care providers to economize on the use of health care resources.