Deck 18: The Economics of the Welfare State

Question 1

Children raised in poverty are more likely to live in poverty as adults than are other children because low income is highly correlated with: I.higher high school dropout rates.
II.a greater risk of mental problems and behavioural disorders.
III.higher rates of illness and hospitalization.

A) I only
B) II only
C) III only
D) I,II,and III

Answer 1

I,II,and III

Question 2

The _____ is widely used to measure income inequality.

A) Gini coefficient
B) median household income
C) poverty rate
D) ability-to-pay principle

Answer 2

Gini coefficient

Question 3

Which factor is/are associated with poverty? I.lack of adequate employment
II.lack of education
III.lack of proficiency in English or French

A) I and II only
B) I and III only
C) II and III only
D) I,II,and III

Answer 3

I,II,and III

Question 4

The _____ identifies the level of income at which half of the households in the population earn more and half of the population earns less.

A) median household income
B) mean household income
C) poverty level
D) Gini coefficient

Question 5

Which example BEST illustrates social insurance?

A) liability insurance for automobiles
B) food availability programs for low-income Canadians
C) housing subsidies
D) retirement pension

Question 6

An example of a social insurance program is:

A) expenditure on national defense.
B) guaranteed income payments to the disabled.
C) free public transport to low-income Canadians.
D) purchasing a new city police car.

Question 7

In 2016,which demographic group had the HIGHEST poverty rate?

A) First Nations children
B) Hispanics
C) Whites
D) female-headed families with no husband present

Question 8

Which factor is NOT a major cause of poverty in Canada?

A) inadequate educational attainment
B) discrimination
C) bad luck
D) welfare

Question 9

Canada's Gini coefficient is _____ of all North and South America.

A) the widest
B) the lowest
C) the highest
D) the most narrow

Question 10

Which factor is NOT a leading cause of poverty in Canada?

A) lack of adequate employment
B) lack of education
C) the welfare system
D) discrimination

Question 11

In 2016,the poverty line (threshold)for a single parent family was:

A) 23.7%.
B) 26.3%.
C) 19.5%.
D) 33.6%.

Question 12

The percentage of the population that falls below the poverty line (threshold)is called the:

A) poor rate.
B) poverty rate.
C) homeless rate.
D) absolute number of people in poverty.

Question 13

Government payments to individuals for which no good or service is exchanged are:

A) spending.
B) purchases.
C) spending on goods and services.
D) transfer payments.

Question 14

In 2014,_____ of the Canadian population was living in poverty.

A) approximately 8.8%
B) 20% to 24%
C) 25% to 29%
D) more than 30%

Question 15

The poverty line (threshold)is adjusted each year to reflect:

A) changes in the cost of living.
B) changes in the size of the average family.
C) the long-term rise in the average standard of living.
D) changes in the cost of living and changes in the size of the average family.

Question 16

During the past 25 years,the degree of income inequality in Canada has been falling.Which factor is NOT a possible reason for this phenomenon?

A) technological progress that has increased the demand for high-skilled workers relative to the demand for low-skilled workers
B) increased imports of labour-intensive products
C) increased immigration
D) higher divorce rates

Question 17

Which transaction is a transfer payment?

A) The government pays an employee by making a direct transfer to the employee's bank account.
B) An army officer transfers part of her pay to the government to pay her taxes.
C) A senior citizen receives his or her pension payment.
D) Government spends additional funds on infrastructure.

Question 18

Given that the definition of poverty has not been adjusted to reflect the long-term rise in average incomes,you would expect _____ in the percentage of the population living below the poverty line.

A) a decrease
B) an increase
C) no change
D) It is impossible to determine how the percentage of the population living in poverty might change.

Question 19

Economists believe that looking at the distribution of income by quintiles at one moment overstates the true inequality of income because:

A) it ignores the effect of taxes.
B) it ignores the effect of transfer payments.
C) families near the bottom of the distribution in any given year may be having an unusually bad year,while those at the top may be having an unusually good one.
D) families near the bottom of the distribution in any given year are often having an unusually good year,while those at the top are often having an unusually bad one.

Question 20

Studies of family income over time reveal that:

A) most people in the highest quintile tend to fall to the lowest quintile during their lifetime.
B) income mobility is rare for all quintiles of the income distribution.
C) many people who move down the income ladder are young.
D) many people who start out at the bottom of the income ladder when they are young move up the income ladder as they age and move down again when they retire.

Question 21

Measured by the amount of money spent by the Canadian government,which Canadian welfare program is the LARGEST?

A) government transfers to provinces
B) employment insurance
C) Medicare
D) retirement pensions

Question 22

Which program provides in-kind transfers?

A) the GST Tax Credit
B) Temporary Assistance for Needy Families
C) retirement benefits
D) Medicare

Question 23

Which factor was NOT mentioned in the textbook as a possible reason why the large welfare state in France is a good thing?

A) low level of employment
B) shorter working hours
C) early retirement
D) access to national daycare

Question 24

If a nation's Gini coefficient is rising over time,it is an indicator of a(n):

A) increase in the poverty rate.
B) decrease in the poverty rate.
C) increase in income inequality.
D) decrease in income inequality.

Question 25

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

Question 26

_____ programs are designed to provide benefits to people whose income falls below some minimum.

A) Means-tested
B) Relative income
C) Absolute income
D) Nominal income

Question 27

When a welfare program is provided to those whose income falls below some minimum,it is said to be:

A) means-tested.
B) an in-kind benefit.
C) a monetary benefit.
D) a negative income tax.

Question 28

A popular choice 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.

Question 29

Affordable housing,Provincial drug plans (for low-income families),and health care are all:

A) negative income taxes.
B) employment benefits.
C) in-kind transfers.
D) part of the Temporary Assistance for Needy Families program.

Question 30

A factor that has been associated with the increase in income inequality in Canada is the:

A) decrease in households headed by single women.
B) reduction in the percentage of the population over age 65.
C) increase in immigration.
D) slowdown in technological change.

Question 31

Which of the following is NOT a characteristic of income inequality in Canada?

A) the growth in technology
B) the children of poor parents are more likely to be poor than the children of affluent parents
C) measures of inequality in a given year overstate true inequality
D) inequality not only persists for long periods of time for individuals

Question 32

Which Canadian welfare program is an in-kind benefit that is NOT means-tested?

A) employment insurance
B) Medicare
C) guaranteed income supplement
D) pension benefit

Question 33

The provision of specific goods and services (rather than cash)to needy people by way of welfare programs is:

A) the income effect.
B) the wealth effect.
C) in-kind benefits.
D) Rawlsian assistance.

Question 34

Affordable housing is an example of:

A) a negative income tax.
B) an in-kind benefit.
C) a monetary benefit.
D) employment insurance.

Question 35

Over the past two decades,the share of income going to the richest Canadians has _____ than the share going to the poorest Canadians.

A) risen faster
B) risen more slowly
C) fallen faster
D) fallen more slowly

Question 36

Remarkably,income inequality is _______ in Canada and ______ in Europe.

A) lower;higher
B) low;low
C) high;high
D) higher;lower

Question 37

The highest levels of income inequality are found in _______ while the most equal distributions of income are in ______.

A) Australia;South America
B) Latin America;Canada
C) Africa;Europe
D) China,Brazil

Question 38

A _____ program is one for which the recipient qualifies on the basis of _____.

A) social insurance;income
B) means-tested;age
C) means-tested;income
D) social insurance;need

Question 39

Redistribution programs are means-tested.To qualify for such a program,a person must demonstrate that:

A) his or her family is larger than the mean family size for the country as a whole.
B) his or her average (or mean)family income has fallen (or not gone up)during the past 3 years.
C) though unemployed,he or she is making serious efforts to get a job.
D) his or her income (or means)is below a certain specified level.

Question 40

Which factor is one that has been associated with the increase in income inequality in Canada?

A) a decrease in households headed by single women
B) a reduction in the percentage of the population over age 65
C) a smaller gap between the wages of skilled and unskilled workers
D) the way technological change has affected labour demand

Question 41

In most wealthy countries,the government pays _____ of medical costs.

A) 100%
B) 70% to 80%
C) 30% to 40%
D) less than 20%

Question 42

In Canada,individuals pay directly (out of pocket)_____ of medical costs.

A) 100%
B) between 70% and 80%
C) 50%
D) less than 30%

Question 43

When adverse selection occurs,healthy people pay premiums that are _____ their actual health care costs.

A) higher than
B) equal to
C) less than
D) positively correlated to

Question 44

In 2014,personal health care expenditures in Canada were approximately _____ per person.

A) $5 000
B) $8 200
C) $5 540
D) $7 500

Question 45

The largest _____ program in Canada is _____.

A) social insurance;Medicare
B) social insurance;retirement payments to retired persons
C) means-tested;farmers' aid
D) means-tested;retirement payments to retired persons

Question 46

Which Canadian welfare program is a means-tested,in-kind benefit?

A) Employment Insurance (EI)
B) Old Age Security (OAS)
C) Affordable housing
D) Canada Child Benefit (CCB)

Question 47

_____ is/are a means-tested monetary benefit in a welfare program.

A) Affordable housing
B) Medicare
C) Old Age Security (OAS)
D) Employment Insurance

Question 48

Insurance companies attempt to minimize adverse selection by:

A) relying on the government to pay for health insurance.
B) screening and employment-based health insurance.
C) relying on the free market to allocate risk efficiently.
D) charging high premiums to young,healthy people.

Question 49

Which is the possible outcome for a means-tested program that provides aid to parents with children?

A) family breakup since a family with both spouses present may not qualify for aid
B) a reward for not seeking work
C) the abandonment of children
D) a reward for not seeking work and the abandonment of children

Question 50

In 2014,health care expenditures in Canada accounted for _____ of GDP.

A) approximately 1%
B) 15% to 20%
C) 40% to 50%
D) over 80%

Question 51

Suppose ABC Health is a private health insurance company that offers an identical policy to all customers.Each customer pays a premium equal to the average consumer's annual medical expenses.This is a system that has the potential to fail because of the _____ problem.

A) adverse selection
B) income inequality
C) single-payer
D) equity versus efficiency

Question 52

Private health insurance is funded by:

A) the government.
B) tax contributions to Medicare,which come primarily from the richest individuals in a population.
C) extremely ill people,who pay very high premiums.
D) members of a large pool of individuals,each paying a fixed premium to a private company that agrees to pay some portion of the medical expenses of the members.

Question 53

Which program is NOT a means-tested program?

A) National Child Benefit Supplement (NCBS)
B) Canada Child Benefit (CCB)
C) Health care
D) Provincial drug plans

Question 54

Sometimes healthy people drop their health insurance,leaving only sicker people to buy insurance.This phenomenon creates a situation known as:

A) moral hazard.
B) an efficient free market outcome.
C) adverse selection.
D) maximizing profits.

Question 55

Becky works for a large grocery store that provides a private health insurance program to all workers.This is an example of:

A) Medicare.
B) employment-based health insurance.
C) government health insurance.
D) a single-payer health care system.

Question 56

In Canada,the government pays _____ of all medical costs.

A) 100%
B) between 70% and 80%
C) approximately 50%
D) less than 20%

Question 57

_____ is a means-tested program.

A) Expenditure on national defense
B) Guaranteed income for the disabled
C) Canada Child Benefit
D) Purchasing a new city police car

Question 58

Which Canadian welfare program is a monetary benefit that is NOT means-tested?

A) Earned Income Tax Credit
B) Canada/Quebec Pension Plan (CPP/QPP)
C) Guaranteed Income Supplement (GIS)
D) Health care

Question 59

In Canada,_______ is a means-tested program,while ________ is a not means-tested program.

A) Provincial drug plans;National Child Benefit Supplement (NCBS)
B) Health care;Canada/Quebec Pension Plan (CPP/QPP)
C) Canada Child Benefit (CCB);Employment Insurance (EI)
D) Old Age Security (OAS);Affordable housing

Question 60

The negative income tax:

A) describes a badly designed tax system.
B) is a system in which low incomes are taxed at a higher rate than are high incomes.
C) is a program in which low-income working families receive income supplements,rather than having to pay taxes.
D) is the minimum tax that must be paid by a business,even if it has a negative income (or a loss).

Question 61

Most Canadians receive their health insurance through:

A) Medicare.
B) employment-based programs.
C) their employer.
D) direct purchase.

Question 62

Which country gives all of its citizens a choice between private doctors and hospitals and care in a system run directly by the government?

A) the United States
B) Canada
C) France
D) Great Britain

Question 63

Some countries,including Canada,have adopted a health care system in which the government pays the medical bills.This is known as a(n)_____ system.

A) employment-based
B) private health insurance
C) means-tested
D) single-payer

Question 64

An advantage for an individual of having employment-based insurance is that it:

A) increases moral hazard.
B) increases the likelihood of adverse selection.
C) increases government tax revenues.
D) receives favorable tax treatment.

Question 65

Which country has a health care system that directly employs health care workers and runs hospitals and clinics that are free to the public?

A) the United States
B) Canada
C) France
D) Great Britain

Question 66

Community rating is a regulation that requires:

A) cities to give ratings to movies shown in local theatres.
B) insurance companies to offer the same policies for the same premium to everyone,regardless of medical history.
C) insurance companies to charge higher premiums to healthy people.
D) insurance companies to charge higher premiums to the sickest people in the community.

Question 67

The Canadian government health insurance program for people aged 65 years and older is:

A) the same as it is for everybody else.
B) means-tested.
C) income based.
D) the Old Age Health Income Act (OAHIA).

Question 68

The individual mandate is the requirement that:

A) each health care provider provide care for Medicare patients.
B) each health care provider provide care for Medicaid patients.
C) each individual purchase health insurance.
D) everyone go to school for at least 12 years.

Question 69

To ensure that low- and middle-income families have health insurance that they can afford,the Affordable Care Act of 2010:

A) provides government subsidies to low- and middle-income families.
B) provides Medicaid for low- and middle-income families.
C) exempts low- and middle-income families from the individual mandate.
D) forces employers to provide them with health insurance.

Question 70

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.

Question 71

The means-tested Canadian government health insurance program is:

A) Medicare.
B) Old Age Security Fund (OASF).
C) employment based.
D) not means-tested,but it is universal.

Question 72

A way in which health care in Canada differs from health care in other wealthy countries is that:

A) people rely more on private health insurance.
B) individuals spend more on health care.
C) significant numbers of people lack health insurance.
D) it provides government health care.

Question 73

Which country has a single-payer system funded through taxes in which the government is the principal payer of medical bills for all of its citizens?

A) the United States
B) Canada
C) France
D) Great Britain

Question 74

According to the federal government,the two overarching objectives of federal health care policy are:

A) (1)to ensure that every Canadian has timely access to all medically necessary health services regardless of their ability to pay for those services and (2)to ensure that no Canadian suffers undue financial hardship as a result of having to pay health care bills.
B) (1)to ensure that every Canadian has access to all health services regardless of their ability to pay for those services and (2)to ensure that no Canadian suffers undue financial hardship as a result of having to pay health care bills.
C) (1)to ensure that every Canadian has timely access to all medically necessary health services regardless of their ability to pay for those services and (2)to ensure that no individual living in Canada suffers undue financial hardship as a result of having to pay health care bills.
D) (1)to ensure that every Canadian has access to all health services regardless of their ability to pay for those services and (2)to ensure that no individual living in Canada suffers undue financial hardship as a result of having to pay health care bills.

Question 75

Medicare is funded by:

A) private insurance companies.
B) the federal government.
C) provincial governments.
D) individuals.

Question 76

Progress in medical science has contributed to _____ health care costs.

A) increasing
B) decreasing
C) constant
D) randomly fluctuating

Question 77

Which country does NOT provide health care to all of its citizens?

A) the United States
B) Canada
C) France
D) Great Britain

Question 78

An advantage of employment-based insurance is that it:

A) reduces moral hazard.
B) helps reduce the problem of adverse selection.
C) increases government tax revenues.
D) guarantees better care than is provided by government insurance such as Medicare.

Question 79

People who are uninsured by employment-based programs are likely NOT so because:

A) their employer does not provide health insurance.
B) they are too old to qualify for health insurance.
C) they are relatively healthy and choose to save their money,rather than buy insurance.
D) they are employed but can't afford to purchase insurance.

Question 80

Which of the following is NOT a provision of The Canada Health Act?

A) universality
B) comprehensiveness
C) accessibility
D) private administration