Question 1

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.4 [Wages - (Work expenses + Child care costs) ]
Based on the information given,the marginal tax rate is

Accepted Answer

A)  Zero percent.
B)  40 percent.
C)  60 percent.D) B) and C)
E) A) and C)

Question 2

Higher breakeven levels of income can be achieved by decreasing

Accepted Answer

A)  In-kind benefits.
B)  Earnings disregards.
C)  Basic benefits.
D)  The marginal tax rate.E) None of the above
F) A) and B)

Question 3

The existence of transfer programs implies that

Accepted Answer

A)  Government failure has occurred.
B)  Market failure has occurred.
C)  Technical efficiency exists.D) All of the above
E) A) and B)

Question 4

Explain how the Social Security program affects economic output.

Accepted Answer

The Social Security program reduces econ...

Question 5

The breakeven level of income is the

Accepted Answer

A)  Lowest level of income at which in-kind benefits are no longer necessary.
B)  Level of income at which an individual household begins to have some discretionary income.
C)  Level of income above which a person loses all welfare benefits.D) A) and C)
E) B) and C)

Question 6

Low marginal tax rates discourage work effort but make fewer people eligible for welfare.

Accepted Answer

A) True 
 B)False

Question 7

Social insurance programs are

Accepted Answer

A)  Event-conditional.
B)  Means-tested.
C)  Available only to those at least 65 years old.D) A) and C)
E) A) and B)

Question 8

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

Accepted Answer

A)  Will increase the risk of moral hazard.
B)  Will increase work incentives.
C)  Will increase the number of people eligible for welfare.D) B) and C)
E) None of the above

Question 9

Transfer payments include all of the following except

Accepted Answer

A)  Government-subsidized loans for students.
B)  Federal crop assistance for farmers.
C)  A church-run thrift store for the poor.D) B) and C)
E) None of the above

Question 10

- Refer to Figure 34.4.If an individual does not work,she or he will receive welfare benefits of

Accepted Answer

A)  $0.
B)  $5,000.
C)  $7,500.D) A) and B)
E) A) and C)

Question 11

Social insurance programs are event-conditional.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is least likely to be the case?

Accepted Answer

A)  Food stamps encourage the production of more food.
B)  Housing subsidies encourage the production of additional housing.
C)  Medicare changes the mix of output away from medical services.D) A) and B)
E) All of the above

Question 13

Which of the following is not an example of in-kind income?

Accepted Answer

A)  Food stamps.
B)  Unemployment benefits.
C)  Housing assistance.D) A) and B)
E) A) and C)

Question 14

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.7 [Wages - (Work expenses + Child care costs) ]
Suppose Carter works 1,200 hours per year at a wage of $6 per hour,has child care expenses of $2,200 per year,and has work expenses of $800.If the state maximum welfare benefit is $12,000 per year,based on the welfare formula given,Carter's welfare benefit will be

Accepted Answer

A)  $3,000.
B)  $10,200.
C)  $9,060.D) All of the above
E) None of the above

Question 15

If the government reduced marginal tax rates on Social Security receipts to zero,

Accepted Answer

A)  All retirees would receive full benefits.
B)  Output from older workers would decrease.
C)  The financial cost of the program would decrease.D) B) and C)
E) A) and C)

Question 16

The creation of the Social Security program had no impact on the labor force participation rate because people are not interested in working past the age of 65.

Accepted Answer

A) True 
 B)False

Question 17

The existence of income transfer programs can

Accepted Answer

A)  Decrease the birth rate.
B)  Increase the wage rate as the labor supply decreases.
C)  Decrease the wage rate as labor supply increases.D) A) and B)
E) A) and C)

Question 18

Lower marginal tax rates increase the breakeven level of income faced by welfare recipients.

Accepted Answer

A) True 
 B)False

Question 19

A zero marginal tax rate in welfare programs will make everyone eligible for welfare benefits.

Accepted Answer

A) True 
 B)False

Question 20

The Social Security program tends to

Accepted Answer

A)  Increase work incentives for both older and younger workers.
B)  Increase work incentives for older workers but not younger workers.
C)  Decrease work incentives for both older and younger workers.D) None of the above
E) A) and C)

Exam 34: Transfer Payments: Welfare and Social Security

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

Correct Answer
verified

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.4 [Wages - (Work expenses + Child care costs) ] Based on the information given,the marginal tax rate is

Correct Answer
verified

Social insurance programs are event-conditional.

Correct Answer
verified

Social insurance programs are

Correct Answer
verified

Correct Answer
verified

- Refer to Figure 34.4.If an individual does not work,she or he will receive welfare benefits of

Correct Answer
verified

The Social Security program tends to

Correct Answer
verified

If the government reduced marginal tax rates on Social Security receipts to zero,

Correct Answer
verified

Lower marginal tax rates increase the breakeven level of income faced by welfare recipients.

Correct Answer
verified

Explain how the Social Security program affects economic output.

Correct Answer
verified
The Social Security program reduces econ...
View Answer

Which of the following is not an example of in-kind income?

Correct Answer
verified

The existence of income transfer programs can

Correct Answer
verified

The breakeven level of income is the

Correct Answer
verified

A zero marginal tax rate in welfare programs will make everyone eligible for welfare benefits.

Correct Answer
verified

The creation of the Social Security program had no impact on the labor force participation rate because people are not interested in working past the age of 65.

Correct Answer
verified

Transfer payments include all of the following except

Correct Answer
verified

The existence of transfer programs implies that

Correct Answer
verified

Low marginal tax rates discourage work effort but make fewer people eligible for welfare.

Correct Answer
verified

Higher breakeven levels of income can be achieved by decreasing

Correct Answer
verified

Which of the following is least likely to be the case?

Correct Answer
verified

Exam 34: Transfer Payments: Welfare and Social Security

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

Correct AnswerverifiedShow Answer

Use the following formula to answer the indicated question: Welfare benefit = Maximum benefit - 0.4 [Wages - (Work expenses + Child care costs) ] Based on the information given,the marginal tax rate is

Correct AnswerverifiedShow Answer

Social insurance programs are event-conditional.

Correct AnswerverifiedShow Answer

Social insurance programs are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

- Refer to Figure 34.4.If an individual does not work,she or he will receive welfare benefits of

Correct AnswerverifiedShow Answer

The Social Security program tends to

Correct AnswerverifiedShow Answer

If the government reduced marginal tax rates on Social Security receipts to zero,

Correct AnswerverifiedShow Answer

Lower marginal tax rates increase the breakeven level of income faced by welfare recipients.

Correct AnswerverifiedShow Answer

Explain how the Social Security program affects economic output.

Correct AnswerverifiedThe Social Security program reduces econ...View AnswerShow Answer

Which of the following is not an example of in-kind income?

Correct AnswerverifiedShow Answer

The existence of income transfer programs can

Correct AnswerverifiedShow Answer

The breakeven level of income is the

Correct AnswerverifiedShow Answer

A zero marginal tax rate in welfare programs will make everyone eligible for welfare benefits.

Correct AnswerverifiedShow Answer

The creation of the Social Security program had no impact on the labor force participation rate because people are not interested in working past the age of 65.

Correct AnswerverifiedShow Answer

Transfer payments include all of the following except

Correct AnswerverifiedShow Answer

The existence of transfer programs implies that

Correct AnswerverifiedShow Answer

Low marginal tax rates discourage work effort but make fewer people eligible for welfare.

Correct AnswerverifiedShow Answer

Higher breakeven levels of income can be achieved by decreasing

Correct AnswerverifiedShow Answer

Which of the following is least likely to be the case?

Correct AnswerverifiedShow Answer

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The Social Security program reduces econ...
View Answer

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