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Economics

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Exam 4 Your session has expired. Please enter your password to re-authenticate for submission. … Show more Exam 4 Your session has expired. Please enter your password to re-authenticate for submission. Password: 1. Which of the following transactions is a transfer payment? A. The government pays an employee by making a direct transfer to the employee’s bank account. B. A senior citizen receives a Social Security payment. C. All of these are transfer payments. D. An army officer, paid by the government, transfers part of the money he receives to the government to pay his taxes. 2. Food stamps are an example of: A. a monetary benefit. B. a negative income tax. C. an in-kind benefit. D. unemployment insurance. 3. According to the marginal productivity theory of income distribution, in a competitive economy each factor of production is paid its equilibrium value of the marginal product. Answer TrueFalse 4. Insurance companies try to overcome the adverse selection problem by A. educating their policyholders about medical treatments. B. screening those who apply for coverage. C. contracting directly with physicians and hospitals. D. educating their policyholders about government benefits. 5. The tendency for the healthiest people to be least likely to buy private health insurance is known as A. adverse selection. B. preferential selection. C. healthy activity bias. D. customer preference. 6. Assume that perfect competition exists in output and factor markets. The P = MC rule for profit maximization implies the same level of labor use that would be implied by using the VMPL = W rule. Answer TrueFalse 7. Which of the following examples of a wage disparity is an example of compensating differentials? A. On average, white men get paid more than women of all ethnicities. B. Tiger Woods gets paid more than a college professor. C. A nuclear scientist gets paid more than a janitor working in the same building. D. A window washer working in a suburban residential subdivision gets paid less than one who is washing windows on the outside of a skyscraper. 8. When the demand for automobiles is high, the demand for workers who build automobiles is high. This relation between the market for automobiles and the market for the labor that builds automobiles is why demand in a factor market is called: A. a compensating differential. B. the marginal productivity theory of income distribution. C. the factor distribution of income. D. a derived demand. 9. A new teacher often makes less than a teacher with 20 years’ experience because of: A. discrimination. B. efficiency wages. C. differences in physical capital. D. differences in human capital. 10. The single most important factor influencing children’s later socioeconomic attainment is: A. geographic mobility. B. parental income. C. health care. D. education. 11. Time allocation refers to: A. how many hours unions will choose for their members to work. B. how many hours an employer should hire a worker for. C. how many hours people choose to spend on different activities. D. how different types of talents determine the wages people will earn. 12. Social Security is financed by A. an estate tax. B. a sales tax. C. a payroll tax. D. a property tax. 13. The poverty rate is A. the rate of increase in the minimum wage. B. the percentage of the population living below the poverty threshold. C. the growth rate of the population in poverty. D. the share of total national income received by the poorest 20 percent of the population. 14. Which of the following is not a factor of production? A. steel B. land C. labor D. human capital 15. Which age group benefits the most from income redistribution in the U.S.? A. 18-35 B. 65 and over C. Under age 18 D. 36-64 16. Beyond some point, a higher wage may induce an individual to work ________, and the labor supply curve may then ________. A. less; bend backward B. harder; become vertical C. more; bend backward D. more; slope downward 17. If programs of the welfare state involve true economic costs in excess of their monetary costs, then we can say that they A. will not be supported by anyone. B. are not consistent with the ability-to-pay principle. C. should be discontinued. D. generate a deadweight loss. 18. If a firm is currently operating at a point at which the wage rate is below the value of the marginal product of labor, A. it is not earning any profit. B. it can add to its profit by hiring more workers. C. it can add to its profit by reducing the number of workers hired. D. it is currently maximizing profit. 19. Manufactured resources such as equipment, buildings, and tools are also known as: A. human capital. B. physical capital. C. natural resources. D. labor. 20. An example of a social insurance program is: A. expenditure on national defense. B. the food stamp program. C. purchasing a new city police car. D. Social Security payments to the disabled. 21. Using standard economic theory, Scientific Superconductors should continue hiring workers until: A. MPL × P = wage. B. MPL × P = demand. C. the quantity of labor supplied = the quantity of labor demanded. D. MPL × W = P. 22. A government payment to an individual or family is known as A. a security voucher. B. a government transfer. C. a government guarantee. D. a government bonus. 23. A means-tested program is one for which A. benefits are available only to families or individuals whose income falls below a certain level. B. benefits are available only to single-parent families. C. benefits are paid for only one year to any one recipient. D. only in-kind benefits are paid. 24. Brazil’s Bolsa Familia program provides grants to families who will A. start a family-run business. B. keep their children in school and go for regular medical check-ups. C. move to areas where housing conditions are better. D. move to areas where jobs are available. 25. The Gini coefficient is a measure of A. the size of the welfare state. B. labor mobility. C. income inequality. D. the size of government transfers. 26. A price-taking firm will hire labor up to the point at which A. the value of the marginal product of labor equals the wage rate. B. the marginal product of labor is maximized. C. the marginal product of labor equals the wage rate. D. the value of the marginal product of labor is zero. 27. A backward-bending labor supply curve is possible only if leisure is an inferior good. Answer TrueFalse 28. Which of the following is an input in the production of croissants? A. dough mixers B. ovens C. flour D. pastry chefs 29. Following compensation of employees, what is the next largest share of factor income? A. Corporate profits B. Interest C. Proprietor’s income D. Rent 30. Which of the following would decrease a firm’s demand for labor? A. An increase in the selling price of its product. B. An increase in the wage rate. C. A decrease in the wage rate. D. A decrease in the selling price of its product. 31. Which of the following would increase a firm’s demand for labor? A. A decrease in the selling price of its product. B. An increase in the wage rate. C. An increase in the selling price of its product. D. A decrease in the wage rate. 32. A nurse willing to work the midnight to 8 A.M. shift may make more than one who works 8 A.M. to 4 P.M. because of: A. discrimination. B. compensating differentials. C. efficiency wages. D. market power. 33. The programs of the welfare state are intended to alleviate A. economic recessions. B. the need for an education. C. the need for job training. D. economic insecurity and income inequality. 34. A factor that has been associated with the increase in income inequality in the United States is the: A. decrease in households headed by single women. B. increase in immigration. C. slowdown in technological change. D. reduction in the percentage of the population over the age of 65. 35. Scott’s wage is $25 per hour and he works 50 hours a week, which is his optimal labor supply. At his optimal labor supply, his marginal utility of one hour of leisure is equal to: A. the marginal utility he gets from less than $25 worth of goods. B. the marginal utility he gets from $25 worth of goods. C. the marginal utility he gets from more than $25 worth of goods. D. the substitution effect. 36. The ability-to-pay principle would suggest that A. the people who benefit the most from government programs should pay the highest taxes. B. families with very low incomes should receive payments out of tax revenue collected from others. C. everyone should contribute the same portion of their income in taxes. D. taxes should be tied to consumption, rather than to income. 37. Medicare Part D was designed to pay for A. preventive care. B. outpatient care. C. elective surgery. D. prescription drugs. 38. The opportunity cost of an extra hour of leisure is: A. the VMPL. B. $1. C. the same as the price of money. D. the hourly wage rate. 39. Studies of family income over time reveal that: A. most people in the lowest quintile tend to stay there over their lifetime. B. many people who move down the income ladder are young. C. 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. D. income mobility is rare for all quintiles of the income distribution. 40. Which of the following government health care programs is/are means-tested? A. Medicare and Medicaid B. Medicaid only C. The Veterans Health Care Administration and Medicare D. Medicare only 41. An above-equilibrium wage that is paid to motivate employee performance is known as A. a compensating wage. B. a union wage. C. a discriminatory wage. D. an efficiency wage. 42. Which of the following characteristics increases one’s chances of being poor? A. Working full-time, rather than part-time B. Having a college degree C. Being part of a married couple D. Being in a female-headed household with no husband present 43. Which of these four countries has the highest Gini coefficient? A. Canada B. Sweden C. Australia D. the United States 44. Human capital: A. has become less important due to the progress in technology. B. consists of man-made resources such as buildings and machines. C. is the improvement in labor created by education and knowledge that is embodied in the workforce. D. is the improvement in labor created by education, which has become less important due to the progress in technology. 45. Leisure is considered a normal good, since people: A. cannot consume more, since it is limited. B. find it to be a luxury to take time off from their jobs. C. consume more of it all the time. D. consume more of it when their incomes rise. 46. The improvement in labor created by education and knowledge is known as A. temporary capital. B. lifetime investment. C. human capital. D. life cycle investment. 47. Unemployment insurance is financed by A. a tax on employers. B. a sales tax. C. a value-added tax. D. an income tax. 48. The most common source of a surge in expenses that can create economic insecurity is A. a medical condition that requires expensive treatment. B. further job-related training. C. home repair expenses. D. a job-related move. 49. The welfare state is the A. set of state government programs intended to provide job training. B. collection of government programs designed to alleviate economic hardship. C. set of federal government programs providing financial assistance for college education. D. collection of all government social programs. 50. The division of total income among labor, land, and capital is known as A. the wealth account. B. the factor distribution of income. C. the income account. D. the wealth allocation. 51. Programs designed to provide protection against unpredictable financial distress are known as: A. social insurance programs. B. government transfers. C. negative income tax programs. D. poverty programs. 52. The more work a person does, all other things unchanged, then the: A. less leisure he or she has. B. greater his or her free time. C. less income he or she has. D. greater his or her nonmarket use of time. 53. Manufactured resources used to produce goods or provide services are known as A. flexible capital. B. hardware investment. C. lifetime capital D. physical capital. 54. An efficiency wage describes a wage rate that is: A. above the equilibrium wage and is paid in order to provide workers with an incentive to perform efficiently. B. determined by collective bargaining between unions and management. C. equal to the VMPL adjusted so as to make the structure of compensation more equitable. D. efficient because it is exactly equal to the wage rate implied by the marginal productivity theory. 55. The demand for factors of production is called a derived demand because it is: A. derived from the available supply of factors, such as land, that can be overexploited. B. derived on the basis of questions posed to residents during the census. C. derived from the demand for the outputs that are produced by the factors of production. D. not easy to determine and must be derived by a technical (and often complicated) process. • Show less

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