A worker earns $2,000 per month before taxes. He pays $140 per month payroll tax on those wages. In addition, the income taxes on those wages are $360 per month. On retirement, the worker receives a Social Security pension of $750 per month. Which of the following statements is true?
Answer
a. The worker’s gross replacement rate is 50 percent.
b. The worker’s net replacement rate is 50 percent.
c. The worker’s net replacement rate is 38 percent.
d. The worker’s net replacement rate is 75 percent.
Question 2
3 out of 3 points
The Social Security Act was implemented in the United States in:
Answer
a. 1927.
b. 1935.
c. 1947.
d. 1965.
Question 3
3 out of 3 points
The gross replacement rate:
a. measures a worker’s monthly retirement benefit divided by monthly earnings before taxes in the year prior to retirement.
b. measures a worker’s monthly retirement benefit divided by monthly earnings after taxes in the year prior to retirement.
c. is an increasing function of gross monthly earnings prior to retirement.
d. is independent of gross monthly earnings prior to retirement.
Answer
Question 4
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.
Answer
Question 5
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.
Answer
Question 6
The induced-retirement effect of the Social Security pension system induces workers to:
Answer
a. save less for retirement.
b. save more for retirement.
c. reduce savings for retirement to zero.
d. work more after retirement.
Question 7
Which of the following is true about the Medicare program in the United States?
Answer
a. It is only available to those who pass a means test.
b. It is available to all citizens over the age of 65.
c. The costs are completely financed by fees paid by insurees.
d. It places no limits on reimbursement to medical care providers.
Question 8
The percent of total health care costs in the United States paid for by governments is approximately:
Answer
a. 90 percent.
b. 45 percent.
c. 25 percent.
d. 10 percent.
Question 9
The government program that provides the health insurance to the poor in the United States is called:
Answer
a. national health insurance.
b. Medicare.
c. Medicaid.
d. employer-provided health insurance.
Question 10
Under national health insurance as operated in Great Britain,
Answer
a. the British system pays fees equal to half of the costs of services provided to them.
b. general practice physicians are paid on a per-patient rather than on a per-unit-of-service basis.
c. patients requiring surgery can pick their surgeons and can usually obtain the surgery in a matter of days, even if it is not an emergency.
d. there are no government limits on health care spending by hospitals.
Question 11
Most of the medical bills of Americans in the United States are paid by:
Answer
a. the patients.
b. private and government health insurance.
c. charities.
d. Medicaid.
Question 12
What is the moral hazard associated with third party payment for health services?
Answer
a. The recipient of the service is not as informed as the provider of the service.
b. The recipient of services tends to decline more services than they should.
c. The recipient of services tends to have more services than what is needed relative to the efficient level of services.
d. There is no moral hazard.
Question 13
A proportional income tax has an average tax rate that:
Answer
a. always is less than the marginal tax rate.
b. always exceeds the marginal tax rate.
c. equals the marginal tax rate at first and then becomes less than the marginal tax rate.
d. always equals the marginal tax rate.
Question 14
A tax on real estate is a:
Answer
a. general wealth tax.
b. general consumption tax.
c. selective wealth tax.
d. selective income tax.
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