1. The payments made to the beneficiaries of the social security program are financed
    by 
 a. the earlier insurance premiums paid by the recipients.
 b. current receipts derived from the payroll tax.
 c. income derived from funds that were previously invested in stocks and bonds.
 d. governmental savings accounts based on the amount of funds the recipient
    previously paid into the system.
 
2. In 1995, the number of workers, per social security beneficiary was approximately
 ________; by the year 2030, this figure is expected to ___________. (Fill in the
     blanks.)
 a. 3.2 ; increase to approximately 6.8
 b. 3.2; fall to approximately 2.0
 c. 8.0; still be approximately 8.0
 d. 8.0; fall to approximately 6.8
 
3. In the early 1990s, the one-fifth of U.S. families with the lowest incomes
     received approximately ___________ percent of the total income (after taxes and
     tranfer benefits), while the proportion received by the highest fifth of families
     was approximately ____________ percent of the total. (Fill in the blanks.)
 a. one, seventy two
 b. five, forty two
 c. eleven, thirty five
 d. seventeen, twenty nine
 
4. During the last thirty years, the United States has experienced a decline in the
     percentage of "out-of-pocket" payments for medical services and an increase in the
     proportion of medical costs paid for by third-parties. This change in payment
     structure will tend to cause
 a. a decline in the demand for medical services.
 b. a decline in the price of medical services.
 c. a reduction in the incentive of individuals to economize on their use of
    medical services.
 d. a reduction in the total amount spent on medical services.
 
5. Which of the following correctly describes the relationship between education,
     gender, and income levels in recent decades?
 a. Incomes of both men and women have risen at roughly the same rate for all
    education levels.
 b. Incomes of men who graduated from college have increased relative to men with a
    high school education, but the same has not held true for women.
 c. While the earnings of men have risen at roughly the same rate for all education
    levels, earnings for college educated women have risen relative to those of
    high school educated women.
 d. Earnings of both male and female college graduates and post-graduates have
    increased considerably during the last two decades relative to those with only
    a high school education.
 
6. When we compare the prices of medical services with overall consumer prices, we
     find that between 1960 and 1995, the prices of medical services
 a. actually declined relative to the overall consumer price index.
 b. increased at approximately the same rate as overall consumer price index.
 c. increased almost twice as much as the overall consumer price index.
 d. increased almost ten times as much as the overall consumer price index.
 
7. An income tax that taxes all income above $25,000 per year at a constant 19
    percent marginal rate would have an average tax rate that
 a. was regressive.
 b. increased as income rose.
 c. fell as income rose.
 d. remained constant as income rose.
 
8. Poor people, who receive income assistance from the government, often do not work
    because
 a. they face very high implicit marginal tax rates.
 b. they are usually not physically able to work.
 c. they have no desire for additional money.
 d. the government forces them to stay at home and take care of their children.
 
9. In the United States during the past thirty years, the overall poverty rate has
 a. declined, even though spending on transfer payments has been reduced as a share
    of GDP.
 b. changed very little, even though spending on transfer payments has increased as
    a share of GDP during this period.
 c. increased sharply as the result of the reduction in spending on transfer
    payments throughout most of this period.
 d. gone down when spending on transfer payments rose and gone up when spending on
    transfer payments fell.
 
10. When economists refer to a flat tax, they generally mean a tax where
 a. everyone pays the same amount of tax.
 b. everyone pays the same percentage of their total income in tax.
 c. everyone pays the same marginal tax rate on their taxable income.
 d. everyone pays tax on every dollar of income they earn.