Deck 8: Finances and Economics

Question 1

Which of the following was a characteristic of the first Canadian pension program in 1927?

A) The provinces had to pay the full cost of the program.
B) Potential pensioners had to pass a residence requirement and a means test.
C) Pensions were available to people 60 years old and over who chose to pay $20 per year into the program.
D) The program acted to replace the income of retirees without an alternate source of income.

Answer 1

B

Question 2

Which of the following are examples of income maintenance programs?

A) the Canada and Quebec Pension Plans (CPP and QPP)
B) the Old Age Security (OAS) and the Guaranteed Income Supplement (GIS)
C) the Spouse's Assistance (SA) and the Family Allowance (FA)
D) Private Retirement Savings Plans (PRSP)

Answer 2

A

Question 3

Why did the federal government keep payments of early pension programs low?

A) to provide incentive for people to provide for their own old age
B) to meet the minimum requirements for older people
C) to keep the cost of the program to wage earners low enough to encourage people to join
D) to prevent people from relying excessively on government support

Answer 3

A

Question 4

What is the term for programs designed to help people maintain their pre-retirement income and lifestyle?

A) public pension plans
B) Private Retirement Savings Plans (PRSPs)
C) income security programs
D) income maintenance programs

Question 5

Which of the following has increased faster among older people than among younger people (aged 15-64)from the early 1980s to the present?

A) rate of acute illness
B) rate of chronic illness
C) income
D) socio-economic status

Question 6

According to Mo and colleagues (2006),which of the following is the major part of the majority of older Canadians' pension income?

A) investments and savings
B) private income
C) private pensions
D) government transfers and private pensions

Question 7

In 2008,about 12 percent of elderly unattached men and over what percentage of elderly unattached women lived in poverty?

A) 7%
B) 12%
C) 14%
D) 17%

Question 8

Why do people on fixed pensions get poorer every year?

A) because payments remain stable, but inflation reduces their real value
B) because payments are fixed on life expectancy, and the longer the retiree lives, the less the pension pays out
C) because payments depend on the number of wage earners paying in, which is decreasing, and the number drawing pensions, which is increasing, as society ages
D) because payments do not fluctuate with OAS payments

Question 9

Which of the following is an example of an "unattached" individual?

A) Josie, a never-married female
B) Ralph, a transient
C) Frank, a senior who lives in a nursing home
D) Sarah, a recently widowed senior

Question 10

According to Marshall (2011),what percentage of Canadian people within an age group do not feel that they are financially secure?

A) 1/4
B) 1/3
C) 2/3
D) 3/4

Question 11

Russell has a pension plan that is not indexed to the cost of living.He needs to save some extra money for his retirement so that he will maintain his current standard of living.What type of pension plan does Russell have?

A) floating income
B) locked investment
C) portable pension
D) fixed pension

Question 12

The Old Age Security (OAS)and the Guaranteed Income Supplement (GIS)are examples of which of the following?

A) income security programs
B) the Canada Pension Plan
C) income maintenance programs
D) social assistance programs

Question 13

The Guaranteed Income Supplement program established to supplement Old Age Security was designed to do which of the following?

A) enable older people to live more comfortably
B) discourage retirees from re-entering the work force
C) help the poorest older people
D) remove the burden of caring for older people from the federal government

Question 14

What are the two types of pension programs that form the basis of the Canadian pension system today?

A) public and private pensions
B) social assistance and social welfare
C) federal guarantees and provincial supplements
D) income security and income maintenance

Question 15

Which one of the following groups of seniors still continues to show the highest rates of poverty among old people?

A) senior men who are married
B) senior men who live alone
C) senior women who are married
D) senior women who live alone

Question 16

What were income security programs designed to do?

A) allow people to remain above the poverty line
B) allow people to maintain their pre-retirement income and lifestyle
C) allow people to meet their basic needs in retirement
D) allow less money to be spent on private pension programs

Question 17

Which of the following is one of the three groups of individuals who often live below the poverty line in old age?

A) married couples
B) very old people
C) high-school drop-outs
D) men

Question 18

What has happened to poverty rates for seniors since the early 1980s,according to a number of studies?

A) It has increased.
B) It has decreased.
C) It has remained the same.
D) It has quadrupled.

Question 19

What is intergenerational family transfer?

A) the quality of interpersonal relationships in a family
B) the amount of money that passes from one generation of family members to another
C) the study of age differences between generations at different time periods
D) the quantity of money required to firmly establish the next generation of family members in a given social class

Question 20

What will happen to the average income earner after he or she retires?

A) He or she will experience a significant drop in income.
B) He or she will significantly increase his or her income by investing in an RSVP.
C) He or she will maintain a stable standard of living by drawing on fixed pensions.
D) He or she will rely on indirect subsidies to offset the effects of inflation on savings.

Question 21

Without GIS and ALW benefits,what proportion of all older Canadians would live below the poverty line?

A) almost one-quarter
B) almost one-half
C) almost one-third
D) almost three-quarters

Question 22

Which of the following is a component of the first tier of Canada's pension system?

A) private income/investments/savings
B) government transfers
C) public and private pension plans
D) vested earnings

Question 23

The CPP combines which two types of pension plans?

A) an RRSP and an RISP
B) social assistance and social security
C) an income maintenance plan and an income supplement plan
D) a savings plan and a transfer plan

Question 24

What is the purpose of government transfers?

A) to help people maintain their income in retirement
B) to protect older people's incomes from falling below a specified level
C) to give older people the incentive to provide for their own well-being in old age
D) to help older people remain in their homes in old age

Question 25

Which of the following makes up Tier Two of Canada's retirement income system?

A) the public pension plans (CPP/QPP)
B) private income, investments, and savings
C) income security programs
D) government transfers

Question 26

What does portability mean as it refers to the CPP?

A) If the pensioner dies, the plan continues to pay to the spouse of the pensioner.
B) The plan moves with workers when they change jobs.
C) The plan moves with recipients if they leave the country.
D) Workers can choose to invest more than the required amount, thereby increasing the benefits they receive at retirement.

Question 27

Which of the following is the problem with the OAS/GIS/ALW program (government transfers),according to McDonald and colleagues (2010)?

A) The program does not pay equally for married and single people, or for men and women.
B) The program does not pay enough money to keep all older people out of poverty.
C) The program is a fixed-income system that is not adjusted for inflation.
D) Older people often do not know the program exists and therefore do not apply for it.

Question 28

According to federal government estimates,approximately how much money was spent in 2011-2012 on government transfers?

A) $26.9 billion
B) $29.4 billion
C) $36.3 billion
D) $39.1 billion

Question 29

Julia is 63 and she receives this payment,which is a component of tier one of Canada's government transfer program.Which of the following payments does Julia receive?

A) Canada Pension Plan (CPP)
B) HST Rebate
C) Federal Income Tax Rebate
D) the Allowance (ALW)

Question 30

The money paid in today by a worker does not go into a private account,but instead goes to pay the pensions of retired plan members today.Thus,the Canada Pension Plan (CPP)works in part like which of the following?

A) a transfer plan
B) a savings plan
C) an RIP (Retroactive Income Payment)
D) an RRSP (Registered Retirement Savings Plan)

Question 31

Which of the following statements best describes The Guaranteed Income Supplement (GIS)?

A) It is a federal government transfer that goes to nearly all Canadians aged 65 or over.
B) It is a federal government transfer that tries to help people maintain their pre-retirement income level.
C) It is a federal government transfer that maintains widows or widowers of former Family Allowance (FA) recipients.
D) It is a federal government transfer that goes to people with no income other than the Old Age Security (OAS).

Question 32

Why is the CPP an important financial program for Canadians?

A) It maintains an older person's income near pre-retirement levels and guarantees pensions for self-employed people.
B) It ensures that workers have some pension beyond OAS/GIS/ALW, and saves the money on transfer payments.
C) It keeps retirees above the poverty line, and ensures that the widows of workers receive benefits.
D) It ensures adequate pensions for the poorest seniors and creates incentives for wage earners to use RRSPs.

Question 33

On Steven's 2007 income tax form,he noted that 24% of his income came from this source.Which of the following sources of income did seniors most regularly report in 2007?

A) lottery and bingo winnings
B) investments
C) pension income
D) trust funds

Question 34

Georgina is a 63-year-old widower.She was a homemaker all of her life.Which special payment does she receive until she reaches the age of 65?

A) the Allowance
B) the OAS
C) the HST Rebate
D) the Canada Pension Plan Death Benefit

Question 35

Why are sources of government income a benefit to seniors?

A) Seniors don't have to live with their children
B) They have an alternative source of income so that they don't have to make difficult financial choices
C) Seniors don't have to borrow money from their children
D) In times of economic downturn, seniors can be reassured of money to support themselves

Question 36

According to the Service Canada 2012 Ratecard,about what percentage of the labour force paid into the CPP/QPP in 2010-2011?

A) 20%
B) 50%
C) 75%
D) 90%

Question 37

What is the OAS indexed to?

A) interest rates
B) the inflation rate
C) the cost of living
D) tax revenues

Question 38

Who receives OAS (Old Age Security)?

A) workers who earn over $1,600 per month
B) seniors who fall below the poverty line
C) nearly all Canadians aged 65 or over
D) pensioners who earn less than $1,600 per year

Question 39

By 1999,income from private pensions accounted for what percentage of older Canadians' retirement incomes?

A) 6%
B) 12%
C) 27%
D) 29%

Question 40

How does the government ensure that only the poorest older people keep all of their OAS benefits?

A) by taxing the OAS as income
B) by indexing payments to the cost of living
C) by using means-testing to determine need
D) by restricting pre-retirement investments

Question 41

According to Statistics Canada figures from 2007,what percentage of men received the CPP?

A) 96%
B) 59%
C) 84%
D) 98%

Question 42

Which of the following is a limitation of the CPP given in the text?

A) The CPP pays benefits to more Canadians than ever before, costing the country more money.
B) The CPP cannot replace a great deal of the average person's income.
C) People who never worked for a wage do not receive the CPP.
D) People can only keep their CPP benefits if they are eligible for and receive GIS.

Question 43

In order to avoid financial problems in the future,the government has adopted several measures.Which of these measures is among them?

A) raising contribution rates
B) investing current surplus funds in the financial markets
C) decreasing foreign aid to save money
D) refusing to allow immigrants to receive the CPP

Question 44

Why is it important that all CPP members get survivor and disability benefits?

A) because the Widowed Spouses Allowance (WSPA) does not cover the loss of the SPA
B) because women receive fewer benefits than men because of differing work patterns and a longer life expectancy
C) because the reduction in OAS payments from the married to the single rate places many older people below the poverty line
D) because women often outlive their husbands, but many do not have pensions of their own

Question 45

Which of the following is a characteristic of the CPP?

A) The plan pays lower rates to women than to men because women tend to live longer.
B) The CPP is a fixed-income plan.
C) The CPP cannot protect people from inflation and requires personal savings or other supplements to ensure the pensioner's income remains stable.
D) The CPP guarantees up to 25% of the pensioner's pre-retirement earnings to a maximum of 25% of the year's Average Industrial Wage.

Question 46

According to Statistics Canada figures from 2007,what percentage of women received the CPP?

A) 86%
B) 75%
C) 47%
D) 67%

Question 47

The government has encouraged more savings through which of the following?

A) the Canada Pension Plan (CPP)
B) Pre-retirement Bursary Subsidies (PBSs)
C) Registered Retirement Savings Plans (RRSPs)
D) the Quantitative Pension Program (QPP)

Question 48

What is the term used to describe how much an employee can expect to earn in retirement,based on a formula that takes into account one's years of service and highest salary?

A) employer pension plan
B) defined benefit pension plan
C) defined occupational pension
D) employer contribution pension plan

Question 49

Statistics Canada (2011)reports that in 2009,what percentage of all Canadians aged 25 to 64 contributed to an RRSP?

A) 17%
B) 40%
C) 51%
D) 84%

Question 50

Jeannette lost some money just before she retired from her job as a nurse.Now retired,she must rely on what most older Canadians use to compensate for lost pre-retirement income.Which of the following do most older people rely on to make up for lost pre-retirement income?

A) private pensions
B) the Canada Pension Plan (CPP)
C) part-time work
D) savings

Question 51

According to Statistics Canada (2011),what type of retirement income did 75% of Canadian workers with a registered pension plan have?

A) occupational pensions
B) defined benefit pension plans
C) public pensions
D) registered pension plans

Question 52

As a result of the low payment rates of the CPP,what do most people need in order to maintain their preretirement life style?

A) a part-time job
B) help from family members
C) private pensions and savings
D) more education

Question 53

In 2012,recipients who received less than the maximum CPP benefits and were living in a large Canadian city experienced which of the following?

A) They made almost 94% of their pre-retirement income.
B) They retained only one-third of their GIS payments after taxes.
C) They fell below the poverty line.
D) They fell within the top 30th percentile in income.

Question 54

Which of the following makes up Tier Three of the pension system?

A) government transfers
B) public pension plans
C) private income
D) provincial assistance

Question 55

According to Brown (2010),what percentage of private sector workers has a defined benefit pension plan?

A) 20%
B) 40%
C) 60%
D) 80%

Question 56

The CPP locks in both workers' and employers' contributions.What is this called?

A) portability
B) actualization
C) vesting
D) pension security

Question 57

Milan and Vezina (2011)report that in 2011,which of the following made up almost two-thirds of senior males' total income?

A) occupational pension benefits
B) interest from savings
C) Canada Pension Plan (CPP) payments
D) investments

Question 58

Why do experts who have studied the occupational pension system express worry about the solvency of these plans?

A) shortened life expectancy
B) later retirement
C) high interest rates
D) lower stock prices

Question 59

What percentage of higher CPP payouts for disability and enriched benefits are projected by the year 2030?

A) 15%
B) 25%
C) 35%
D) 45%

Question 60

Which of the following did poor people rely on for most (77%)of their income?

A) occupational pensions
B) defined pension plans
C) public pensions
D) RRSPs

Question 61

Education and former occupation largely determine income in old age.Which of the following explains this effect?

A) multiple jeopardy theory
B) conflict theory (Marxism)
C) political economy perspective
D) structural-functionalism

Question 62

Which of the following was included in changes made in 1984 to improve the Canada Pension Plan (CPP)?

A) indexing payments to the rate of inflation
B) increasing survivor benefits to spouses
C) locked-in vesting of the employer's share of the payments
D) allowing women and men to deduct years spent childrearing from pensionable years

Question 63

Mrs.Brown wants to have extra income for her retirement and she decides to invest up to $5,000 in a relatively new government program for which she will not be taxed when she requires the use of her money.What is the name of this program?

A) Registered Income Savings
B) Retirement Investment Fund
C) Tax Free Income Account
D) Tax Free Savings Account

Question 64

Why do middle-aged people support a strong public pension system?

A) It offers a secure investment with high returns.
B) They will soon be old and have a self-interest in a strong pension and social security system.
C) It guarantees a better old age than private pensions and savings alone could do.
D) Much of the cost will lie with the young.

Question 65

Ryan is 26 years old and is just starting to work.He has a good pension plan at his new job.Why do young people such as Ryan continue to support a stronger pension system in the future?

A) Payments into the CPP help to reduce the national debt.
B) They can withdraw money saved in their pension plans to pay for post-retirement amenities.
C) It creates social and economic stability.
D) Without it, they would have to care for their parents themselves.

Question 66

Which of the following is one reason only a small percentage of people belonging to occupational pension plans ever collect a full pension?

A) Many plans have a variety of conditions that effectively prevent full payment.
B) Most plans use vesting (using pension plan money to reinvest in the company) to keep up with inflation, but the government does not insure against bankruptcy.
C) The majority of plans lack portability, and as workers change jobs much of their pension is lost.
D) Most plans are indexed to private savings and investments, and pay full pensions only to the poorest recipients.

Question 67

List and discuss the 10 characteristics of the Canada Pension Plan.

Question 68

What question was discussed in "The Great Pension Debate" in the early 1980s?

A) whether public pension plans or private pension plans would best serve Canadians
B) whether women should receive pension credit for years worked as homemakers
C) whether the CPP should be a means-tested pension to ensure that the poorest older people receive the most help
D) whether a "clawback" option on the OAS should be implemented

Question 69

Which of the following facts will result from changes in private and public pensions?

A) Pensions will cost less money.
B) A strong economy and high inflation will make it easier to pay for pensions.
C) Pensions will cost more money.
D) A strong economy and lower inflation will make it harder to pay pensions.

Question 70

Adjustments made by the federal government to the income security system over the years include which of the following?

A) indexing the CPP against the Consumer Price Index
B) improving the OAS so that it is more of a means-tested plan
C) reducing clawbacks to ensure that poorer older people retain more of their benefits
D) increasing OAS benefits to older single women

Question 71

Since the late 1980s,new rules have improved the public pension plan system.These include which of the following?

A) Improvements in the OAS have led to decreased poverty rates for single older people.
B) The CPP allowed only women to deduct the years that they spend in child rearing from their pensionable years.
C) All widows and widowers with low incomes will always get the ALW.
D) The federal and provincial governments agreed that all occupational plans remove survivor benefits.

Question 72

What is a registered retirement savings plan (RRSP)?

Question 73

Which group will still have to consider some tough issues in the future such as the rising costs of OAS pensions and the indexation of private pension plans?

A) provincial government
B) federal government
C) younger people
D) seniors

Question 74

According to McDonald and Robb (2004),the pension system needs reform to meet the needs of which of the following groups?

A) older men
B) older women
C) younger men
D) younger women

Question 75

The retirement income system most seriously fails for which of the following?

A) the upper-class, who are disproportionately taxed in retirement
B) the middle-class, who suffer extreme changes in lifestyle because of differences between pre-retirement and retirement incomes
C) women, who have different work patterns than men
D) landed immigrants, who contribute to the public pension system, yet receive only partial pensions

Question 76

The gap between CPP payments to men and to women is the result of which of the following?

A) discrimination against women in the workplace
B) low incomes and short careers at paid labour
C) overcompensating for Spouses Allowance payments
D) fewer men than women opting for early retirement

Question 77

Membership in a non-European ethnic group leads to lower income in retirement.According to the National Seniors Council (2009),this situation occurs as a result of which of the following reasons?

A) Racial discrimination throughout life accounts for higher levels of poverty.
B) Members of ethnic groups tend to retire earlier, and are penalized by occupational pensions.
C) Pre-retirement education often does not consider the special needs of members of ethnic groups.
D) Ethnic groups have an unrealistic reliance on their social support network in old age.

Question 78

What are the best predictors of income in retirement?

A) health and social supports
B) education and occupational status
C) ethnic group and sex
D) social class and pre-retirement income

Question 79

The National Seniors Council reports that in 2006,60% of unattached senior women found themselves in which of the following situations?

A) They were living with their families.
B) They received income from a private pension.
C) They had a low income rate.
D) They worked part-time.

Question 80

In 2009,which percentage of women were public pension plan members?

A) 25%
B) 47%
C) 59%
D) 62%