Deck 19: Government Redistribution Programs

Question 1

The TANF program is generally thought of as being a success because _____.

A)welfare rolls have declined significantly since its inception
B)welfare spending has declined significantly since its inception
C)is similar to the AFDC program while being strictly means-tested
D)a and b

Answer 1

A

Question 2

The TANF program was the result of _____.

A)the New Deal
B)the Great Society programs of President Johnson
C)President Reagan's second term in office
D)President Clinton's desire to end welfare as conventionally understood

Answer 2

D

Question 3

Which of the following is not advantage of a negative income tax?

A)A negative income tax is simple to administer.
B)A negative income tax is equivalent to a cash transfer.
C)A negative income tax retains the paternalistic nature of in-kind transfers.
D)A negative income tax could replace many transfer programs.

Answer 3

C

Question 4

The closest thing in the real world to a negative income tax is the _____.

A)AARP
B)EITC
C)TANF
D)AFDC

Question 5

If increasing the utility of the transfer recipient is the only criterion cared about,then _____.

A)a cash payment will usual be preferred to an in-kind payment
B)an in-kind payment will usually be preferred to a cash payment
C)a cash payment and in-kind payment are always equal
D)an in-kind payment will always be preferred to a cash payment

Question 6

The food stamp program was started to _____.

A)increase demand for agricultural products
B)reduce poverty
C)provide better nutrition for low-income individuals
D)a and c

Question 7

The Earned Income Tax Credit was created in _____.

A)1970
B)1975
C)1982
D)1991

Question 8

People on welfare often face the highest marginal tax rates of anyone because ______.

A)of our regressive income tax system
B)of the non-deducibility of state sales taxes
C)of the loss of entitlement payments when earning additional income
D)of increasing marginal utility of income

Question 9

Cash payments are generally preferable to in-kind payments when the utility of the transfer recipient is the only criterion because _____.

A)it is cheaper to distribute in-kind benefits
B)cash is necessary for utility maximization
C)recipients know their utility functions better than anyone else
D)of diminishing marginal utility

Question 10

Assume that increasing the utility of the transfer recipient is the only criterion cared about.When comparing a cash transfer payment to an in-kind payment of an equal value it is clear that _____.

A)the recipient is always better off with a cash transfer
B)the recipient is never worse off with a cash transfer
C)the two are identical
D)the recipient would prefer an in-kind payment if legally possible

Question 11

Food stamps are ______.

A)financed by the federal government but administered by the states
B)financed by the federal government and the states and administered by the states
C)financed by the federal government and the states and administered by localities
D)financed by the states but administered by the counties

Question 12

An advantage of a negative income tax is _____.

A)it is more paternalistic than in-kind transfer payments
B)it could replace many existing transfer programs
C)it eliminates the incentive to substitute into leisure
D)it has no excess burden

Question 13

In-kind transfer payments are _____.

A)efficient
B)popular with recipients
C)paternalistic
D)a and b

Question 14

One advantage of a negative income tax is _____.

A)it minimizes the deadweight loss from taxation
B)leisure becomes an inferior good
C)it is identical to an in-kind payment in terms of utility
D)it is easy to administer

Question 15

In-kind transfers can be justified over cash transfers on the grounds that _____.

A)they give the recipients higher utility
B)they have lower administrative costs
C)they are more equitable than in-kind transfers
D)taxpayers prefer them

Question 16

If a taxpayer who qualifies for the EITC receives a credit larger than the amount of taxes due,then ____.

A)they loose that portion of the credit
B)they are allowed to apply it towards future tax liabilities
C)it is refunded at a 50 percent rate
D)it is refunded at a 100 percent rate

Question 17

The TANF program is funded by _____.

A)user fees
B)the federal government and the states
C)the federal government only
D)the states only

Question 18

Assuming that increasing the utility of the transfer recipient is the only relevant criterion then an in-kind transfer would _____.

A)never give more utility than an equal cash payment
B)never give less utility than an equal cash payment
C)always give the same utility as an equal cash payment
D)always give less utility than an equal cash payment

Question 19

In-kind transfer payments might not be used in the desired way due to _____.

A)the fungibility of money
B)poor incentives
C)incomplete information
D)the incentive to substitute into leisure

Question 20

TANF stands for _____.

A)Temporary Aid to Needy Families
B)Temporary Assistance to Needy Families
C)Transitory Aid to Needy Families
D)Transitory Assistance to Needy Families

Question 21

An advantage of a negative income tax is that there are no disincentives to earning additional income.

Question 22

When compared to a public housing of the same value,a rent subsidy _____.

A)would always make the individual better off
B)would always make the individual worse off
C)would make some individuals better off and some individuals worse off depending upon their preferences
D)has a lower potential for fraud

Question 23

If an individual had the option of receiving a cash transfer equal to the value of the housing subsidy,_____.

A)they would be better off
B)they could rent better housing than the public housing
C)they could rent worse housing than the public housing
D)all of the above
E)a and b

Question 24

Homelessness can be caused by destroying cheap,low-quality housing through _____.

A)building codes
B)zoning
C)urban renewal programs
D)all of the above

Question 25

Homelessness is not caused by _____.

A)the high cost of housing in cities
B)the deinstitutionalization of the mentally ill
C)drug abuse
D)housing subsidies

Question 26

The marginal tax rate from the food stamp program is _____.

A)zero
B)10 percent
C)20 percent
D)30 percent

Question 27

A cash transfer payment is always preferred to an in-kind transfer payment of an equal size.

Question 28

Approximately what percentage of food stamps are issued to individuals who are not entitled to them?

A)5 percent
B)15 percent
C)25 percent
D)35 percent

Question 29

The predecessor of TANF was Aid to Families with Dependent Children.

Question 30

Food stamps _____.

A)do little to increase demand for agricultural products
B)make certain low-income individuals eat healthy foods
C)increase demand for agricultural products
D)help fight obesity

Question 31

While rent subsidies have some disadvantages,one advantage of rent subsidies is _____.

A)administrative costs are low
B)there is little chance of fraud
C)the renter can chose from among different housing qualities
D)renters have a strong incentive to shop carefully

Question 32

There exists a substantial underground market in food stamps.

Question 33

Food stamps are an example of an in-kind transfer payment.

Question 34

The Earned Income Tax Credit replaced many government transfer programs.

Question 35

As long as the amount of food stamps an individual receives is less than they would have spent on food without the food stamps,the food stamps act like a straight income transfer.

Question 36

A problem with the TANF program's predecessor AFDC was that it was strictly means-tested.

Question 37

Compared to a direct cash transfer payment of an identical amount,food stamps make individuals who desire less food than the value of the food stamps _____.

A)better off
B)worse off
C)indifferent between food and all other goods
D)prefer food too all other goods on the margin

Question 38

In response to a negative income tax,the substitution of leisure for income could be great enough to reduce total income.

Question 39

The largest rent subsidy program provides what is called ______.

A)Section 6 housing.
B)Section 8 housing.
C)public housing
D)AFCD housing

Question 40

Individuals who live in public housing _____.

A)live in better housing than if public housing was not available
B)are better off than they would be absent public housing
C)forfeit their eligibility for the EITC
D)are automatically enrolled in the TANF program

Question 41

Assume a negative income tax is enacted and the income of recipients fall,yet their incomes rise.Is this possible? Why or why not? Illustrate your answer using indifference curve analysis (with income on the y-axis and leisure on the x-axis).

Question 42

What are the main differences between cash transfer payments and payments in-kind? Excluding paternalistic justifications,is one generally preferable to the other? Why or why not?

Question 43

Provide a justification for favoring in-kind transfer payments over cash transfer payments.Why might the fungibility of money erode the strength of this justification?

Question 44

A recipient of a Section 8 rent subsidy can be used to rent any government approved housing project.

Question 45

Placing housing on the x-axis and all other goods on the y-axis,illustrate homelessness using indifference curve analysis.Demonstrate how a homeless individual receives more utility from being homeless than from purchasing the minimum level of housing available in the area.

Question 46

Urban renewal destroyed potential housing for the homeless.

Question 47

What is the relationship between food stamps and cash transfer payments? When,if ever,are they equivalent? When,if ever,might they diverge?

Question 48

Placing housing on the x-axis and all other goods on the y-axis,demonstrate why public housing improves utility using indifference curve analysis.

Question 49

Rent subsidies are primarily financed by the states.

Question 50

Government expenditures on housing subsidies at all levels total more than $45 billion a year.