QUESTION 1

The Iron Law means that medical spending is almost equal to income.
True
False
 
QUESTION 2

Medicare, Medicaid, and Medical Research are funded as entitlements by the government.
True
False
 
QUESTION 3

One benefit to consumers when physicians pay is restricted is that physicians will compete on non-price factors which may be important to consumers.
True
False
 
QUESTION 4

Private land purchased around the Schuylkill River in the 1870s from William Simpson for $300,000 completed the assemblage of the northern border of the river drive, an essential part of the Philadelphia watershed. In this case, the value of the public value of the land could easily be determined.
True
False
 
QUESTION 5

Unintended consequences of price controls are often misinterpreted or ignored by proponents of such controls because the effects take a few years to work through the health care system.
True
False
 
QUESTION 6

It is unlikely that health care industry employment will fall significantly during a recession because:
a.
Employment in health care does not respond to economic fluctuations
b.
Employment in health care lags economic downturns because of fix contracts
c.
Employers will hire more part time employees
d.
Employers will use less part time employee hours
e.
Employment in health care moves up and down with economic fluctuations
 
QUESTION 7

The Coase Theorem:
a.
Suggests that government intervention is necessary for an efficient outcome
b.
Is generally successful in assigning property rights for public goods
c.
Points out that high transaction costs are a barrier to efficiency
d.
Helps explain Arrow's Impossibility Theorem
e.
Is an example of how Arrow's Impossibility Theorem can be implemented
 
QUESTION 8

If U.S. GDP growth remains at 1.1 % (its 2008 level) for 2009 and 2010, and inflation remains around 2.8% (its 2008 level), then projections of health expenditures for 2011-2015 will be:
a.
Difficult to calculate
b.
Calculated as growing at essentially constant rates over the 2011-2015 period
c.
Calculated as growing at rapidly increasing rates over the 2011-2015 period
d.
Calculated showing decreasing levels over the 2011-2015 period
e.
Calculated showing rapidly decreasing rates over the 2011-2015 period
 
QUESTION 9

The GDP in country I is $2,900 per capita-or about $3.3 trillion for all of country I. If country I expect growth in GDP to be about 7% for next year, health expenditures should increase by at least $203 per capita.
True
False
 
QUESTION 10

Comparative statics are used more frequently than dynamic analysis of macroeconomic trends in health care.
True
False
 
QUESTION 11

The major determinants of total health care spending are:
a.
Microeconomic decisions
b.
GDP, population, and inflation
c.
National income, population, and inflation
d.
Society's elasticity of demand, national income, and government
e.
Individual's elasticity of demand, national income and population
 
QUESTION 12

The role of the government as a provider of health care is:
a.
Unheard of in the U.S.
b.
Always an improvement on private provision
c.
Common in the U.S.
d.
Only seen in the Veterans Affairs health system in the U.S.
e.
Only seen in the Medicare system in the U.S.
 
QUESTION 13

Medicare and Medicaid are both entitlements; however:
a.
Medicaid is a form of social insurance; Medicare is not
b.
Medicare is a form of social insurance; Medicaid is not
c.
Medicare is funded through general tax revenues; Medicaid is funded through a dedicated tax on workers
d.
Both are funded through dedicated tax on employee earnings
e.
Medicare if federally funded; Medicaid receives no federal funding
 
QUESTION 14

Medicaid is controversial because it may seem unclear whether it is a form of social insurance or charity to the poor. Medicare benefits, socially, carry less stigma as charity payments because:
a.
Voters value concern for the elderly and disabled above concern for the poor
b.
Voters value concern for the poor above concern for the elderly and disabled
c.
Like benefits provided to Veterans at VA hospitals, it is a form of social insurance
d.
Like benefits provided to citizens under the British National Health Service, it is a form of social insurance
e.
The elderly and disabled are more successful in lobbying for Medicare than the poor
 
QUESTION 15

Your father is unable to perform many of the activities of daily living (ADL), including feeding and bathing himself. He considers moving from his apartment to a nursing home. The nursing home application asks for financial information from you and your siblings concerning how much you are able to contribute financially to his care. This is an example that the shared income hypothesis is being employed
True
False
 
QUESTION 16

Macroeconomic health outcomes data collected by the World Health Organization include:
a.
Death from cancer per 100,000 population
b.
Death from acute myocardial infarctions (AMIs) per 100,000 population
c.
Infant mortality per 10,000 live births
d.
Number of suicides per 100,000 population
e.
All of the above
 
QUESTION 17

Macroeconomic studies would be more interested in the trend in overweight and obesity in the U.S. and other OECD countries rather than the percent of public spending on health care.
True
False
 
QUESTION 18

Real health care wages have risen over the past 40 years because:
a.
A greater share of each dollar spent has been allocated to healthcare and real wages have remained constant for health care workers
b.
A greater share of each dollar spent has been allocated to healthcare and real wages have increase for health care workers over the entire forty years
c.
A greater share of each dollar spent has been allocated to healthcare and real wages have increase for health care workers over the past twenty years
d.
A greater share of each dollar spent has been allocated to healthcare
e.
Health care wages are highly correlated with growth in the GDP
 
QUESTION 19

Health care market has market failure due to economies of scale in insurance provision which results in natural monopoly.
True
False
 
QUESTION 20

The Iron Law: Medical Costs = Medical Incomes is the same as the identity specified by health economist Uwe Reinhardt as the Alfred E. Neuman's Cosmic Law of Health Care, "Every dollar of health spending is someone else's health-care income, including fraud, waste and abuse."
True
False
 
QUESTION 21

Benefits of government regulation include:
a.
Health insurers have no incentive to address adverse selection in a way that maximizes social welfare
b.
Public research is funded
c.
Public health measures can be taken
d.
Licensure of providers gives patients a level of safety they would not otherwise have
e.
All of the above
 
QUESTION 22

People have a strong incentive to hide their true willingness-to-pay, or valuation, of a public good because taxing officials might use it to get them to pay more taxes.
True
False
 
QUESTION 23

Board certification by the American College of Surgeons in a particular surgery is one way surgeons can use to privatize (extract monopoly rents from) the public good of surgical knowledge.
True
False
 
QUESTION 24

Very uneven distribution of goods is an example of market failure.
True
False
 
QUESTION 25

The effect of cost controls implemented under the institution of the DRG payment structure to hospitals has been blunted by the general trend for increased out-patient expenditures.
True
False
 
QUESTION 26

Diversity of tastes in a society makes it difficult to agree on the amount of public provision of a public good that is socially desirable.
True
False
 
QUESTION 27

In 1983, Reverend Wells founded ODAAT (One Day At A Time) as a comprehensive support center for recovering homeless addicts in Philadelphia. ODAAT is especially effective in channeling at-risk individuals to social services for HIV/AIDs testing. This is an example of a non-governmental organization (NGO) in the voluntary sector which aids government operations.
True
False
 
QUESTION 28

All other things equal, if an individual earning $100,000 per year has an income elasticity of demand for health care of 0.4, and her salary increases by 10%, her expenditures on health care will increase by $4,000.
True
False
 
QUESTION 29

The role of government is to:
a.
Enforce contracts between private parties
b.
Provide health services
c.
Protect health of individuals against unsafe products
d.
Provide public goods
e.
All of the above
 
QUESTION 30

The U.S. is unusual in the developed world in that it uses a general tax to fund health insurance for the elderly.
True
False
 
QUESTION 31

One negative effect for consumer welfare can occur when hospitals compete on non-price factors to attract patients, all of whom will pay the same rates. For example, many hospitals in the 1990s built home-like maternity suites and served lobster dinners to new birth parents in an attempt to draw patients.
True
False
 
QUESTION 32

Including the tax subsidy for employer provided health insurance, the government provides about 47% of total funds for health care financing.
True
False
 
QUESTION 33

Benefits of market activity include:
a.
Health insurers address adverse selection in a way that maximizes social welfare
b.
Wealthier patients are able to pay more than poorer patients
c.
Innovation is rewarded with profits; this provides an incentive for more innovation
d.
Licensure of providers gives patients a level of safety they would not otherwise have
e.
The poor and the disabled are not provided for
 
QUESTION 34

Special tax treatment for health insurance payments, government payment of almost half of all health expenditures, government supported funding of research, and regulations under the Employee Retirement Income Security Act of 1974 (ERISA) are all part of the:
a.
Lifecycle income hypothesis
b.
Permanent income hypothesis which says that the income of the social and political group to which a person belongs determines her current health expenditures
c.
Shared income hypothesis which says that a person's expected income determines her current health expenditures
d.
Permanent income hypothesis which says that a person's expected income determines her current health expenditures
e.
Shared income hypothesis which says that the income of the social and political group to which a person belongs determines her current health expenditures
 
QUESTION 35

Real health care wages have risen over the past 40 years because:
a.
A greater share of each dollar spent has been allocated to healthcare and real wages have remained constant for health care workers
b.
A greater share of each dollar spent has been allocated to healthcare and real wages have increase for health care workers over the entire forty years
c.
A greater share of each dollar spent has been allocated to healthcare and real wages have increase for health care workers over the past twenty years
d.
A greater share of each dollar spent has been allocated to healthcare
e.
Health care wages are highly correlated with growth in the GDP
 
QUESTION 36

It took about 8 years for the Health Professions Educational Assistance Act of 1963 to show the fully intended increase in the physician supply.
True
False
 
QUESTION 37

Provision of health statistics by the National Center for Health Statistics is an example of the government performing its role as provider of a public good.
True
False
 
QUESTION 38

A set of diet recommendations to help diabetes patients maintain optimal blood sugar levels is a public good.
True
False
 
QUESTION 39

Any research publication which receives NIH funding must be published on the PUBMED database, which is available free of charge to anyone with internet connection. This is consistent with the goal of providing research and knowledge to as many people in society as possible.
True
False
 
QUESTION 40

In the absence of a profit motive, the primary motive of government bureaucrats is so-called "kingdom building," that is, maximizing the number of government employees.
True
False