Chapter 1 Quiz answers PDF

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Chapter 1 Introduction Key Ideas •

How is health care like other goods? How is it different?

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How big are the health care sectors in the United States and elsewhere?

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Does economics apply to health care?

1. Since the 1970s, health care spending in the United States has risen from about ____ to about _____ percent of the Gross Domestic Product. a. b. c. d.

4; 10 5; 13 6: 16 7; 18*

2. The intrinsic value of health can be measured in terms of: a. b. c. d.

increased output per worker. degree to which people feel better. reduced absenteeism rates. Answers (a), (b), and (c) are correct.*

3. Rather than aggregate health expenditures, we often look at real expenditures per capita. This calculation requires us to deflate the aggregate expenditures by: a. b. c. d.

the purchasing power of the currency. the size of the population. the cost of health care. Answers (a) and (b) are correct.*

4. The following is not a measure of health outcome: a. b. c. d.

Number of physicians per capita.* Population incidence of malaria. Death rate for children under the age of 5. Estimated men’s lifespan.

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5. Table 1.1 in the textbook indicates that in 2015_____ spent the highest percentages of their GDPs on health, whereas _____ spent the lowest percentages. a. b. c. d.

Australia and Belgium; Canada and Denmark France and Germany; Portugal and Spain the United Kingdom and Sweden; Ireland and Italy the United States and Switzerland; Mexico and Turkey*

6. The following does not represent a new technology for the provision of health care: a. Revascularization, that is, surgical procedures such as coronary bypass and angioplasty which restore blood flow. b. Improved bandages to prevent bedsores. c. Increased numbers of X-ray machines.* d. Biological drug treatments for arthritis. 7. The following aggregate has not increased since 1980. a. b. c. d.

Number of hospital beds.* Number of physicians. Number of registered nurses. Number of pharmacists.

8. In the United States, National Health Expenditures per capita have increased from $147 in 1960 to $9,523 in 2009. Adjusting this increase for inflation leads us to infer that there was: a. b. c. d.

no increase in real terms. a 235% increase in real terms. a 660% increase in real terms.* a 816% increase in real terms.

9. Health care expenditures have risen as a portion of the GDP in all countries because: a. b. c. d.

populations have become less healthy. patients and their providers are using more expensive technologies.* physicians are prescribing unnecessary services. Answers (a) and (c) are correct.

10. Table 1.2 in the textbook compares spending on housing, food and health care. It shows that in the United States in 2015 the percentage expenditures, from most to least, were: 11. © 2017 Taylor & Francis

a. b. c. d.

housing; health care; food. health care; food; housing. food; health care; housing. health care; housing; food.*

11. Decisions regarding health care differ from decisions regarding auto repair with respect to: a. b. c. d.

the role of insurance. the role of nonprofit providers.* the presence and extent of uncertainty. problems of information regarding the appropriateness of the procedure.

12. Uncertainty in the health care economy suggests: a. providers and their patients may not know whether treatments will be effective. b. patients may wish to insure against unexpected illnesses or injuries. c. insurers may make substantial profits. d. Answers (a), (b), and (c) are correct.* 13. Data from the Rand Health Insurance Experiment indicated that: a. b. c. d.

price has no impact on the utilization of health care. increased price is related to increased use of health care. increased price is related to decreased use of health care.* increased price first increases, then decreases use of health care.

14. Increased coinsurance rates for prescription drugs suggest that: a. b. c. d.

those insured may buy fewer pills at a time.* those insured may buy more drugs in advance. drug companies will earn more money because prices will be higher. Answers (a) and (b) are correct.

15. The growth of managed care has reduced the growth in health care costs by all but the following methods: a. b. c. d.

reduction in preventive care.* reduction in elective care. reduction in inpatient care. reduction in payments to providers.

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16. Some consumers oppose managed care organizations (like HMOs or PPOs) because they view: a. the quality of care as inferior.* b. their provider choices (under managed care) as inadequate. c. the managed care charges as too high. d. Answers (a) and (b) are correct. 17. The term equity refers to: a. b. c. d.

the efficient production of services. equal treatment of all individuals.* competition among health providers. government provision of health care.

18. Table 1.3 in the textbook suggests that between 1970 and 2013 the number of ____ per 100,000 increased by the largest percentage: a. b. c. d.

dentists pharmacists physicians registered nurses*

19. Economists view ____ as the ultimate scarce resource. a. b. c. d.

money time* health Answers (a) and (b) are correct.

20. Home health care for the elderly ___________ because ___________. a. costs nothing; the caregivers are not working anyhow b. is costly; physicians must monitor the patients c. may be costly; caregivers must spend time providing care that they would have allocated differently* d. is costly; the elderly need to take large amounts of prescription drugs 21. In examining the physician shortage of the 1930s, Friedman and Kuznets found that physicians earned 32% more than dentists, although their training costs were only 17% higher. They attributed the higher returns on their investment to: a. the prevalence of health insurance in the 1930s. b. reduced birth rates in the 1930s. © 2017 Taylor & Francis

c. health care planning processes implemented at the time. d. barriers to entry to the medical profession.* 22. Insurance has a major impact on expenditures in the health economy. Since 1960 the share of health expenditures paid for by third parties has risen from about ____ percent to over ___ percent. a. b. c. d.

20; 40 30; 65 45; 80* 60; 95

23. Asymmetry of information may mean that: a. b. c. d.

neither the provider nor the patient has all of the information. the provider has more information than the patient. the patient has more information than the provider. Answers (b) and (c) are correct.*

24. If an asymptomatic man has a blood pressure test at a pharmacy, this is an example of: a. symmetric information because neither the provider nor the man has all of the information.* b. asymmetric information, because the man must know that he has high blood pressure, but the provider does not. c. asymmetric information, because the provider must know that the man has high blood pressure. d. symmetric information, because the provider may have ordered the test. 25. Figure 1.2 in the textbook compares the responses of general medical care and mental health care to coinsurance rates and finds that: a. b. c. d.

general medical care responds more to changes in coinsurance rates. mental health care responds more to changes in coinsurance rates.* both respond about the same. neither type of care responds to changes in coinsurance rates.

26. In Box 1.1 in the textbook, the head of the Council of Economic Advisers argued that medical expenditures were increasing around the world because of: a. improved products for which people willingly pay more.* b. world-wide inflation.

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c. monopoly power among providers. d. decreasing productivity among providers. 27. If a family moves an elderly relative from his or her own home to a nursing home, reported health expenditures will: a. fall, because nursing homes are cheaper than home care. b. fall, because nursing homes provide lower quality care. c. rise, because unreimbursed home care is replaced by market-based nursing home care.* d. neither rise nor fall, because no change in care is occurring. 28. A randomized health care study: a. b. c. d.

provides an experimental treatment to all who ask for it. avoids selection bias that may occur if people volunteer for the study.* must continue to completion whether the treatment works or not. cannot be conducted outside of hospital settings.

29. From one year to the next, aggregate GDP rises by 2 percent and aggregate healthcare expenditures rise by 5 percent. From this information we can infer that: a. the health expenditure share has fallen, because health care is only a small fraction of GDP. b. the health expenditure share has risen, because health expenditures have risen by more dollars than the GDP. c. the health expenditure share has risen, because health expenditures have risen by a greater percentage than the GDP.* d. we have insufficient information to answer the question. 30. From one year to the next, aggregate GDP falls by 2 percent and aggregate healthcare expenditures remain constant. From this information we can infer that: a. the health expenditure share has risen, because health expenditures have risen by a greater percentage than the GDP.* b. the health expenditure share has fallen, because GDP has fallen. c. the health expenditure share has risen, because health expenditures have risen by more dollars than the GDP has fallen. d. we have insufficient information to answer the question. 31. Despite the growth of government programs such as Medicare and Medicaid, by 2010, at the time of the passage of the Affordable Care Act, about _________ million Americans were without health insurance at some time during the year.

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a. b. c. d.

31 50* 63 100

32. After the 2010 passage of the Affordable Care Act, through 2016: a. b. c. d.

millions of Americans lost their health insurance. the number of uninsured Americans stayed constant. the number of uninsured American fell by 20 million.* all Americans gained health insurance.

33. Analysts predict that under the Affordable Care Act of 2010, by 2020 health care expenditures are expected to: a. b. c. d.

fall to 15% of GDP. rise to 20% of GDP.* rise to 30% of GDP. rise to 50% of GDP.

34. Health care for the poor is provided largely through the ____ program: a. b. c. d.

Medicare CHIP Medicaid Answers (b) and (c) are correct.*

35. The US spends about twice the fraction of GDP on health care as does the United Kingdom. The United Kingdom, however, rations care by making patients wait for many treatments. If we account for these waiting time costs: a. b. c. d.

the United Kingdom fraction would be closer to that of the United States.* the United Kingdom fraction would be larger than that of the United States. there would be no difference in the relative fractions. it is impossible to put a dollar value on time costs.

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