Challenges Facing the Welfare State
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Questions and Answers

In the context of social justice, what must in-kind transfers be accompanied by?

  • Strong efficiency justifications (correct)
  • Unrestricted individual autonomy
  • High tax rates
  • Administrative complexity

    • Which factor should be considered when deciding to use in-kind transfers for distributional purposes?

  • Individual autonomy (correct)
  • Tax evasion rates
  • Administrative convenience
  • Government size

    • When is the use of in-kind transfers potentially justified according to the text?

  • For political bargaining
  • To reduce government spending
  • Only for economic growth
  • To address horizontal inequity (correct)

    • What should be evaluated when deciding to use in-kind transfers based on the text?

    <p>Context-specific factors</p> Signup and view all the answers

    Why should the use of in-kind transfers for distributional purposes be carefully assessed?

    <p>To consider trade-offs involved</p> Signup and view all the answers

    What is one of the main functions of the welfare state described in the text?

    <p>Reducing social exclusion</p> Signup and view all the answers

    Which of the following best describes the 'Piggy Bank function' of the welfare state as mentioned in the text?

    <p>Safeguarding retirement savings</p> Signup and view all the answers

    Why does the text mention that we would still need a welfare state even if poverty were eliminated?

    <p>To perform tasks the market cannot</p> Signup and view all the answers

    What distinguishes contributory benefits from non-contributory benefits in the context of the welfare state?

    <p>Income eligibility criteria</p> Signup and view all the answers

    How do benefits in kind differ from cash benefits within the welfare state described in the text?

    <p>Benefits in kind include education and healthcare</p> Signup and view all the answers

    According to economic theory, why does the welfare state have a role in social policy regarding equity and efficiency?

    <p>To mitigate inequality</p> Signup and view all the answers

    What aspect should a welfare system address to reduce inequality?

    <p>Social exclusion</p> Signup and view all the answers

    What role does the welfare state play in addressing market failures?

    <p>Promoting social equity</p> Signup and view all the answers

    In a Beveridgean system, how is health care funded?

    <p>Through tax revenues</p> Signup and view all the answers

    Which statistical measure is used to assess the effectiveness of a welfare system?

    <p>Headcount below the poverty line</p> Signup and view all the answers

    What principle should a welfare system abide by to ensure easy understanding?

    <p>Intelligibility</p> Signup and view all the answers

    What objective does the Bismarckian system aim to achieve through contributions from employees and employers?

    <p>Covering a defined package of services</p> Signup and view all the answers

    What is a major argument in favor of providing Benefit-In-Kind (BIK) over income transfers according to the text?

    <p>BIK leads to better outcomes than income transfers.</p> Signup and view all the answers

    What is a common argument against Benefit-In-Kind (BIK) as mentioned in the text?

    <p>BIK may not be effective if easily substitutable with other resources.</p> Signup and view all the answers

    Which term refers to the phenomenon where means-tested benefits can create welfare dependency as discussed in the text?

    <p>Unintended consequences</p> Signup and view all the answers

    Why is achieving social justice considered one of the objectives of policy, as per the text?

    <p>To ensure equal distribution of income</p> Signup and view all the answers

    What should the choice of method depend on after agreeing on the objective of policy?

    <p>Which method maximizes social welfare</p> Signup and view all the answers

    What is a potential issue associated with frequent changes in government according to the text?

    <p>Consistency in policy approach</p> Signup and view all the answers

    What conditions must hold in a first-best economy, according to the text?

    <p>Perfect competition, no externalities, and imperfect information</p> Signup and view all the answers

    Which theorem shows that under certain conditions a competitive market can lead to a Pareto efficient allocation of resources?

    <p>The Invisible Hand Theorem</p> Signup and view all the answers

    What behavior takes advantage of asymmetric information before a transaction, according to the text?

    <p>Adverse selection</p> Signup and view all the answers

    Which concept involves impure public goods and merit goods?

    <p>Incomplete markets</p> Signup and view all the answers

    In the context of market failure, what type of intervention may be justified on efficiency grounds?

    <p>Mixed public/private provision</p> Signup and view all the answers

    What situation does asymmetric information refer to?

    <p>One party having more information than the other in a transaction</p> Signup and view all the answers

    'Bounded rationality' and 'bounded will-power' are concepts associated with which area of economics?

    <p>Behavioral economics</p> Signup and view all the answers

    'Pigouvian taxes/subsidies' are most closely related to which aspect of finance in the text?

    <p>'Externalities'</p> Signup and view all the answers

    'Regulation' as a form of state intervention is particularly important when:

    <p>'Knowledge is imperfect'</p> Signup and view all the answers

    'Cash benefits (Consumption Smoothing/Insurance)' are associated with which type of welfare state provision?

    <p>'Private sector solution'</p> Signup and view all the answers

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