1. What is the idea behind the income-contingent loan financing scheme? a. Tuiti
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Question
1. What is the idea behind the income-contingent loan financing scheme?
a. Tuition should be lowered for all students in order to improve access to higher education and reduce student debt-loads upon graduation.
b. Grants awarded to many students should be raised in order to improve access to higher education and reduce student debt-loads upon graduation.
c. Tuition should be raised somewhat in order to boost the quality of education provided, but repayment of student loans should be geared to the student's income after graduation.
d. Tuition should be raised somewhat in order to boost the quality of education, but in the event of a default, student loans should be forgiven.
2. A human capital earnings function is:
a. a function relating an individual's earnings to his/her education level.
b. a function relating an individual's earnings to his/her characteristics that determine productivity.
c. a function relating an individual's earnings to his/her level of professional training in the particular field.
d. a function relating an individual's earnings to his/her family background.
3. It is indisputable that the degree of inequality in the distribution of wages has risen drastically in North America over the past 35 years or so. The most widely accepted explanation is that:
a. The returns to education and to unobserved skill have increased.
b. The decline of institutions tends to raise the wages of lower-paid workers.
c. The increased international competition and imports tended to positively affect low-wage workers.
d. There are increased exploitation of labour by unscrupulous multi-national firms.
4. Which of the following INCORRECTLY addresses the problem of "ability bias?"
a. In the earning function, ln Y = a + bS + e, where log wages depend only on the level of schooling, S, and unobserved talent, e. The OLS estimate of the return to schooling b is biased, because unobserved talent, e, is correlated with schooling.
b. The estimated coefficient may overstate the true causal effect, if more highly educated individuals would have earned more than less educated individuals even with the same amount of schooling as the less educated.
c. The problem of "ability bias" can be addressed by "natural experiments" technology.
d. Recent empirical studies have found that the problem of "ability bias" is exaggerated.
Explanation / Answer
1. b. Grants awarded to many students should be raised in order to improve access to higher education and reduce student debt-loads upon graduation.
Explanation: The main idea behind income-contingent loan financing scheme is to make repayment of educations loans easier for students from the poorer economic background. Under an income-contingent loan financing scheme, the monthly payment amount depends on the paying capacity of the borrower.
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