Question 1

The largest U.S.welfare program is

Accepted Answer

A) Aid to Families with Dependent Children 
B) Medicaid 
C) Social Security 
D) unemployment compensation 
E) food stamps 
A) Aid to Families with Dependent Children 
B) Medicaid 
C) Social Security 
D) unemployment compensation 
E) food stamps

Question 2

Income assistance benefits are

Accepted Answer

A) taxed at a high marginal rate, in the sense that benefits sharply decrease as earned income increases 
B) taxed at a 20 percent marginal rate 
C) taxed at a high marginal rate in order to provide work incentives 
D) unaffected by increases in earned income 
E) positively related to income from other sources 
A) taxed at a high marginal rate, in the sense that benefits sharply decrease as earned income increases 
B) taxed at a 20 percent marginal rate 
C) taxed at a high marginal rate in order to provide work incentives 
D) unaffected by increases in earned income 
E) positively related to income from other sources

Question 3

Exhibit 18-1   Exhibit 18-1 shows five different Lorenz curves.Along the Lorenz curve labelled a, the poorest 60% of the population earns what proportion of the total income?

Accepted Answer

A) 20% 
B) 40% 
C) 60% 
D) 80% 
E) 100% 
A) 20% 
B) 40% 
C) 60% 
D) 80% 
E) 100%

Question 4

Which of the following is an in-kind transfer payment?

Accepted Answer

A) Medicaid 
B) Social Security 
C) workers' compensation 
D) unemployment insurance 
E) Temporary Assistance to Needy Families 
A) Medicaid 
B) Social Security 
C) workers' compensation 
D) unemployment insurance 
E) Temporary Assistance to Needy Families

Question 5

Which of the following groups has experienced the greatest decrease in poverty rates since 1959?

Accepted Answer

A) the elderly 
B) children 
C) people 18 to 64 years old 
D) women 
E) none of the above (i.e., all of these groups have had higher poverty rates) 
A) the elderly 
B) children 
C) people 18 to 64 years old 
D) women 
E) none of the above (i.e., all of these groups have had higher poverty rates)

Question 6

In a market economy, income is primarily determined by

Accepted Answer

A) the productivity of household resources 
B) the level of transfer payments 
C) government monetary and fiscal policy 
D) the geographic distribution of resources 
E) the amount of financial assets owned by households 
A) the productivity of household resources 
B) the level of transfer payments 
C) government monetary and fiscal policy 
D) the geographic distribution of resources 
E) the amount of financial assets owned by households

Question 7

In determining the poverty level, the Census Bureau counts cash transfers, but not in-kind transfers, thereby understating the actual amount of antipoverty transfers made.

Accepted Answer

A) True 
 B)False

Question 8

The decline of the poverty rate for the elderly can be attributed to

Accepted Answer

A) Temporary Assistance for Need Families (TANF) 
B) tax increases 
C) Medicaid 
D) the political power of the elderly 
E) increased resource earnings 
A) Temporary Assistance for Need Families (TANF) 
B) tax increases 
C) Medicaid 
D) the political power of the elderly 
E) increased resource earnings

Question 9

Which of the following groups does not support the special interests of the elderly?

Accepted Answer

A) the elderly themselves 
B) the relatives of the elderly 
C) the housing industry 
D) doctors and nursing home operators 
E) those under 65 who are concerned about their future benefits 
A) the elderly themselves 
B) the relatives of the elderly 
C) the housing industry 
D) doctors and nursing home operators 
E) those under 65 who are concerned about their future benefits

Question 10

In a market economy, income depends mostly on

Accepted Answer

A) productivity 
B) luck 
C) age 
D) sex 
E) discrimination 
A) productivity 
B) luck 
C) age 
D) sex 
E) discrimination

Question 11

Poverty is

Accepted Answer

A) a relative concept 
B) an absolute concept 
C) more prevalent in North American countries than in other areas 
D) an insufficient income level to purchase all necessities 
E) the same in all countries 
A) a relative concept 
B) an absolute concept 
C) more prevalent in North American countries than in other areas 
D) an insufficient income level to purchase all necessities 
E) the same in all countries

Question 12

In every age group, average income in the United States increases with education.

Accepted Answer

A) True 
 B)False

Question 13

Measured in dollar terms, the two largest U.S.antipoverty programs are

Accepted Answer

A) cash transfers and medical care 
B) cash transfers and food assistance 
C) food and housing assistance 
D) medical care and food assistance 
E) medical care and housing assistance 
A) cash transfers and medical care 
B) cash transfers and food assistance 
C) food and housing assistance 
D) medical care and food assistance 
E) medical care and housing assistance

Question 14

According to a recent five-year survey of U.S.business ownership, the number of black-owned businesses rose

Accepted Answer

A) 45 percent 
B) 450 percent 
C) 90 percent 
D) 25 percent 
E) 4.5 percent 
A) 45 percent 
B) 450 percent 
C) 90 percent 
D) 25 percent 
E) 4.5 percent

Question 15

In the U.S., the poverty rate is lowest among young families with a head of household under 25.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 18-1   Exhibit 18-1 shows five different Lorenz curves.Along the Lorenz curve labelled e, the poorest 60% of the population earns what proportion of the total income?

Accepted Answer

A) 100% 
B) exactly 60% 
C) more than 60% 
D) less than 60% 
E) cannot tell from the information provided 
A) 100% 
B) exactly 60% 
C) more than 60% 
D) less than 60% 
E) cannot tell from the information provided

Question 17

The U.S.poverty rate is higher among households headed by black married couples than those headed by white females.

Accepted Answer

A) True 
 B)False

Question 18

Poor welfare recipients face higher marginal tax rates than do the richest families.

Accepted Answer

A) True 
 B)False

Question 19

Welfare data show that in the United States

Accepted Answer

A) most welfare recipients receive benefits only for a short time 
B) welfare encourages young women to have children 
C) children brought up on welfare tend to remain on welfare as adults 
D) having poor parents does not increase the chances of a child's being on welfare as an adult 
E) children of poor parents have a 50 percent chance of being middle-income adults 
A) most welfare recipients receive benefits only for a short time 
B) welfare encourages young women to have children 
C) children brought up on welfare tend to remain on welfare as adults 
D) having poor parents does not increase the chances of a child's being on welfare as an adult 
E) children of poor parents have a 50 percent chance of being middle-income adults

Question 20

Food stamps and Medicaid are examples of

Accepted Answer

A) money transfers 
B) resource earnings 
C) in-kind transfers 
D) tax expenditures 
E) capital gains 
A) money transfers 
B) resource earnings 
C) in-kind transfers 
D) tax expenditures 
E) capital gains

Exam 18: Income Distribution and Poverty

The largest U.S.welfare program is

Income assistance benefits are

Exhibit 18-1 Exhibit 18-1 shows five different Lorenz curves.Along the Lorenz curve labelled a, the poorest 60% of the population earns what proportion of the total income?

Which of the following is an in-kind transfer payment?

Which of the following groups has experienced the greatest decrease in poverty rates since 1959?

In a market economy, income is primarily determined by

In determining the poverty level, the Census Bureau counts cash transfers, but not in-kind transfers, thereby understating the actual amount of antipoverty transfers made.

The decline of the poverty rate for the elderly can be attributed to

Which of the following groups does not support the special interests of the elderly?

In a market economy, income depends mostly on

Poverty is

In every age group, average income in the United States increases with education.

Measured in dollar terms, the two largest U.S.antipoverty programs are

According to a recent five-year survey of U.S.business ownership, the number of black-owned businesses rose

In the U.S., the poverty rate is lowest among young families with a head of household under 25.

Exhibit 18-1 Exhibit 18-1 shows five different Lorenz curves.Along the Lorenz curve labelled e, the poorest 60% of the population earns what proportion of the total income?

The U.S.poverty rate is higher among households headed by black married couples than those headed by white females.

Poor welfare recipients face higher marginal tax rates than do the richest families.

Welfare data show that in the United States

Food stamps and Medicaid are examples of

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

International Trade

International Finance

Economic Development

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