Question 1

The top 5 percent of U.S. annual family income in 2011 was $205,200 or more.

Accepted Answer

A) True 
 B)False

Question 2

A disadvantage of the Earned Income Tax Credit (EITC) program is that it does not help alleviate poverty due to unemployment, sickness, or other inability to work.

Accepted Answer

A) True 
 B)False

Question 3

Which group would be the least upset by wide variation in the income distribution?

Accepted Answer

A) utilitarians 
B) liberals 
C) libertarians 
D) Each group would be equally upset. 
A) utilitarians 
B) liberals 
C) libertarians 
D) Each group would be equally upset.

Question 4

Which of the following statements is not correct?

Accepted Answer

A) Welfare programs may encourage illegitimate births. 
B) The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C) Welfare programs may reduce incentives for people to work. 
D) A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families. 
A) Welfare programs may encourage illegitimate births. 
B) The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C) Welfare programs may reduce incentives for people to work. 
D) A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.

Question 5

The study by economists Cox and Alm found that the 2006 pre-tax income of the richest fifth of U.S. households is

Accepted Answer

A) 5 times the pre-tax income of the poorest fifth. 
B) 10 times the pre-tax income of the poorest fifth. 
C) 15 times the pre-tax income of the poorest fifth. 
D) 20 times the pre-tax income of the poorest fifth. 
A) 5 times the pre-tax income of the poorest fifth. 
B) 10 times the pre-tax income of the poorest fifth. 
C) 15 times the pre-tax income of the poorest fifth. 
D) 20 times the pre-tax income of the poorest fifth.

Question 6

In 2011 the top 5 percent of income earners accounted for over 50% of all income received by United States' families.

Accepted Answer

A) True 
 B)False

Question 7

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Accepted Answer

It would d

Question 8

Scenario 20-8
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $14,000
​
​
-Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.​

Accepted Answer

A) True 
 B)False

Question 9

Would the maximin criterion achieve perfect income equality?

Accepted Answer

A) Yes. There would be no way to reallocate resources to raise the utility of the poor. 
B) Yes. The maximin criterion would eliminate poverty. 
C) No. It is impossible for complete equality to benefit the worst-off people in society. 
D) No. Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society. 
A) Yes. There would be no way to reallocate resources to raise the utility of the poor. 
B) Yes. The maximin criterion would eliminate poverty. 
C) No. It is impossible for complete equality to benefit the worst-off people in society. 
D) No. Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society.

Question 10

In the United States in 2011, the bottom fifth of the income distribution had incomes below $27,218.

Accepted Answer

A) True 
 B)False

Question 11

Which political philosophy believes that the government should equalize the incomes of all members of society?

Accepted Answer

A) Utilitarianism. 
B) Liberalism. 
C) Libertarianism. 
D) None of the above is correct. 
A) Utilitarianism. 
B) Liberalism. 
C) Libertarianism. 
D) None of the above is correct.

Question 12

Table 20-14
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.   Source: US Census Bureau
-Refer to Table 20-14. The trend in income inequality from 1980 to 2010 is .

Accepted Answer

The answer of Table 20-14
Income Inequality in the United States
The...

Question 13

If a father earns 20% above his generation's average income, his son will most likely earn what percent above his generation's average income? What does this statistic indicate?

Accepted Answer

8% Persistence of economic suc

Question 14

In-kind transfers are transfers to the poor

Accepted Answer

A) in the form of goods and services rather than cash. 
B) in the form of goods, services, and cash. 
C) from private charitable organizations only. 
D) from the federal government only. 
A) in the form of goods and services rather than cash. 
B) in the form of goods, services, and cash. 
C) from private charitable organizations only. 
D) from the federal government only.

Question 15

When the government enacts policies to redistribute income,

Accepted Answer

A) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C) the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D) the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient. 
A) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C) the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D) the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.

Question 16

Which of the following is not correct?

Accepted Answer

A) Critics argue that minimum-wage laws hurt the very people they are intended to help. 
B) Minimum-wage laws may increase unemployment among the groups of workers affected by the minimum wage. 
C) If the demand for unskilled labor is relatively inelastic, the higher wage will produce more unemployment than if the demand for unskilled labor is relatively elastic. 
D) Minimum-wage laws may benefit teenagers from middle-class families, so the policy is not a precise way to help the poor. 
A) Critics argue that minimum-wage laws hurt the very people they are intended to help. 
B) Minimum-wage laws may increase unemployment among the groups of workers affected by the minimum wage. 
C) If the demand for unskilled labor is relatively inelastic, the higher wage will produce more unemployment than if the demand for unskilled labor is relatively elastic. 
D) Minimum-wage laws may benefit teenagers from middle-class families, so the policy is not a precise way to help the poor.

Question 17

Figure 20-3  
-Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

Accepted Answer

A) higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
B) higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. 
C) is lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty. 
D) is lower than the percentage of children under age 18 and is equal to the percentage of elderly aged 65 and over in poverty. 
A) higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
B) higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. 
C) is lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty. 
D) is lower than the percentage of children under age 18 and is equal to the percentage of elderly aged 65 and over in poverty.

Question 18

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

Accepted Answer

According to utilitarianism, the governm

Question 19

The maximin criterion suggests that social policy should

Accepted Answer

A) expropriate the factors of production from the capitalist class. 
B) ensure an equal distribution of income. 
C) elevate the well-being of those at the bottom of the income distribution. 
D) elevate the well-being of all workers. 
A) expropriate the factors of production from the capitalist class. 
B) ensure an equal distribution of income. 
C) elevate the well-being of those at the bottom of the income distribution. 
D) elevate the well-being of all workers.

Question 20

Many Democrats support raising the U.S. minimum wage. Critics of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A) too expensive for local governments to fund. 
B) too expensive for local governments to administer. 
C) imprecise in their ability to help the working poor. 
D) easy for businesses to pay. 
A) too expensive for local governments to fund. 
B) too expensive for local governments to administer. 
C) imprecise in their ability to help the working poor. 
D) easy for businesses to pay.

Exam 20: Income Inequality and Poverty

The top 5 percent of U.S. annual family income in 2011 was $205,200 or more.

A disadvantage of the Earned Income Tax Credit (EITC) program is that it does not help alleviate poverty due to unemployment, sickness, or other inability to work.

Which group would be the least upset by wide variation in the income distribution?

Which of the following statements is not correct?

The study by economists Cox and Alm found that the 2006 pre-tax income of the richest fifth of U.S. households is

In 2011 the top 5 percent of income earners accounted for over 50% of all income received by United States' families.

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Scenario 20-8 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $14,000 ​ ​ -Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.​

Would the maximin criterion achieve perfect income equality?

In the United States in 2011, the bottom fifth of the income distribution had incomes below $27,218.

Which political philosophy believes that the government should equalize the incomes of all members of society?

Table 20-14 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-14. The trend in income inequality from 1980 to 2010 is .

If a father earns 20% above his generation's average income, his son will most likely earn what percent above his generation's average income? What does this statistic indicate?

In-kind transfers are transfers to the poor

When the government enacts policies to redistribute income,

Which of the following is not correct?

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

The maximin criterion suggests that social policy should

Many Democrats support raising the U.S. minimum wage. Critics of raising the minimum wage argue that minimum-wage laws are

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Scenario 20-8 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $14,000 -Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.