Question 1

In 2011, what percentage of U.S. families had income levels below $75,000?

Accepted Answer

A) 20 percent 
B) 40 percent 
C) 60 percent 
D) 80 percent 
A) 20 percent 
B) 40 percent 
C) 60 percent 
D) 80 percent

Question 2

Explain the relationship between labor earnings and the distribution of income.

Accepted Answer

A person's earnings depend on the supply

Question 3

Table 20-12
Income Inequality in 2010 in the United States by Race
The values in the table reflect the percentages of pre-tax-and-transfer income.   Source: US Census Bureau
-Refer to Table 20-12. According to the information in the table, which race had the most income inequality in 2010?

Accepted Answer

A) Asian 
B) Black 
C) Hispanic 
D) White 
A) Asian 
B) Black 
C) Hispanic 
D) White

Question 4

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A) improve economic efficiency by reducing poverty. 
B) reduce economic efficiency because they distort incentives. 
C) have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D) sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency. 
A) improve economic efficiency by reducing poverty. 
B) reduce economic efficiency because they distort incentives. 
C) have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D) sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.

Question 5

Scenario 20-5
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) - $10,000
-Refer to Scenario 20-5. A family earning $70,000 before taxes would have how much after-tax income?

Accepted Answer

A) $7,500 
B) $52,500 
C) $62,500 
D) $77,500 
A) $7,500 
B) $52,500 
C) $62,500 
D) $77,500

Question 6

Suppose the government used the following formula to compute a family's tax liability:
Taxes owed = 28% of income - $8,000. How much would a family that earned $18,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 7

Liberals believe

Accepted Answer

A) that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B) in the assumption of diminishing marginal utility. 
C) that everyone in society should have equal utility. 
D) that the government should not redistribute income. 
A) that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B) in the assumption of diminishing marginal utility. 
C) that everyone in society should have equal utility. 
D) that the government should not redistribute income.

Question 8

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

Accepted Answer

difference

Question 9

With a minimum wage law, the workers who remain employed benefit from a .

Accepted Answer

The answer of With a minimum wage law, the workers...

Question 10

Scenario 20-7
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/6 of income) - $24,000
-Refer to Scenario 20-7. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A) $24,000 
B) $50,000 
C) $144,000 
D) $150,000 
A) $24,000 
B) $50,000 
C) $144,000 
D) $150,000

Question 11

For which of the following programs can a person qualify solely by having a low income?

Accepted Answer

A) both Temporary Assistance for Needy Families (TANF) and Supplemental Security Income (SSI) 
B) Temporary Assistance for Needy Families (TANF) but not Supplemental Security Income (SSI) 
C) Supplemental Security Income (SSI) but not Temporary Assistance for Needy Families (TANF) 
D) neither Temporary Assistance for Needy Families (TANF) nor Supplemental Security Income (SSI) 
A) both Temporary Assistance for Needy Families (TANF) and Supplemental Security Income (SSI) 
B) Temporary Assistance for Needy Families (TANF) but not Supplemental Security Income (SSI) 
C) Supplemental Security Income (SSI) but not Temporary Assistance for Needy Families (TANF) 
D) neither Temporary Assistance for Needy Families (TANF) nor Supplemental Security Income (SSI)

Question 12

The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called

Accepted Answer

A) liberalism. 
B) libertarianism. 
C) mobilism. 
D) utilitarianism. 
A) liberalism. 
B) libertarianism. 
C) mobilism. 
D) utilitarianism.

Question 13

The typical economic life cycle illustrates how people tend to

Accepted Answer

A) borrow more when they are younger and save more when they are middle-aged. 
B) earn their peak incomes immediately prior to the typical retirement age of 65. 
C) adjust their consumption based on changes in their transitory income. 
D) All of the above are correct. 
A) borrow more when they are younger and save more when they are middle-aged. 
B) earn their peak incomes immediately prior to the typical retirement age of 65. 
C) adjust their consumption based on changes in their transitory income. 
D) All of the above are correct.

Question 14

Liberalism is the political philosophy espoused by

Accepted Answer

A) Robert Nozick. 
B) John Stuart Mill. 
C) John Rawls. 
D) Jeremy Bentham. 
A) Robert Nozick. 
B) John Stuart Mill. 
C) John Rawls. 
D) Jeremy Bentham.

Question 15

In 2011 the top 20% of income earners accounted for over 80% of all income received by United States' families.

Accepted Answer

A) True 
 B)False

Question 16

Jermaine believes that it is important to maximize the well-being of the worst-off person in society. He believes in the principle called the .

Accepted Answer

The answer of Jermaine believes that it is important to...

Question 17

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick?

Accepted Answer

A) a negative income tax 
B) an Earned Income Tax Credit (EIT
C)  
C) an in-kind transfer program 
D) None of the programs would be favored by Nozick. 
A) a negative income tax 
B) an Earned Income Tax Credit (EIT
C)  
C) an in-kind transfer program 
D) None of the programs would be favored by Nozick.

Question 18

A government's policy of redistributing income makes the income distribution

Accepted Answer

A) more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
B) more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
C) less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
D) less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
A) more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
B) more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
C) less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
D) less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.

Question 19

Figure 20-3  
-Refer to Figure 20-3. Which of the following best describes the poverty rates by age from 1965 to 2011?

Accepted Answer

A) The poverty rates by age have declined for all age groups. 
B) The percentage of people living in poverty has consistently been highest for the elderly aged 65 and over and lowest for adults aged 18 to 64. 
C) The percentage of children under age 18 and the percentage of adults aged 18 to 64 have maintained a similar trend while the percentage of elderly aged 65 and over has decreased significantly. 
D) The poverty rates by age have increased for all age groups. 
A) The poverty rates by age have declined for all age groups. 
B) The percentage of people living in poverty has consistently been highest for the elderly aged 65 and over and lowest for adults aged 18 to 64. 
C) The percentage of children under age 18 and the percentage of adults aged 18 to 64 have maintained a similar trend while the percentage of elderly aged 65 and over has decreased significantly. 
D) The poverty rates by age have increased for all age groups.

Question 20

An income distribution may not give an accurate picture of the standard of living for the poor because it does not include in-kind transfers.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

In 2011, what percentage of U.S. families had income levels below $75,000?

Explain the relationship between labor earnings and the distribution of income.

Table 20-12 Income Inequality in 2010 in the United States by Race The values in the table reflect the percentages of pre-tax-and-transfer income. Source: US Census Bureau -Refer to Table 20-12. According to the information in the table, which race had the most income inequality in 2010?

Government programs that take money from high-income people and give it to low-income people typically

Scenario 20-5 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) - $10,000 -Refer to Scenario 20-5. A family earning $70,000 before taxes would have how much after-tax income?

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $18,000 owe?

Liberals believe

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

With a minimum wage law, the workers who remain employed benefit from a .

Scenario 20-7 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/6 of income) - $24,000 -Refer to Scenario 20-7. This negative income tax would guarantee what minimum level of income to every family?

For which of the following programs can a person qualify solely by having a low income?

The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called

The typical economic life cycle illustrates how people tend to

Liberalism is the political philosophy espoused by

In 2011 the top 20% of income earners accounted for over 80% of all income received by United States' families.

Jermaine believes that it is important to maximize the well-being of the worst-off person in society. He believes in the principle called the .

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick?

A government's policy of redistributing income makes the income distribution

Figure 20-3 -Refer to Figure 20-3. Which of the following best describes the poverty rates by age from 1965 to 2011?

An income distribution may not give an accurate picture of the standard of living for the poor because it does not include in-kind transfers.

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

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