Question 1

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

Accepted Answer

A) True 
 B)False

Question 2

The only qualification to receive government assistance under a negative income tax is

Accepted Answer

A) pre-school children. 
B) to be enrolled in job training. 
C) a working head-of-household. 
D) a low income. 
A) pre-school children. 
B) to be enrolled in job training. 
C) a working head-of-household. 
D) a low income.

Question 3

If income were equally distributed among households,

Accepted Answer

A) each household's relative share of income would increase. 
B) each household's relative share of income would decrease. 
C) the top fifth of households would have 50 percent of the income. 
D) 50 percent of the households would receive exactly 50 percent of the income. 
A) each household's relative share of income would increase. 
B) each household's relative share of income would decrease. 
C) the top fifth of households would have 50 percent of the income. 
D) 50 percent of the households would receive exactly 50 percent of the income.

Question 4

There is very little economic mobility in the United States, which means that once a family is poor, it is very likely to remain poor for at least a decade.

Accepted Answer

A) True 
 B)False

Question 5

The United States has less income inequality than

Accepted Answer

A) Ethiopia. 
B) United Kingdom. 
C) Vietnam. 
D) Mexico. 
A) Ethiopia. 
B) United Kingdom. 
C) Vietnam. 
D) Mexico.

Question 6

The United States has greater income disparity than

Accepted Answer

A) Japan. 
B) India. 
C) South Africa. 
D) Both a and b are correct. 
A) Japan. 
B) India. 
C) South Africa. 
D) Both a and b are correct.

Question 7

Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer. Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida. Which of the following is correct?

Accepted Answer

A) Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income. 
B) Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. 
C) Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. 
D) Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income. 
A) Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income. 
B) Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. 
C) Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. 
D) Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income.

Question 8

The calculation of the poverty line includes adjustments for

Accepted Answer

A) energy costs. 
B) child care costs. 
C) the level of prices. 
D) the Earned Income Tax Credit. 
A) energy costs. 
B) child care costs. 
C) the level of prices. 
D) the Earned Income Tax Credit.

Question 9

The poverty line in the country of Inequalia is $7,800. The distribution of income for Inequalia is as follows:   The poverty rate in Inequalia is

Accepted Answer

A) 7.8 percent. 
B) between 10 percent and 25 percent. 
C) between 25 percent and 50 percent. 
D) 39 percent. 
A) 7.8 percent. 
B) between 10 percent and 25 percent. 
C) between 25 percent and 50 percent. 
D) 39 percent.

Question 10

Table 20-14
James, Luke, Peter, Micah, and Sarah are the only five inhabits of Marketsville. The following table shows their income.   ​
​
-Refer to Table 20-14. According to the table, what percentage of individuals in Marketsville have an income above $90,000?

Accepted Answer

A) 40 percent. 
B) 60 percent. 
C) 80 percent. 
D) 100 percent. 
A) 40 percent. 
B) 60 percent. 
C) 80 percent. 
D) 100 percent.

Question 11

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Accepted Answer

A) True 
 B)False

Question 12

Ms. Spring currently earns $100,000 a year, while her junior partner, Mr. Fall, earns $55,000 a year. From the perspective of a utilitarian, if both of their incomes are subject to diminishing marginal utility, taking a dollar from Ms. Spring and giving it to Mr. Fall will

Accepted Answer

A) increase society's total utility. 
B) lower Ms. Spring's marginal utility of income. 
C) increase Mr. Fall's marginal utility of income. 
D) lower society's total utility. 
A) increase society's total utility. 
B) lower Ms. Spring's marginal utility of income. 
C) increase Mr. Fall's marginal utility of income. 
D) lower society's total utility.

Question 13

The poverty line in the country of Inequalia is $10,000. The distribution of income for Inequalia is as follows:   The poverty rate in Inequalia is

Accepted Answer

A) 11.1 percent. 
B) 16.7 percent. 
C) 27.8 percent. 
D) 55.5 percent. 
A) 11.1 percent. 
B) 16.7 percent. 
C) 27.8 percent. 
D) 55.5 percent.

Question 14

Which of the following statements about the minimum wage is correct?

Accepted Answer

A) An increase in the minimum wage enhances the well-being of all unskilled workers. 
B) An increase in the minimum wage has no effect on the well-being of middle-class families. 
C) Advocates of the minimum wage argue that the demand for labor is relatively inelastic. 
D) Critics of the minimum wage argue that it is an undesirable way of helping the poor because it is costly to the government. 
A) An increase in the minimum wage enhances the well-being of all unskilled workers. 
B) An increase in the minimum wage has no effect on the well-being of middle-class families. 
C) Advocates of the minimum wage argue that the demand for labor is relatively inelastic. 
D) Critics of the minimum wage argue that it is an undesirable way of helping the poor because it is costly to the government.

Question 15

The U.S. welfare system was revised by a 1996 law that

Accepted Answer

A) consolidated all of the previous assistance programs into a single program. 
B) limited the amount of time that people could receive assistance. 
C) said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance. 
D) turned all federally-run welfare programs over to the states. 
A) consolidated all of the previous assistance programs into a single program. 
B) limited the amount of time that people could receive assistance. 
C) said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance. 
D) turned all federally-run welfare programs over to the states.

Question 16

A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?

Accepted Answer

A) Utilitarianism suggests that government policies should strive to maximize Ulyana's utility. 
B) Liberalism suggests that government policies should strive to increase Ulyana's utility. 
C) Libertarianism suggests that government policies should strive to improve Tristan's utility at the cost of Sam's utility. 
D) Libertarianism suggests that government policies should strive to make Sam, Tristan, and Ulyana equally well off. 
A) Utilitarianism suggests that government policies should strive to maximize Ulyana's utility. 
B) Liberalism suggests that government policies should strive to increase Ulyana's utility. 
C) Libertarianism suggests that government policies should strive to improve Tristan's utility at the cost of Sam's utility. 
D) Libertarianism suggests that government policies should strive to make Sam, Tristan, and Ulyana equally well off.

Question 17

Which of the following is not a characteristic of the Earned Income Tax Credit (EITC)?

Accepted Answer

A) It does not discourage recipients from working. 
B) It is less distortionary than other anti-poverty programs. 
C) It helps the disabled who cannot work. 
D) It applies only to the working poor. 
A) It does not discourage recipients from working. 
B) It is less distortionary than other anti-poverty programs. 
C) It helps the disabled who cannot work. 
D) It applies only to the working poor.

Question 18

Which philosopher claimed that the government should aim to maximize the well-being of the worst-off person in society?

Accepted Answer

The answer of Which philosopher claimed that the government should...

Question 19

Of the following groups, which group is most likely to live in poverty - children, elderly, married-couple families, female household with no spouse present?

Accepted Answer

female hou

Question 20

Table 20-6  
-Refer to Table 20-6. In both 2011 and 2012, approximately 25% of the population earned less than

Accepted Answer

A) $15,000. 
B) $25,000. 
C) $50,000. 
D) $100,000. 
A) $15,000. 
B) $25,000. 
C) $50,000. 
D) $100,000.

Exam 20: Income Inequality and Poverty

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

The only qualification to receive government assistance under a negative income tax is

If income were equally distributed among households,

There is very little economic mobility in the United States, which means that once a family is poor, it is very likely to remain poor for at least a decade.

The United States has less income inequality than

The United States has greater income disparity than

The calculation of the poverty line includes adjustments for

The poverty line in the country of Inequalia is $7,800. The distribution of income for Inequalia is as follows: The poverty rate in Inequalia is

Table 20-14 James, Luke, Peter, Micah, and Sarah are the only five inhabits of Marketsville. The following table shows their income. ​ ​ -Refer to Table 20-14. According to the table, what percentage of individuals in Marketsville have an income above $90,000?

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Ms. Spring currently earns $100,000 a year, while her junior partner, Mr. Fall, earns $55,000 a year. From the perspective of a utilitarian, if both of their incomes are subject to diminishing marginal utility, taking a dollar from Ms. Spring and giving it to Mr. Fall will

The poverty line in the country of Inequalia is $10,000. The distribution of income for Inequalia is as follows: The poverty rate in Inequalia is

Which of the following statements about the minimum wage is correct?

The U.S. welfare system was revised by a 1996 law that

A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?

Which of the following is not a characteristic of the Earned Income Tax Credit (EITC)?

Which philosopher claimed that the government should aim to maximize the well-being of the worst-off person in society?

Of the following groups, which group is most likely to live in poverty - children, elderly, married-couple families, female household with no spouse present?

Table 20-6 -Refer to Table 20-6. In both 2011 and 2012, approximately 25% of the population earned less than

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

Table 20-14 James, Luke, Peter, Micah, and Sarah are the only five inhabits of Marketsville. The following table shows their income. -Refer to Table 20-14. According to the table, what percentage of individuals in Marketsville have an income above $90,000?