Exam 20: Income Inequality and Poverty

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. A family earning $120,000 before taxes would have how much after-tax income?

Saving and borrowing is indicative of a family that

Approximately what fraction of total income in the US economy comes from labor earnings?

Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits. What is the foundation of your critique?

Which of the following formulas is most representative of a negative income tax proposal?

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 $20,000 owe?

The poverty line is adjusted each year to reflect changes in the

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which is an advocate of minimum-wage laws?

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

Which of the following is not correct?

Figure 20-1 Number of Poor -Refer to Figure 20-1. Between 1959 and 2011 the poverty rate has

Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-11. What is the poverty line for a family of three with one child?

-Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

The United States has more income inequality than Brazil and South Africa.

About four out of five millionaires in the United States earned their money rather than inherited it.

Measures of poverty that fail to account for the value of in-kind transfers

Which of the following is an advantage of an in-kind transfer in comparison to a cash payment?

Table 20-10 *A Gini coefficient is a commonly used measure of income inequality, with values between 0 and 1 (0 corresponds to perfect equality whereby everyone has exactly the same income, and 1 corresponds to perfect inequality where one person has all the income, while everyone else has zero income). Source: The World Bank -Refer to Table 20-10. Which of the following statements is correct?

With which three demographic variables is poverty correlated?

The study by economists Cox and Alm found