Question 1

The distribution of income for Danville is as follows:   If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?

Accepted Answer

A) $15,000. 
B) $20,000. 
C) $25,000. 
D) $30,000. 
A) $15,000. 
B) $20,000. 
C) $25,000. 
D) $30,000.

Question 2

Table 20-8   Source: U.S. Bureau of Census
-Refer to Table 20-8. Comparing data from 2000 and 2011, which of the following statements is correct?

Accepted Answer

A) The bottom 40% of the population had a greater share of the income in 2011 than it did in 2001. 
B) The top 40% of the population had a greater share of the income in 2011 than it did in 2001. 
C) The middle 60% of the population had a greater share of the income in 2011 than it did in 2001. 
D) All of the above are correct. 
A) The bottom 40% of the population had a greater share of the income in 2011 than it did in 2001. 
B) The top 40% of the population had a greater share of the income in 2011 than it did in 2001. 
C) The middle 60% of the population had a greater share of the income in 2011 than it did in 2001. 
D) All of the above are correct.

Question 3

Whether or not policymakers should try to make our society more egalitarian is largely a matter of

Accepted Answer

A) economic efficiency. 
B) political philosophy. 
C) egalitarian principles. 
D) enhanced opportunity. 
A) economic efficiency. 
B) political philosophy. 
C) egalitarian principles. 
D) enhanced opportunity.

Question 4

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Accepted Answer

A) Changes in technology. 
B) An increase in minimum wages. 
C) A reduction in the demand for unskilled labor. 
D) Increased international trade with low-wage countries. 
A) Changes in technology. 
B) An increase in minimum wages. 
C) A reduction in the demand for unskilled labor. 
D) Increased international trade with low-wage countries.

Question 5

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

Accepted Answer

The answer of Of the following groups, which group is...

Question 6

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

Accepted Answer

A) increase by about 1 percent. 
B) decrease by about 1 percent. 
C) decrease by about 5 percent. 
D) decrease by about 10 percent. 
A) increase by about 1 percent. 
B) decrease by about 1 percent. 
C) decrease by about 5 percent. 
D) decrease by about 10 percent.

Question 7

The percentage of the population whose family income falls below an absolute level is call the

Accepted Answer

The answer of The percentage of the population whose family...

Question 8

Which two of the Ten Principles of Economics are illustrated in this chapter?

Accepted Answer

A) A country's standard of living depends on its ability to produce goods & People face tradeoffs. 
B) Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. 
C) Governments can sometimes improve market outcomes & People face tradeoffs. 
D) People face tradeoffs & Prices rise when the government prints too much money . 
A) A country's standard of living depends on its ability to produce goods & People face tradeoffs. 
B) Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. 
C) Governments can sometimes improve market outcomes & People face tradeoffs. 
D) People face tradeoffs & Prices rise when the government prints too much money .

Question 9

In 2011, the top 20% of US families had more than times as much income as the bottom 20%.

Accepted Answer

The answer of In 2011, the top 20% of US...

Question 10

A disadvantage associated with in-kind transfers to reduce poverty is that they

Accepted Answer

A) alter peoples' incentives, whereas a negative income tax does not alter peoples' incentives. 
B) do not allow poor families to make purchases based on their preferences. 
C) can only be distributed by the federal government. 
D) cannot restrict the group of recipients and some middle-class families may benefit from them. 
A) alter peoples' incentives, whereas a negative income tax does not alter peoples' incentives. 
B) do not allow poor families to make purchases based on their preferences. 
C) can only be distributed by the federal government. 
D) cannot restrict the group of recipients and some middle-class families may benefit from them.

Question 11

Suppose that a family saves and borrows to buffer itself against changes in income. These actions relate to which problem in measuring inequality?

Accepted Answer

A) in-kind transfers 
B) negative income tax 
C) transitory versus permanent income 
D) economic mobility 
A) in-kind transfers 
B) negative income tax 
C) transitory versus permanent income 
D) economic mobility

Question 12

The utilitarian case for redistributing income is based on the assumption of

Accepted Answer

A) collective consensus. 
B) a notion of fairness engendered by equality. 
C) diminishing marginal utility. 
D) rising marginal utility. 
A) collective consensus. 
B) a notion of fairness engendered by equality. 
C) diminishing marginal utility. 
D) rising marginal utility.

Question 13

Scenario 20-4
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/5 of income) - $15,000
-Refer to Scenario 20-4. Below what level of income would families start to receive a subsidy from this negative income tax?

Accepted Answer

A) $5,000 
B) $15,000 
C) $50,000 
D) $75,000 
A) $5,000 
B) $15,000 
C) $50,000 
D) $75,000

Question 14

Scenario 20-6
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which
Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-6. How much does Zooey owe or receive from the government?

Accepted Answer

A) She receives $10,000. 
B) She owes $10,000. 
C) She receives $15,000. 
D) She owes $5,000 
A) She receives $10,000. 
B) She owes $10,000. 
C) She receives $15,000. 
D) She owes $5,000

Question 15

When the government enacts policies to make the distribution of income more equitable, it distorts incentives, alters behavior, and makes the allocation of resources less efficient.

Accepted Answer

A) True 
 B)False

Question 16

Scenario 20-3
Suppose that a society is made up of five families whose incomes are as follows:
$120,000; $90,000; $30,000; $30,000; and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where families earning less than $35,000 pay no income tax and families earning more than $35,000 pay 10% of their income in taxes. The income tax revenue collected from those families earning over $35,000 is then redistributed equally to those families earning less than $35,000.
-Refer to Scenario 20-3. Assuming that utility is directly proportional to the cash value of after-tax income, which government policy would an advocate of utilitarianism prefer?

Accepted Answer

A) Plan A 
B) Plan B 
C) either Plan A or Plan B 
D) neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy 
A) Plan A 
B) Plan B 
C) either Plan A or Plan B 
D) neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy

Question 17

The distribution of income for Dismal is as follows:   If the poverty rate in Dismal is about 17 percent, what is the poverty line in Dismal?

Accepted Answer

A) $10,000. 
B) $20,000. 
C) $30,000. 
D) $40,000. 
A) $10,000. 
B) $20,000. 
C) $30,000. 
D) $40,000.

Question 18

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. Where would the government of Marketsville set the poverty line to have a poverty rate of 20 percent?

Accepted Answer

A) $23,000 
B) $35,000 
C) $44,000 
D) $55,000 
A) $23,000 
B) $35,000 
C) $44,000 
D) $55,000

Question 19

The poverty rate is based on a family's

Accepted Answer

A) income, in-kind transfers, and other government aid. 
B) income and in-kind transfers. 
C) in-kind transfers only. 
D) income only. 
A) income, in-kind transfers, and other government aid. 
B) income and in-kind transfers. 
C) in-kind transfers only. 
D) income only.

Question 20

If society chose to maximize total utility rather than minimum utility,

Accepted Answer

A) society would achieve perfect income equality. 
B) society would achieve the maximin objective. 
C) its justice would be more utilitarian than Rawlsian. 
D) its justice would be more Rawlsian than utilitarian. 
A) society would achieve perfect income equality. 
B) society would achieve the maximin objective. 
C) its justice would be more utilitarian than Rawlsian. 
D) its justice would be more Rawlsian than utilitarian.

The distribution of income for Danville is as follows: If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. Comparing data from 2000 and 2011, which of the following statements is correct?

Whether or not policymakers should try to make our society more egalitarian is largely a matter of

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

The percentage of the population whose family income falls below an absolute level is call the

Which two of the Ten Principles of Economics are illustrated in this chapter?

In 2011, the top 20% of US families had more than times as much income as the bottom 20%.

A disadvantage associated with in-kind transfers to reduce poverty is that they

Suppose that a family saves and borrows to buffer itself against changes in income. These actions relate to which problem in measuring inequality?

The utilitarian case for redistributing income is based on the assumption of

When the government enacts policies to make the distribution of income more equitable, it distorts incentives, alters behavior, and makes the allocation of resources less efficient.

The distribution of income for Dismal is as follows: If the poverty rate in Dismal is about 17 percent, what is the poverty line in Dismal?

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. Where would the government of Marketsville set the poverty line to have a poverty rate of 20 percent?

The poverty rate is based on a family's

If society chose to maximize total utility rather than minimum utility,

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

Exam 20: Income Inequality and Poverty

The distribution of income for Danville is as follows: If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. Comparing data from 2000 and 2011, which of the following statements is correct?

Whether or not policymakers should try to make our society more egalitarian is largely a matter of

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

The percentage of the population whose family income falls below an absolute level is call the

Which two of the Ten Principles of Economics are illustrated in this chapter?

In 2011, the top 20% of US families had more than times as much income as the bottom 20%.

A disadvantage associated with in-kind transfers to reduce poverty is that they

Suppose that a family saves and borrows to buffer itself against changes in income. These actions relate to which problem in measuring inequality?

The utilitarian case for redistributing income is based on the assumption of

When the government enacts policies to make the distribution of income more equitable, it distorts incentives, alters behavior, and makes the allocation of resources less efficient.

The distribution of income for Dismal is as follows: If the poverty rate in Dismal is about 17 percent, what is the poverty line in Dismal?

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. Where would the government of Marketsville set the poverty line to have a poverty rate of 20 percent?

The poverty rate is based on a family's

If society chose to maximize total utility rather than minimum utility,

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. Where would the government of Marketsville set the poverty line to have a poverty rate of 20 percent?