Question 1

In the United States, labor earnings are about what percent of total income?

Accepted Answer

A) 75 percent 
B) 70 percent 
C) 67 percent 
D) 50 percent 
A) 75 percent 
B) 70 percent 
C) 67 percent 
D) 50 percent

Question 2

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

Accepted Answer

A) True 
 B)False

Question 3

The goal of utilitarians is to

Accepted Answer

A) apply the logic of individual decision making to questions concerning morality and public policy. 
B) measure happiness and satisfaction. 
C) redistribute income based on the assumption of increasing marginal utility. 
D) All of the above are correct. 
A) apply the logic of individual decision making to questions concerning morality and public policy. 
B) measure happiness and satisfaction. 
C) redistribute income based on the assumption of increasing marginal utility. 
D) All of the above are correct.

Question 4

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Accepted Answer

Utilitarians reject complete equalizatio

Question 5

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Accepted Answer

A) trickle-down effects. 
B) enhancing market efficiency. 
C) redistributing income. 
D) maintaining the status quo income distribution. 
A) trickle-down effects. 
B) enhancing market efficiency. 
C) redistributing income. 
D) maintaining the status quo income distribution.

Question 6

People have their highest saving rates when they are

Accepted Answer

A) retired. 
B) middle-aged. 
C) married with young children. 
D) young and single. 
A) retired. 
B) middle-aged. 
C) married with young children. 
D) young and single.

Question 7

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

Accepted Answer

A) The gap shrinks if taxes are taken into account. 
B) The gap shrinks if consumption, rather than income, is compared. 
C) The gap shrinks if the number of people in the household is taken into account. 
D) The gap shrinks if the state of residence is taken into account. 
A) The gap shrinks if taxes are taken into account. 
B) The gap shrinks if consumption, rather than income, is compared. 
C) The gap shrinks if the number of people in the household is taken into account. 
D) The gap shrinks if the state of residence is taken into account.

Question 8

The Smith family owns an apple orchard in Illinois. The Jones family owns an apple orchard in Wisconsin. A late frost destroys half of the Smith family's harvest for one year. For the Jones family, their

Accepted Answer

A) transitory income for the year of the frost likely exceeds their permanent income. 
B) permanent income likely exceeds their transitory income for the year of the frost. 
C) permanent income will be more affected by the frost than their transitory income. 
D) Both a and c are correct. 
A) transitory income for the year of the frost likely exceeds their permanent income. 
B) permanent income likely exceeds their transitory income for the year of the frost. 
C) permanent income will be more affected by the frost than their transitory income. 
D) Both a and c are correct.

Question 9

Table 20-4   Source: U.S. Bureau of Census
-Refer to Table 20-4. In 2011, the top fifth of families have

Accepted Answer

A) almost 13 times as much income as the bottom fifth of families. 
B) 28.2% more income than the bottom fifth of families. 
C) 50.3% more income than the bottom fifth of families. 
D) 45.1% more income than the bottom fifth of families. 
A) almost 13 times as much income as the bottom fifth of families. 
B) 28.2% more income than the bottom fifth of families. 
C) 50.3% more income than the bottom fifth of families. 
D) 45.1% more income than the bottom fifth of families.

Question 10

In the Temporary Assistance for Needy Families program, most families

Accepted Answer

A) must have both parents in the home to qualify. 
B) are female head-of-household families in which the father is absent. 
C) have adult children with disabilities living at home. 
D) are ineligible to receive assistance from other support programs. 
A) must have both parents in the home to qualify. 
B) are female head-of-household families in which the father is absent. 
C) have adult children with disabilities living at home. 
D) are ineligible to receive assistance from other support programs.

Question 11

Which of the following programs would be opposed by philosopher John Rawls?

Accepted Answer

A) a negative income tax 
B) the Supplemental Security Income (SSI) program 
C) a tax plan creating a perfectly egalitarian income distribution 
D) Rawls would oppose all of the programs. 
A) a negative income tax 
B) the Supplemental Security Income (SSI) program 
C) a tax plan creating a perfectly egalitarian income distribution 
D) Rawls would oppose all of the programs.

Question 12

Assume that the government proposes a negative income tax that calculates taxes owed by the formula, Taxes Owed = (a   Income) - 
a.What is the value for "a"?
b.What is the value for "b"?
b. A family with an income of $40,000 pays $5,000 in taxes, and a family with an income of $12,000 receives an income subsidy of $2,000.
c.What is the tax liability of a family with an income of $50,000?
d.At what level of income will a family neither pay taxes, nor receive an income subsidy?

Accepted Answer

a.0.25 or

Question 13

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 $40,000 before taxes will owe tax.​

Accepted Answer

A) True 
 B)False

Question 14

Table 20-15
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 20-15. Which race shows the least equal distribution of income?

Accepted Answer

The answer of Table 20-15
Income Inequality in 2010 in the...

Question 15

The concept of utility is fundamental to utilitarianism and describes the

Accepted Answer

A) optimal distribution of wealth in society. 
B) level of satisfaction derived from a person's circumstances. 
C) method by which society chooses to allocate resources. 
D) method whereby wealth is stored. 
A) optimal distribution of wealth in society. 
B) level of satisfaction derived from a person's circumstances. 
C) method by which society chooses to allocate resources. 
D) method whereby wealth is stored.

Question 16

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 six with three children?

Accepted Answer

A) $29,494 
B) $31,005 
C) $32,181 
D) $26,844 
A) $29,494 
B) $31,005 
C) $32,181 
D) $26,844

Question 17

Since about 1970 in the U.S.,

Accepted Answer

A) decreases in the wages of unskilled workers, relative to skilled workers, have led to increased inequality in family incomes. 
B) increases in the wages of unskilled workers, relative to skilled workers, have led to increased equality in family incomes. 
C) inequality in family incomes has increased, despite increases in the wages of unskilled workers relative to skilled workers. 
D) inequality in family incomes has decreased, despite increases in the wages of skilled workers relative to unskilled workers. 
A) decreases in the wages of unskilled workers, relative to skilled workers, have led to increased inequality in family incomes. 
B) increases in the wages of unskilled workers, relative to skilled workers, have led to increased equality in family incomes. 
C) inequality in family incomes has increased, despite increases in the wages of unskilled workers relative to skilled workers. 
D) inequality in family incomes has decreased, despite increases in the wages of skilled workers relative to unskilled workers.

Question 18

Which of the following statements is not correct?

Accepted Answer

A) The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B) Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C) The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D) Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income. 
A) The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B) Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C) The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D) Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income.

In the United States, labor earnings are about what percent of total income?

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

The goal of utilitarians is to

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

People have their highest saving rates when they are

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

The Smith family owns an apple orchard in Illinois. The Jones family owns an apple orchard in Wisconsin. A late frost destroys half of the Smith family's harvest for one year. For the Jones family, their

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. In 2011, the top fifth of families have

In the Temporary Assistance for Needy Families program, most families

Which of the following programs would be opposed by philosopher John Rawls?

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 $40,000 before taxes will owe tax.

Table 20-15 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 20-15. Which race shows the least equal distribution of income?

The concept of utility is fundamental to utilitarianism and describes the

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 six with three children?

Since about 1970 in the U.S.,

Which of the following statements is not correct?

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

In the United States, labor earnings are about what percent of total income?

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

The goal of utilitarians is to

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

People have their highest saving rates when they are

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

The Smith family owns an apple orchard in Illinois. The Jones family owns an apple orchard in Wisconsin. A late frost destroys half of the Smith family's harvest for one year. For the Jones family, their

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. In 2011, the top fifth of families have

In the Temporary Assistance for Needy Families program, most families

Which of the following programs would be opposed by philosopher John Rawls?

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 $40,000 before taxes will owe tax.​

Table 20-15 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 20-15. Which race shows the least equal distribution of income?

The concept of utility is fundamental to utilitarianism and describes the

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 six with three children?

Since about 1970 in the U.S.,

Which of the following statements is not correct?

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 $40,000 before taxes will owe tax.