Question 1

Table 20-4   Source: U.S. Bureau of Census
-Refer to Table 20-4. In 2011, the bottom 60% of families have

Accepted Answer

A) about 13% of total income in the U.S. 
B) about 28% of total income in the U.S. 
C) about 51% of total income in the U.S. 
D) about 74% of total income in the U.S. 
A) about 13% of total income in the U.S. 
B) about 28% of total income in the U.S. 
C) about 51% of total income in the U.S. 
D) about 74% of total income in the U.S.

Question 2

The regular pattern of income variation over a person's life is called the

Accepted Answer

A) earned income cycle. 
B) substitution effect. 
C) life cycle. 
D) pattern of change. 
A) earned income cycle. 
B) substitution effect. 
C) life cycle. 
D) pattern of change.

Question 3

Which of the following statements is correct?

Accepted Answer

A) The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B) The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C) The economic life cycle explains why people base spending decisions on transitory income. 
D) The United States has more income inequality than developing countries, including Mexico and Brazil. 
A) The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B) The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C) The economic life cycle explains why people base spending decisions on transitory income. 
D) The United States has more income inequality than developing countries, including Mexico and Brazil.

Question 4

Utilitarianism is

Accepted Answer

A) a liberal religion that focuses on individual rights. 
B) a political philosophy that believes the government should choose policies deemed to be just by an impartial observer. 
C) a political philosophy that believes the government should not redistribute income. 
D) a political philosophy that believes the government should choose policies to maximize the total utility of society. 
A) a liberal religion that focuses on individual rights. 
B) a political philosophy that believes the government should choose policies deemed to be just by an impartial observer. 
C) a political philosophy that believes the government should not redistribute income. 
D) a political philosophy that believes the government should choose policies to maximize the total utility of society.

Question 5

Which of the following is not correct?

Accepted Answer

A) Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. 
B) Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. 
C) Critics argue that in-kind transfers are inefficient and disrespectful. 
D) For a program to qualify as an in-kind transfer, it must have government approval. 
A) Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. 
B) Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. 
C) Critics argue that in-kind transfers are inefficient and disrespectful. 
D) For a program to qualify as an in-kind transfer, it must have government approval.

Question 6

-Refer to Table 20-13. The Human Development Report computes a measure of inequality by dividing the income of the richest 10% of the population by the income of the poorest 10%. What is the value for this measure of inequality in Imagination?

Accepted Answer

The answer of  
-Refer to Table 20-13. The Human...

Question 7

Temporary Assistance for Needy Families (TANF) is an example of a negative income tax program.

Accepted Answer

A) True 
 B)False

Question 8

Figure 20-1
Number of Poor  
-Refer to Figure 20-1. The absolute number of people in poverty

Accepted Answer

A) is higher in 2011 than in 1959. 
B) is lower in 2011 than in 1959. 
C) has not changed between 1959 and 2011. 
D) has steadily decreased between 1959 and 2011. 
A) is higher in 2011 than in 1959. 
B) is lower in 2011 than in 1959. 
C) has not changed between 1959 and 2011. 
D) has steadily decreased between 1959 and 2011.

Question 9

Of the four countries below, the country that has the most income equality is

Accepted Answer

A) Ethiopia. 
B) France. 
C) Russia. 
D) Thailand. 
A) Ethiopia. 
B) France. 
C) Russia. 
D) Thailand.

Question 10

What is one argument made by proponents of in-kind transfers over cash payments to the needy?

Accepted Answer

In-kind payments ens

Question 11

On what type of income do many economists believe that people base their consumption?

Accepted Answer

The answer of On what type of income do many...

Question 12

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

Accepted Answer

An in-kind transfer program distributes

Question 13

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 $150,000 owe?

Accepted Answer

A) $34,000 
B) $42,000 
C) $50,000 
D) $68,000 
A) $34,000 
B) $42,000 
C) $50,000 
D) $68,000

Question 14

"Only individual members of society earn income, not society itself." This statement is most closely associated with the political philosophy of a

Accepted Answer

A) utilitarian. 
B) liberal. 
C) libertarian. 
D) None of the above is correct. 
A) utilitarian. 
B) liberal. 
C) libertarian. 
D) None of the above is correct.

Question 15

Which of the following is correct?

Accepted Answer

A) Governments can never improve market outcomes. 
B) Governments can sometimes improve market outcomes. 
C) Governments can always improve market outcomes. 
D) Government can never make the income distribution more equal. 
A) Governments can never improve market outcomes. 
B) Governments can sometimes improve market outcomes. 
C) Governments can always improve market outcomes. 
D) Government can never make the income distribution more equal.

Question 16

The Hicks family owns a blueberry farm in Maine. The Ward family owns a blueberry farm in Massachusetts. A drought in Massachusetts destroys half of the Ward family's harvest for one year. For the Ward family, their

Accepted Answer

A) transitory income for the year of the drought likely exceeds their permanent income. 
B) permanent income likely exceeds their transitory income for the year of the drought. 
C) transitory income likely will be affected but the permanent income of the Hicks family will increase. 
D) permanent income likely will be affected but the permanent income of the Hicks family will not be affected. 
A) transitory income for the year of the drought likely exceeds their permanent income. 
B) permanent income likely exceeds their transitory income for the year of the drought. 
C) transitory income likely will be affected but the permanent income of the Hicks family will increase. 
D) permanent income likely will be affected but the permanent income of the Hicks family will not be affected.

Question 17

U.S. income data over the last 75 years suggests that the distribution of income

Accepted Answer

A) has gradually become more equal over the entire time period. 
B) has gradually become less equal over the entire time period. 
C) gradually became less equal until about 1970, then became more equal from 1970 to 2011. 
D) gradually became more equal until about 1970, then became less equal from 1970 to 2011. 
A) has gradually become more equal over the entire time period. 
B) has gradually become less equal over the entire time period. 
C) gradually became less equal until about 1970, then became more equal from 1970 to 2011. 
D) gradually became more equal until about 1970, then became less equal from 1970 to 2011.

Question 18

"An extra dollar of income gives more additional satisfaction to a poor person than to a rich person." This is an important assumption of which political philosophy?

Accepted Answer

A) utilitarianism 
B) liberalism 
C) libertarianism 
D) republicanism 
A) utilitarianism 
B) liberalism 
C) libertarianism 
D) republicanism

Question 19

In the United States, long-term poverty, defined as a family having an income below the poverty line for eight or more years, is

Accepted Answer

A) common, affecting approximately 25 percent of all American families. 
B) common, affecting approximately 15 percent of all American families. 
C) uncommon, affecting approximately 8 percent of all American families. 
D) rare, affecting approximately 3 percent of all American families. 
A) common, affecting approximately 25 percent of all American families. 
B) common, affecting approximately 15 percent of all American families. 
C) uncommon, affecting approximately 8 percent of all American families. 
D) rare, affecting approximately 3 percent of all American families.

Question 20

Binding minimum-wage laws

Accepted Answer

A) are costly for the government to impose. 
B) force a market imbalance between the supply and demand for labor. 
C) have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people. 
D) do not affect segments of the population who are not poor. 
A) are costly for the government to impose. 
B) force a market imbalance between the supply and demand for labor. 
C) have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people. 
D) do not affect segments of the population who are not poor.

Exam 20: Income Inequality and Poverty

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. In 2011, the bottom 60% of families have

The regular pattern of income variation over a person's life is called the

Which of the following statements is correct?

Utilitarianism is

Which of the following is not correct?

-Refer to Table 20-13. The Human Development Report computes a measure of inequality by dividing the income of the richest 10% of the population by the income of the poorest 10%. What is the value for this measure of inequality in Imagination?

Temporary Assistance for Needy Families (TANF) is an example of a negative income tax program.

Figure 20-1 Number of Poor -Refer to Figure 20-1. The absolute number of people in poverty

Of the four countries below, the country that has the most income equality is

What is one argument made by proponents of in-kind transfers over cash payments to the needy?

On what type of income do many economists believe that people base their consumption?

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

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 $150,000 owe?

"Only individual members of society earn income, not society itself." This statement is most closely associated with the political philosophy of a

Which of the following is correct?

The Hicks family owns a blueberry farm in Maine. The Ward family owns a blueberry farm in Massachusetts. A drought in Massachusetts destroys half of the Ward family's harvest for one year. For the Ward family, their

U.S. income data over the last 75 years suggests that the distribution of income

"An extra dollar of income gives more additional satisfaction to a poor person than to a rich person." This is an important assumption of which political philosophy?

In the United States, long-term poverty, defined as a family having an income below the poverty line for eight or more years, is

Binding minimum-wage laws

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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