Question 1

The US government sets the poverty line equal to approximately

Accepted Answer

A) three times the cost of providing subsidized housing. 
B) three times the cost of providing an adequate diet. 
C) the minimum wage for a single person working 40 hours per week and 50 weeks per year. 
D) the cost of providing food, shelter, and health care expenses for a family of four. 
A) three times the cost of providing subsidized housing. 
B) three times the cost of providing an adequate diet. 
C) the minimum wage for a single person working 40 hours per week and 50 weeks per year. 
D) the cost of providing food, shelter, and health care expenses for a family of four.

Question 2

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Accepted Answer

inequality

Question 3

Suppose that young people often borrow and then repay the loans when they are older. These actions relate to which problem in measuring inequality?

Accepted Answer

A) in-kind transfers 
B) the economic life cycle 
C) a negative income tax 
D) economic mobility 
A) in-kind transfers 
B) the economic life cycle 
C) a negative income tax 
D) economic mobility

Question 4

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Accepted Answer

The answer of A system in which anyone collecting antipoverty...

Question 5

Despite continued growth in average income since the early 1970s, the poverty rate has not declined below the level reached in 1973.

Accepted Answer

A) True 
 B)False

Question 6

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Accepted Answer

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

Question 7

-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Accepted Answer

The answer of  
-Refer to Table 20-13. If the...

Question 8

Most economists believe that a family bases its spending decisions on its transitory income.

Accepted Answer

A) True 
 B)False

Question 9

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 20-1
The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income less $20,000.
-Refer to Scenario 20-1. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?

Accepted Answer

A) Utilitarians, because they want to maximize the utility to the worst-off person in society 
B) Liberals, because of the maximin criterion 
C) Libertarians, because they believe in diminishing marginal utility 
D) All three groups would be equally in favor of the switch. 
A) Utilitarians, because they want to maximize the utility to the worst-off person in society 
B) Liberals, because of the maximin criterion 
C) Libertarians, because they believe in diminishing marginal utility 
D) All three groups would be equally in favor of the switch.

Question 11

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Accepted Answer

A) True 
 B)False

Question 12

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

A) tends to follow a seasonal pattern. 
B) rises as a worker gains maturity and experience. 
C) rises and falls in conjunction with the business cycle. 
D) falls during the early years of market activity and peaks at retirement. 
A) tends to follow a seasonal pattern. 
B) rises as a worker gains maturity and experience. 
C) rises and falls in conjunction with the business cycle. 
D) falls during the early years of market activity and peaks at retirement.

Question 13

Which of the following is correct?

Accepted Answer

A) Incomes tend to be high for young workers. 
B) Incomes tend to rise sharply at retirement. 
C) Incomes tend to peak at around age 50. 
D) Current income is more equally distributed than permanent income. 
A) Incomes tend to be high for young workers. 
B) Incomes tend to rise sharply at retirement. 
C) Incomes tend to peak at around age 50. 
D) Current income is more equally distributed than permanent income.

Question 14

Scenario 20-5
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) - $10,000
-Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A) $5,000 
B) $10,000 
C) $15,000 
D) $25,000 
A) $5,000 
B) $10,000 
C) $15,000 
D) $25,000

Question 15

In-kind transfers

Accepted Answer

A) are cash payments given to the poor from the government. 
B) are available to citizens of all income levels, but usually only sought by the poor. 
C) are non-monetary items given to the poor. 
D) include food stamps, but not housing vouchers or medical services. 
A) are cash payments given to the poor from the government. 
B) are available to citizens of all income levels, but usually only sought by the poor. 
C) are non-monetary items given to the poor. 
D) include food stamps, but not housing vouchers or medical services.

Question 16

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Accepted Answer

A) True 
 B)False

Question 17

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. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A) $5,000 
B) $10,000 
C) $15,000 
D) $50,000 
A) $5,000 
B) $10,000 
C) $15,000 
D) $50,000

Question 18

The United States has greater income

Accepted Answer

A) disparity than most other economically advanced countries, but a more equal income distribution than some developing countries. 
B) disparity than both other economically advanced and all developing countries. 
C) equality than most other economically advanced countries but greater income disparity than some developing countries. 
D) equality than both other economically advanced and developing countries. 
A) disparity than most other economically advanced countries, but a more equal income distribution than some developing countries. 
B) disparity than both other economically advanced and all developing countries. 
C) equality than most other economically advanced countries but greater income disparity than some developing countries. 
D) equality than both other economically advanced and developing countries.

Question 19

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

Accepted Answer

A) A negative income tax because it would maximize the minimum income of members of society. 
B) An Earned Income Tax Credit (EIT
C)  because a policy that rewards the working poor would be the most just. 
C) An in-kind transfer program because it would maximize the total utility of all members of society. 
D) None of the programs would be favored because each of them forcibly redistributes income that was fairly, if not equally, earned. 
A) A negative income tax because it would maximize the minimum income of members of society. 
B) An Earned Income Tax Credit (EIT
C)  because a policy that rewards the working poor would be the most just. 
C) An in-kind transfer program because it would maximize the total utility of all members of society. 
D) None of the programs would be favored because each of them forcibly redistributes income that was fairly, if not equally, earned.

Exam 20: Income Inequality and Poverty

The US government sets the poverty line equal to approximately

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Suppose that young people often borrow and then repay the loans when they are older. These actions relate to which problem in measuring inequality?

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Despite continued growth in average income since the early 1970s, the poverty rate has not declined below the level reached in 1973.

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Most economists believe that a family bases its spending decisions on its transitory income.

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

The life cycle effect characterizes a lifetime income profile in which income

Which of the following is correct?

Scenario 20-5 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) - $10,000 -Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

In-kind transfers

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

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. This negative income tax would guarantee what minimum level of income to every family?

The United States has greater income

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

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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