Question 1

Which of the following statements is not correct?

Accepted Answer

A) The poverty line is an absolute level of income set by the federal government below which a family is considered to be in poverty. 
B) The poverty line is approximately equal to three times the cost of providing an adequate diet. 
C) The poverty line is adjusted annually to reflect changes in price levels. 
D) The poverty line is adjusted semiannually to reflect changes in fuel prices. 
A) The poverty line is an absolute level of income set by the federal government below which a family is considered to be in poverty. 
B) The poverty line is approximately equal to three times the cost of providing an adequate diet. 
C) The poverty line is adjusted annually to reflect changes in price levels. 
D) The poverty line is adjusted semiannually to reflect changes in fuel prices.

Question 2

Based on data from 2011, the top fifth of all families received approximately what percent of all income in the United States?

Accepted Answer

A) 83 percent 
B) 49 percent 
C) 41 percent 
D) 21 percent 
A) 83 percent 
B) 49 percent 
C) 41 percent 
D) 21 percent

Question 3

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. In percentage point terms, how much more did the top 5% of the Asian population earn than it would have if income were distributed equally?

Accepted Answer

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

Question 4

Suppose society consists of four individuals: Andy, Bill, Carl, and David. Andy has $20,000 of income, Bill has $40,000 of income, Carl has $60,000 of income, and David has $80,000 of income. A utilitarian would argue that

Accepted Answer

A) taking $1 from Bill and giving it to Carl would increase society's total utility. 
B) taking $1 from Carl and giving it to Andy would increase society's total utility. 
C) taking $1 from Carl and giving it to David would increase society's total utility. 
D) taking $1 from Bill and giving it to David would increase society's total utility. 
A) taking $1 from Bill and giving it to Carl would increase society's total utility. 
B) taking $1 from Carl and giving it to Andy would increase society's total utility. 
C) taking $1 from Carl and giving it to David would increase society's total utility. 
D) taking $1 from Bill and giving it to David would increase society's total utility.

Question 5

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Accepted Answer

A) a more efficient allocation of resources 
B) a distortion of incentives 
C) unchanged behavior 
D) All of the above are correct. 
A) a more efficient allocation of resources 
B) a distortion of incentives 
C) unchanged behavior 
D) All of the above are correct.

Question 6

The marketplace allocates resources

Accepted Answer

A) fairly. 
B) efficiently. 
C) to those desiring them least. 
D) both efficiently and equitably. 
A) fairly. 
B) efficiently. 
C) to those desiring them least. 
D) both efficiently and equitably.

Question 7

The goal of utilitarians is to

Accepted Answer

A) punish crimes and enforce voluntary agreements but not to redistribute income. 
B) redistribute income until each person has equal earnings. 
C) redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. 
D) redistribute income based on the assumption of diminishing marginal utility. 
A) punish crimes and enforce voluntary agreements but not to redistribute income. 
B) redistribute income until each person has equal earnings. 
C) redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. 
D) redistribute income based on the assumption of diminishing marginal utility.

Question 8

An example of a transitory change in income is the

Accepted Answer

A) annual cost of living adjustment to your salary. 
B) increase in income that results from a job promotion linked to your education. 
C) increase in income of California orange growers that results from an orange-killing frost in Florida. 
D) All of the above are correct. 
A) annual cost of living adjustment to your salary. 
B) increase in income that results from a job promotion linked to your education. 
C) increase in income of California orange growers that results from an orange-killing frost in Florida. 
D) All of the above are correct.

Question 9

Which of the following statements is not correct?

Accepted Answer

A) Two key elements of welfare reform are work requirements and limiting the time that recipients can receive benefits. 
B) The Earned Income Tax Credit (EIT
C)  is very similar to a negative income tax. 
C) Minimum wage laws will likely increase unemployment. 
D) The elderly are more likely to be poor than single mothers. 
A) Two key elements of welfare reform are work requirements and limiting the time that recipients can receive benefits. 
B) The Earned Income Tax Credit (EIT
C)  is very similar to a negative income tax. 
C) Minimum wage laws will likely increase unemployment. 
D) The elderly are more likely to be poor than single mothers.

Question 10

Table 20-3
The Distribution of Income in Edgerton  
-Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

Accepted Answer

A) $28,000 
B) $44,000 
C) $76,000 
D) $88,000 
A) $28,000 
B) $44,000 
C) $76,000 
D) $88,000

Question 11

Poor families are eligible for financial assistance, without having to demonstrate any additional "need,"

Accepted Answer

A) under the current welfare system and under a negative income tax. 
B) under the current welfare system but not under a negative income tax. 
C) under a negative income tax but not under the current welfare system. 
D) under neither the current welfare system nor under a negative income tax. 
A) under the current welfare system and under a negative income tax. 
B) under the current welfare system but not under a negative income tax. 
C) under a negative income tax but not under the current welfare system. 
D) under neither the current welfare system nor under a negative income tax.

Question 12

Supporters of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A) a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. 
B) better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
C) better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. 
D) a way to increase employment of those likely to earn the minimum wage. 
A) a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. 
B) better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
C) better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. 
D) a way to increase employment of those likely to earn the minimum wage.

Question 13

Which of the following is not correct?

Accepted Answer

A) A negative income tax only applies to working people, so it encourages people to get full-time work. 
B) Supporters advocate the use of the Earned Income Tax Credit as a way to help the working poor. 
C) A negative income tax subsidizes the incomes of poor people. 
D) An advantage of a negative income tax is that it is not based on the number of children, so it does not provide incentives for unmarried women to have children. 
A) A negative income tax only applies to working people, so it encourages people to get full-time work. 
B) Supporters advocate the use of the Earned Income Tax Credit as a way to help the working poor. 
C) A negative income tax subsidizes the incomes of poor people. 
D) An advantage of a negative income tax is that it is not based on the number of children, so it does not provide incentives for unmarried women to have children.

Question 14

Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

Accepted Answer

The answer of Of the following countries, which has the...

Question 15

A family's ability to buy goods and services depends largely on its

Accepted Answer

A) permanent income, which is its normal, or average, income. 
B) permanent income, which is the lowest annual income the family has received over a 10-year period. 
C) transitory income, which is the measure of income used by the government to analyze the distribution of income and the poverty rate. 
D) transitory income, which is its money income plus any in-kind transfers it receives. 
A) permanent income, which is its normal, or average, income. 
B) permanent income, which is the lowest annual income the family has received over a 10-year period. 
C) transitory income, which is the measure of income used by the government to analyze the distribution of income and the poverty rate. 
D) transitory income, which is its money income plus any in-kind transfers it receives.

Question 16

A tax provision that works much like a negative income tax is the

Accepted Answer

A) Earned Income Tax Credit (EIT
C) . 
B) Temporary Assistance for Needy Families (TANF). 
C) deduction for charitable contributions. 
D) mortgage interest rate deduction. 
A) Earned Income Tax Credit (EIT
C) . 
B) Temporary Assistance for Needy Families (TANF). 
C) deduction for charitable contributions. 
D) mortgage interest rate deduction.

Question 17

The philosopher John Rawls argued that

Accepted Answer

A) people would choose a more equal distribution of income if they had to determine an economic distribution system before knowing their place in it. 
B) people would choose income inequality to allow the maximum use of their individual talents. 
C) government has a role to ensure income equality to prevent social unrest. 
D) people would choose equal opportunity because it is morally right. 
A) people would choose a more equal distribution of income if they had to determine an economic distribution system before knowing their place in it. 
B) people would choose income inequality to allow the maximum use of their individual talents. 
C) government has a role to ensure income equality to prevent social unrest. 
D) people would choose equal opportunity because it is morally right.

Question 18

The income distribution in the United States shows that the income share of the top fifth of all families is

Accepted Answer

A) over 60 percent. 
B) around 21 percent. 
C) more than 12 times the income of the bottom fifth. 
D) less than 10 times the income of the bottom fifth. 
A) over 60 percent. 
B) around 21 percent. 
C) more than 12 times the income of the bottom fifth. 
D) less than 10 times the income of the bottom fifth.

Question 19

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Accepted Answer

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

Question 20

Which of the following is not an example of in-kind transfers?

Accepted Answer

A) food stamps 
B) Medicaid 
C) the Earned Income Tax Credit 
D) housing vouchers 
A) food stamps 
B) Medicaid 
C) the Earned Income Tax Credit 
D) housing vouchers

Exam 20: Income Inequality and Poverty

Which of the following statements is not correct?

Based on data from 2011, the top fifth of all families received approximately what percent of all income in the United States?

Suppose society consists of four individuals: Andy, Bill, Carl, and David. Andy has $20,000 of income, Bill has $40,000 of income, Carl has $60,000 of income, and David has $80,000 of income. A utilitarian would argue that

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

The marketplace allocates resources

The goal of utilitarians is to

An example of a transitory change in income is the

Which of the following statements is not correct?

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

Poor families are eligible for financial assistance, without having to demonstrate any additional "need,"

Supporters of raising the minimum wage argue that minimum-wage laws are

Which of the following is not correct?

Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

A family's ability to buy goods and services depends largely on its

A tax provision that works much like a negative income tax is the

The philosopher John Rawls argued that

The income distribution in the United States shows that the income share of the top fifth of all families is

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Which of the following is not an example of in-kind transfers?

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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