Exam 20: Income Inequality and Poverty

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?

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

An income distribution may not give an accurate picture of the standard of living for the poor because it does not include in-kind transfers.

When incentives to earn income are distorted by income redistribution programs,

The invisible hand of the marketplace acts to allocate resources

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

The US government sets the poverty line equal to approximately

Which of the following statements illustrates diminishing marginal utility?

The United States has greater income

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

When John F. Kennedy said, "A rising tide lifts all boats," to what was he referring?

Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Liberalism aims to raise the welfare of the worst-off person in society. This rule is called the

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. If the poverty line was $31,852, what would be the poverty rate?

Which political philosophy argues that the government should choose policies to maximize the total utility of everyone in society?

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Comparing the United States household income distribution to other countries is

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of children under age 18 in poverty is

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. In 2011, the bottom 40% of families has