Exam 20: Income Inequality and Poverty

A utilitarian government must

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?

Many economists believe that a family bases its spending decisions on its permanent, or average, income rather than on transitory income.

The poverty rate is

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

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

In 2011, the poverty rate in the United States was

The founders of utilitarianism include

Libertarians believe that

One way of expressing the tradeoff between income equality and efficiency is to say the more equally the pie is divided, the .

John Rawls, who developed the way of thinking called liberalism, argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal,

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

Figure 20-3 -Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Income mobility studies suggest that poverty

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 $20,000 owe?

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 liberalism prefer?