Question 1

Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

Accepted Answer

The poverty rate is the percentage of th

Question 2

In the United States, a typical worker's income peaks around age

Accepted Answer

A) 70. 
B) 60. 
C) 50. 
D) 40. 
A) 70. 
B) 60. 
C) 50. 
D) 40.

Question 3

The 2011 U.S. distribution of income shows that the top 20 percent of all families have

Accepted Answer

A) more than twelve times the income of the bottom 20 percent. 
B) more than six times the income of the bottom 20 percent. 
C) more than 100 percent more income than the bottom 20 percent. 
D) the same share of income as the bottom 20 percent. 
A) more than twelve times the income of the bottom 20 percent. 
B) more than six times the income of the bottom 20 percent. 
C) more than 100 percent more income than the bottom 20 percent. 
D) the same share of income as the bottom 20 percent.

Question 4

A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that it

Accepted Answer

A) encourages illegitimate births because single women with children receive higher payments. 
B) rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C) does not help the poor who are unemployed. 
D) creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage. 
A) encourages illegitimate births because single women with children receive higher payments. 
B) rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C) does not help the poor who are unemployed. 
D) creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage.

Question 5

"The government should choose policies to maximize the total utility of society." 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 6

Of the four countries below, which has the highest degree of income inequality?

Accepted Answer

A) Germany 
B) Turkey 
C) South Africa 
D) Mexico 
A) Germany 
B) Turkey 
C) South Africa 
D) Mexico

Question 7

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Accepted Answer

A) Changes in technology. 
B) An increase in minimum wages. 
C) A reduction in the demand for unskilled labor. 
D) Increased international trade with low-wage countries. 
A) Changes in technology. 
B) An increase in minimum wages. 
C) A reduction in the demand for unskilled labor. 
D) Increased international trade with low-wage countries.

Question 8

Winston Churchill once said

Accepted Answer

A) "The inherent virtue of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." 
B) "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." 
C) "The inherent vice of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries." 
D) "The inherent virtue of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries." 
A) "The inherent virtue of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." 
B) "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries." 
C) "The inherent vice of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries." 
D) "The inherent virtue of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries."

Question 9

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 10

For a typical worker, her income will be lower when she is younger, peak around age 50, and decrease drastically when she retires. This pattern of changes in income for a typical worker is called

Accepted Answer

A) the life cycle. 
B) permanent income. 
C) transitory income. 
D) in-kind transfers. 
A) the life cycle. 
B) permanent income. 
C) transitory income. 
D) in-kind transfers.

Question 11

What measure does the federal government use when setting the official poverty line in the US?

Accepted Answer

three times the cost

Question 12

Many Democrats support raising the U.S. minimum wage. Critics of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A) too expensive for local governments to fund. 
B) too expensive for local governments to administer. 
C) imprecise in their ability to help the working poor. 
D) easy for businesses to pay. 
A) too expensive for local governments to fund. 
B) too expensive for local governments to administer. 
C) imprecise in their ability to help the working poor. 
D) easy for businesses to pay.

Question 13

Liberals believe

Accepted Answer

A) that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B) in the assumption of diminishing marginal utility. 
C) that everyone in society should have equal utility. 
D) that the government should not redistribute income. 
A) that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B) in the assumption of diminishing marginal utility. 
C) that everyone in society should have equal utility. 
D) that the government should not redistribute income.

Question 14

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 15

"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 16

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 17

Which of the following statements is characteristic of utilitarianism?

Accepted Answer

A) An extra dollar of income provides higher marginal utility to a poor person than to a rich person. 
B) Social policies should be created behind a "veil of ignorance." 
C) Society should strive to maximize the utility of its wealthiest member. 
D) Equality of opportunity is more important than equality of incomes. 
A) An extra dollar of income provides higher marginal utility to a poor person than to a rich person. 
B) Social policies should be created behind a "veil of ignorance." 
C) Society should strive to maximize the utility of its wealthiest member. 
D) Equality of opportunity is more important than equality of incomes.

Question 18

Since about 1970 in the U.S.,

Accepted Answer

A) decreases in the wages of unskilled workers, relative to skilled workers, have led to increased inequality in family incomes. 
B) increases in the wages of unskilled workers, relative to skilled workers, have led to increased equality in family incomes. 
C) inequality in family incomes has increased, despite increases in the wages of unskilled workers relative to skilled workers. 
D) inequality in family incomes has decreased, despite increases in the wages of skilled workers relative to unskilled workers. 
A) decreases in the wages of unskilled workers, relative to skilled workers, have led to increased inequality in family incomes. 
B) increases in the wages of unskilled workers, relative to skilled workers, have led to increased equality in family incomes. 
C) inequality in family incomes has increased, despite increases in the wages of unskilled workers relative to skilled workers. 
D) inequality in family incomes has decreased, despite increases in the wages of skilled workers relative to unskilled workers.

Question 19

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

Accepted Answer

A) a negative income tax 
B) an Earned Income Tax Credit (EIT
C)  
C) an in-kind transfer program 
D) None of the programs would be favored by Nozick. 
A) a negative income tax 
B) an Earned Income Tax Credit (EIT
C)  
C) an in-kind transfer program 
D) None of the programs would be favored by Nozick.

Question 20

Economists who study economic mobility have found that, if a father earns 20 percent above his generation's average income, his son will most likely earn

Accepted Answer

A) an income equal to his generation's average income. 
B) 8 percent above his generation's average income. 
C) 5 percent below his generation's average income. 
D) 3 percent above his generation's average income. 
A) an income equal to his generation's average income. 
B) 8 percent above his generation's average income. 
C) 5 percent below his generation's average income. 
D) 3 percent above his generation's average income.

Exam 20: Income Inequality and Poverty

Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

In the United States, a typical worker's income peaks around age

The 2011 U.S. distribution of income shows that the top 20 percent of all families have

A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that it

"The government should choose policies to maximize the total utility of society." This statement is most closely associated with which political philosophy?

Of the four countries below, which has the highest degree of income inequality?

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Winston Churchill once said

In-kind transfers

For a typical worker, her income will be lower when she is younger, peak around age 50, and decrease drastically when she retires. This pattern of changes in income for a typical worker is called

What measure does the federal government use when setting the official poverty line in the US?

Many Democrats support raising the U.S. minimum wage. Critics of raising the minimum wage argue that minimum-wage laws are

Liberals believe

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

"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?

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

Which of the following statements is characteristic of utilitarianism?

Since about 1970 in the U.S.,

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

Economists who study economic mobility have found that, if a father earns 20 percent above his generation's average income, his son will most likely earn

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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