Question 1

Which of the following statements is correct?

Accepted Answer

A) The poverty line is a relative standard. 
B) More families are pushed above the poverty line as economic growth pushes the entire income distribution upward. 
C) Increasing income inequality reduces poverty. 
D) Economic growth, by definition, affects all families equally. 
A) The poverty line is a relative standard. 
B) More families are pushed above the poverty line as economic growth pushes the entire income distribution upward. 
C) Increasing income inequality reduces poverty. 
D) Economic growth, by definition, affects all families equally.

Question 2

Goods and services given to the poor such as food stamps, housing vouchers, and medical services are called

Accepted Answer

The answer of Goods and services given to the poor...

Question 3

Raising total utility is the prime objective of which political philosophy?

Accepted Answer

A) utilitarianism 
B) liberalism 
C) libertarianism 
D) None of the above is correct. 
A) utilitarianism 
B) liberalism 
C) libertarianism 
D) None of the above is correct.

Question 4

One existing government program that works much like a negative income tax is the Earned Income Tax Credit.

Accepted Answer

A) True 
 B)False

Question 5

Which two of the Ten Principles of Economics are illustrated in this chapter?

Accepted Answer

A) A country's standard of living depends on its ability to produce goods & People face tradeoffs. 
B) Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. 
C) Governments can sometimes improve market outcomes & People face tradeoffs. 
D) People face tradeoffs & Prices rise when the government prints too much money . 
A) A country's standard of living depends on its ability to produce goods & People face tradeoffs. 
B) Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. 
C) Governments can sometimes improve market outcomes & People face tradeoffs. 
D) People face tradeoffs & Prices rise when the government prints too much money .

Question 6

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. A family earning $110,000 before taxes would have how much after-tax income?

Accepted Answer

A) $82,500 
B) $92,500 
C) $100,000 
D) $127,500 
A) $82,500 
B) $92,500 
C) $100,000 
D) $127,500

Question 7

Figure 20-3  
-Refer to Figure 20-3. In 1968, the percent of elderly aged 65 and over in poverty is

Accepted Answer

A) higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B) higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C) lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D) is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty. 
A) higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B) higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C) lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D) is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty.

Question 8

The best government policy to reduce poverty is

Accepted Answer

A) a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps. 
B) an expanded welfare program because people must have an additional "need" such as small children or a disability. 
C) an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter. 
D) not obvious. Government programs to reduce poverty have many advantages but also many disadvantages. 
A) a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps. 
B) an expanded welfare program because people must have an additional "need" such as small children or a disability. 
C) an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter. 
D) not obvious. Government programs to reduce poverty have many advantages but also many disadvantages.

Question 9

The maximin criterion suggests that social policy should

Accepted Answer

A) expropriate the factors of production from the capitalist class. 
B) ensure an equal distribution of income. 
C) elevate the well-being of those at the bottom of the income distribution. 
D) elevate the well-being of all workers. 
A) expropriate the factors of production from the capitalist class. 
B) ensure an equal distribution of income. 
C) elevate the well-being of those at the bottom of the income distribution. 
D) elevate the well-being of all workers.

Question 10

Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years
[Dollars]   Source: U. S. Bureau of the Census, Current Population Survey.
-Refer to Table 20-11. What is the poverty line for a family of six with three children?

Accepted Answer

A) $29,494 
B) $31,005 
C) $32,181 
D) $26,844 
A) $29,494 
B) $31,005 
C) $32,181 
D) $26,844

Question 11

Which of the following statements is not correct?

Accepted Answer

A) Libertarians are opposed to redistributing income. 
B) Critics of the welfare system argue that it breaks up families. 
C) One of the problems with measuring income inequality is valuing in-kind transfers. 
D) Utilitarians believe that the government should punish crimes but should not redistribute income. 
A) Libertarians are opposed to redistributing income. 
B) Critics of the welfare system argue that it breaks up families. 
C) One of the problems with measuring income inequality is valuing in-kind transfers. 
D) Utilitarians believe that the government should punish crimes but should not redistribute income.

Question 12

Robert Nozick criticizes Rawls's concept of justice by using an example of

Accepted Answer

A) minimum wage laws. 
B) the grade distribution in a class. 
C) a leaky bucket. 
D) the price of tea in China. 
A) minimum wage laws. 
B) the grade distribution in a class. 
C) a leaky bucket. 
D) the price of tea in China.

Question 13

Economists who support minimum-wage legislation are likely to believe that the

Accepted Answer

A) demand for unskilled labor is relatively inelastic. 
B) demand for unskilled labor is relatively elastic. 
C) supply of unskilled labor is relatively elastic. 
D) supply of unskilled labor is relatively inelastic. 
A) demand for unskilled labor is relatively inelastic. 
B) demand for unskilled labor is relatively elastic. 
C) supply of unskilled labor is relatively elastic. 
D) supply of unskilled labor is relatively inelastic.

Question 14

The table below reflects the levels of total utility received from income for each of four members of a society.   
a.Assume that the society has the following income distribution:Peter $3Paul $7Mary $5Jane $3Is it possible for the government to increase total aggregate utility by redistributing income among members of society? Explain your answer.
b.Assume that the government has $19 to allocate among the four members of society. (Assume that no one has any income to start with.) If the government is interested in distributing income in a way that maximizes aggregate total utility, how should it distribute the $19 of income?
c.Does the table above describe a situation characterized by diminishing marginal utility? Explain your answer.

Accepted Answer

a.No. If a dollar is taken from anyone,

Question 15

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

Accepted Answer

A) in-kind transfers 
B) economic life cycle 
C) transitory versus permanent income 
D) economic mobility 
A) in-kind transfers 
B) economic life cycle 
C) transitory versus permanent income 
D) economic mobility

Question 16

Scenario 20-7
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/6 of income) - $24,000
-Refer to Scenario 20-7. A family earning $120,000 before taxes would have how much after-tax income?

Accepted Answer

A) -$4,000 
B) $96,000 
C) $116,000 
D) $124,000 
A) -$4,000 
B) $96,000 
C) $116,000 
D) $124,000

Question 17

Table 20-1
The following table shows the distribution of income in Marysville.  
-Refer to Table 20-1. If the poverty line were $23,021, what would be the poverty rate?

Accepted Answer

A) less than 25% 
B) between 25% and 50% 
C) between 50% and 75% 
D) There is insufficient information to answer this question. 
A) less than 25% 
B) between 25% and 50% 
C) between 50% and 75% 
D) There is insufficient information to answer this question.

Question 18

The poverty line in the country of Abbyville is $15,000. The distribution of income for Abbyville is as follows:   The poverty rate in Abbyville is

Accepted Answer

A) 12 percent. 
B) 32 percent. 
C) 50 percent. 
D) 68 percent. 
A) 12 percent. 
B) 32 percent. 
C) 50 percent. 
D) 68 percent.

Question 19

Which of the following statements is correct?

Accepted Answer

A) The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B) The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C) The economic life cycle explains why people base spending decisions on transitory income. 
D) The United States has more income inequality than developing countries, including Mexico and Brazil. 
A) The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B) The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C) The economic life cycle explains why people base spending decisions on transitory income. 
D) The United States has more income inequality than developing countries, including Mexico and Brazil.

Question 20

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula,
Taxes Owed = (1/3   
Income) - $10,000.
Compute the tax that would be owed given each level of income. 
a.$120,000
b.$90,000
c.$60,000
d.$30,000
e.
$0

Accepted Answer

a.$30,000
b.$20,000
c.$10,000

Exam 20: Income Inequality and Poverty

Which of the following statements is correct?

Goods and services given to the poor such as food stamps, housing vouchers, and medical services are called

Raising total utility is the prime objective of which political philosophy?

One existing government program that works much like a negative income tax is the Earned Income Tax Credit.

Which two of the Ten Principles of Economics are illustrated in this chapter?

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. A family earning $110,000 before taxes would have how much after-tax income?

Figure 20-3 -Refer to Figure 20-3. In 1968, the percent of elderly aged 65 and over in poverty is

The best government policy to reduce poverty is

The maximin criterion suggests that social policy should

Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-11. What is the poverty line for a family of six with three children?

Which of the following statements is not correct?

Robert Nozick criticizes Rawls's concept of justice by using an example of

Economists who support minimum-wage legislation are likely to believe that the

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

Scenario 20-7 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/6 of income) - $24,000 -Refer to Scenario 20-7. A family earning $120,000 before taxes would have how much after-tax income?

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. If the poverty line were $23,021, what would be the poverty rate?

The poverty line in the country of Abbyville is $15,000. The distribution of income for Abbyville is as follows: The poverty rate in Abbyville is

Which of the following statements is correct?

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 Income) - $10,000. Compute the tax that would be owed given each level of income. a.$120,000 b.$90,000 c.$60,000 d.$30,000 e. $0

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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