Question 1

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Accepted Answer

A) $170,000 and over 
B) $205,000 and over 
C) $250,000 and over 
D) $325,000 and over 
A) $170,000 and over 
B) $205,000 and over 
C) $250,000 and over 
D) $325,000 and over

Question 2

Which of the following statements is correct?

Accepted Answer

A) The distribution of annual income accurately reflects the distribution of living standards. 
B) Permanent incomes are more equally distributed than annual incomes. 
C) Transitory changes in income generally have a significant impact on a family's standard of living. 
D) Annual income is more equally distributed than permanent income. 
A) The distribution of annual income accurately reflects the distribution of living standards. 
B) Permanent incomes are more equally distributed than annual incomes. 
C) Transitory changes in income generally have a significant impact on a family's standard of living. 
D) Annual income is more equally distributed than permanent income.

Question 3

Minimum wage laws

Accepted Answer

A) benefit all unskilled workers. 
B) create unemployment, but if demand is relatively elastic, the unemployment effects will be minor. 
C) may help the nonpoor, such as teenagers from wealthy families. 
D) reduce poverty by reducing unemployment. 
A) benefit all unskilled workers. 
B) create unemployment, but if demand is relatively elastic, the unemployment effects will be minor. 
C) may help the nonpoor, such as teenagers from wealthy families. 
D) reduce poverty by reducing unemployment.

Question 4

Scenario 20-7
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which
Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-7. Zooey's brother Zander owes $10,000 in taxes. How much does he earn?

Accepted Answer

The answer of Scenario 20-7
Zooey is a single mother of...

Question 5

Scenario 20-7
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which
Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-7. One of Zooey's friends tells her she would have more money for the year if she quit her job and filed her tax return with $0 in income. Is her friend correct? Why or why not?

Accepted Answer

No, she would have $

Question 6

When the government redistributes income to achieve greater equality, it

Accepted Answer

A) distorts incentives. 
B) improves efficiency. 
C) focuses on middle income brackets. 
D) relies on foreign aid to help balance the budget. 
A) distorts incentives. 
B) improves efficiency. 
C) focuses on middle income brackets. 
D) relies on foreign aid to help balance the budget.

Question 7

With a minimum wage law, the workers who remain employed benefit from a .

Accepted Answer

The answer of With a minimum wage law, the workers...

Question 8

Table 20-9
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.   Source: US Census Bureau
-Refer to Table 20-9. Which of the following statements best describes the trends in the table?

Accepted Answer

A) From 1980 to 2010, the distribution of income has become less equal. 
B) From 1980 to 2010, the distribution of income has remained the same. 
C) From 1980 to 2010, the distribution of income has become more equal. 
D) None of the above is correct. 
A) From 1980 to 2010, the distribution of income has become less equal. 
B) From 1980 to 2010, the distribution of income has remained the same. 
C) From 1980 to 2010, the distribution of income has become more equal. 
D) None of the above is correct.

Question 9

When the government enacts policies to redistribute income,

Accepted Answer

A) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C) the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D) the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient. 
A) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B) the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C) the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D) the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.

Question 10

Figure 20-5  
-Refer to Figure 20-5. An effective minimum wage would be set at a level

Accepted Answer

A) above Wo, and employment would rise above Qo. 
B) above Wo, and employment would fall below Qo. 
C) below Wo, and employment would rise above Qo. 
D) below Wo, and employment would fall below Qo. 
A) above Wo, and employment would rise above Qo. 
B) above Wo, and employment would fall below Qo. 
C) below Wo, and employment would rise above Qo. 
D) below Wo, and employment would fall below Qo.

Question 11

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

Accepted Answer

A) People will alter their behaviors. 
B) Incentives will be distorted. 
C) Total utility will likely remain constant. 
D) The allocation of resources will be less efficient . 
A) People will alter their behaviors. 
B) Incentives will be distorted. 
C) Total utility will likely remain constant. 
D) The allocation of resources will be less efficient .

Question 12

Table 20-12
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 20-12. According to the information in the table, which race had the most income inequality in 2010?

Accepted Answer

A) Asian 
B) Black 
C) Hispanic 
D) White 
A) Asian 
B) Black 
C) Hispanic 
D) White

Question 13

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

Accepted Answer

A) taking $1 from Mitchell and giving it to Phil would increase society's total utility. 
B) taking $1 from Mitchell and giving it to Jay would increase society's total utility. 
C) taking $1 from Phil and giving it to Jay would increase society's total utility. 
D) None of the above are correct because all three individuals have sufficient income. 
A) taking $1 from Mitchell and giving it to Phil would increase society's total utility. 
B) taking $1 from Mitchell and giving it to Jay would increase society's total utility. 
C) taking $1 from Phil and giving it to Jay would increase society's total utility. 
D) None of the above are correct because all three individuals have sufficient income.

Question 14

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Accepted Answer

It would d

Question 15

The goal of libertarianism is to

Accepted Answer

A) redistribute income based on the assumption of diminishing marginal utility. 
B) redistribute income in order to maximize the well-being of the worst-off person in society. 
C) punish crimes and enforce voluntary agreements but not to redistribute income. 
D) measure happiness and satisfaction. 
A) redistribute income based on the assumption of diminishing marginal utility. 
B) redistribute income in order to maximize the well-being of the worst-off person in society. 
C) punish crimes and enforce voluntary agreements but not to redistribute income. 
D) measure happiness and satisfaction.

Question 16

The United States has a more equal income distribution than many developing economies such as Mexico, South Africa, and Brazil.

Accepted Answer

A) True 
 B)False

Question 17

Economic mobility refers to the

Accepted Answer

A) government's attempt to distribute monetary assistance to areas most in need. 
B) ability of families to freely relocate to find good jobs. 
C) movement of people among income classes. 
D) movement of resources from one country to another. 
A) government's attempt to distribute monetary assistance to areas most in need. 
B) ability of families to freely relocate to find good jobs. 
C) movement of people among income classes. 
D) movement of resources from one country to another.

Question 18

A government's policy of redistributing income makes the income distribution

Accepted Answer

A) more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
B) more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
C) less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
D) less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
A) more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
B) more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
C) less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
D) less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.

Exam 20: Income Inequality and Poverty

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Which of the following statements is correct?

Minimum wage laws

When the government redistributes income to achieve greater equality, it

With a minimum wage law, the workers who remain employed benefit from a .

Table 20-9 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-9. Which of the following statements best describes the trends in the table?

When the government enacts policies to redistribute income,

Figure 20-5 -Refer to Figure 20-5. An effective minimum wage would be set at a level

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

Table 20-12 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 20-12. According to the information in the table, which race had the most income inequality in 2010?

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

The goal of libertarianism is to

The United States has a more equal income distribution than many developing economies such as Mexico, South Africa, and Brazil.

Economic mobility refers to the

A government's policy of redistributing income makes the income distribution

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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