Question 1

Fewer than three percent of families are poor for eight or more years.

Accepted Answer

A) True 
 B)False

Question 2

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

Accepted Answer

A) equalize the incomes of John and Jane. 
B) equalize John's utility and Jane's utility. 
C) equalize John's marginal utility and Jane's marginal utility. 
D) maximize the sum of John's utility and Jane's utility. 
A) equalize the incomes of John and Jane. 
B) equalize John's utility and Jane's utility. 
C) equalize John's marginal utility and Jane's marginal utility. 
D) maximize the sum of John's utility and Jane's utility.

Question 3

In the United States, long-term poverty, defined as a family having an income below the poverty line for eight or more years, is

Accepted Answer

A) common, affecting approximately 25 percent of all American families. 
B) common, affecting approximately 15 percent of all American families. 
C) uncommon, affecting approximately 8 percent of all American families. 
D) rare, affecting approximately 3 percent of all American families. 
A) common, affecting approximately 25 percent of all American families. 
B) common, affecting approximately 15 percent of all American families. 
C) uncommon, affecting approximately 8 percent of all American families. 
D) rare, affecting approximately 3 percent of all American families.

Question 4

The Hicks family owns a blueberry farm in Maine. The Ward family owns a blueberry farm in Massachusetts. A drought in Massachusetts destroys half of the Ward family's harvest for one year. For the Ward family, their

Accepted Answer

A) transitory income for the year of the drought likely exceeds their permanent income. 
B) permanent income likely exceeds their transitory income for the year of the drought. 
C) transitory income likely will be affected but the permanent income of the Hicks family will increase. 
D) permanent income likely will be affected but the permanent income of the Hicks family will not be affected. 
A) transitory income for the year of the drought likely exceeds their permanent income. 
B) permanent income likely exceeds their transitory income for the year of the drought. 
C) transitory income likely will be affected but the permanent income of the Hicks family will increase. 
D) permanent income likely will be affected but the permanent income of the Hicks family will not be affected.

Question 5

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Accepted Answer

A) utilitarianism 
B) liberalism 
C) libertarianism 
D) welfarism 
A) utilitarianism 
B) liberalism 
C) libertarianism 
D) welfarism

Question 6

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

Accepted Answer

A) True 
 B)False

Question 7

When comparing the percentage of income (or expenditure) of the lowest and highest 10 percent of the population,

Accepted Answer

A) South Africa has a more equal income distribution than the United States. 
B) South Africa has a more equal income distribution than Japan. 
C) Japan has a more equal income distribution than the United States. 
D) Mexico has a more equal income distribution than Germany. 
A) South Africa has a more equal income distribution than the United States. 
B) South Africa has a more equal income distribution than Japan. 
C) Japan has a more equal income distribution than the United States. 
D) Mexico has a more equal income distribution than Germany.

Question 8

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Accepted Answer

A) True 
 B)False

Question 9

Libertarianism identifies a redistribution of income role for government when

Accepted Answer

A) the utility of the worst-off could be improved. 
B) the income distribution is altered by illegal means (e.g. theft). 
C) the total utility for society can be improved through redistribution of income. 
D) a "veil of ignorance" would result in a recommendation of redistribution of income. 
A) the utility of the worst-off could be improved. 
B) the income distribution is altered by illegal means (e.g. theft). 
C) the total utility for society can be improved through redistribution of income. 
D) a "veil of ignorance" would result in a recommendation of redistribution of income.

Question 10

Which of the following explains the rise in income inequality in the United States from 1970 to 2011?

Accepted Answer

A) An increase in minimum wages. 
B) An increase in the demand for skilled labor. 
C) An increase in the demand for unskilled labor. 
D) Reduced international trade with low-wage countries. 
A) An increase in minimum wages. 
B) An increase in the demand for skilled labor. 
C) An increase in the demand for unskilled labor. 
D) Reduced international trade with low-wage countries.

Question 11

Table 20-5
Distribution of Income in Umakastan  
-Refer to Table 20-5. Approximately what percentage of families in Umakastan have income levels below $74,000?

Accepted Answer

A) 27% 
B) 28% 
C) 52% 
D) 79% 
A) 27% 
B) 28% 
C) 52% 
D) 79%

Question 12

Suppose that Jamal is moving to a state where personal incomes are distributed randomly. If Jamal believes in liberalism, he would prefer

Accepted Answer

A) an income distribution that is relatively equal. 
B) that everyone has the same work opportunities and market-determined wage rates. 
C) that private property be transformed to government property to safeguard people's incomes. 
D) less economic assistance to the poor because it distorts the price system. 
A) an income distribution that is relatively equal. 
B) that everyone has the same work opportunities and market-determined wage rates. 
C) that private property be transformed to government property to safeguard people's incomes. 
D) less economic assistance to the poor because it distorts the price system.

Question 13

The maximin criterion is attributed to which political philosophy?

Accepted Answer

A) utilitarianism 
B) liberalism 
C) libertarianism 
D) repubicanism 
A) utilitarianism 
B) liberalism 
C) libertarianism 
D) repubicanism

Question 14

In comparison to the average poverty rate,

Accepted Answer

A) children and the elderly are more likely to be poor. 
B) children and the elderly are less likely to be poor. 
C) children are more likely to be poor, but the elderly are less likely to be poor. 
D) children are less likely to be poor, but the elderly are more likely to be poor. 
A) children and the elderly are more likely to be poor. 
B) children and the elderly are less likely to be poor. 
C) children are more likely to be poor, but the elderly are less likely to be poor. 
D) children are less likely to be poor, but the elderly are more likely to be poor.

Question 15

Scenario 20-8
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) - $14,000
​
​
-Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.​

Accepted Answer

A) True 
 B)False

Question 16

Critics of the minimum wage argue that

Accepted Answer

A) labor demand is inelastic so firms can adjust production. 
B) too many older employees benefit at the expense of teenage workers. 
C) many minimum-wage earners are teenagers from middle-class families. 
D) All of the above are correct. 
A) labor demand is inelastic so firms can adjust production. 
B) too many older employees benefit at the expense of teenage workers. 
C) many minimum-wage earners are teenagers from middle-class families. 
D) All of the above are correct.

Question 17

Figure 20-1
Number of Poor  
-Refer to Figure 20-1. Between 1965 and 2011, during recessions (the shaded bars) the number of individuals in poverty has

Accepted Answer

A) increased. 
B) decreased. 
C) not changed. 
D) decreased and then increased. 
A) increased. 
B) decreased. 
C) not changed. 
D) decreased and then increased.

Question 18

The study by economists Cox and Alm found that the 2006 after-tax income of the richest fifth of U.S. households is

Accepted Answer

A) equal to the after-tax income of the poorest fifth. 
B) 7 times the after-tax income of the poorest fifth. 
C) 14 times the after-tax income of the poorest fifth. 
D) 21 times the after-tax income of the poorest fifth. 
A) equal to the after-tax income of the poorest fifth. 
B) 7 times the after-tax income of the poorest fifth. 
C) 14 times the after-tax income of the poorest fifth. 
D) 21 times the after-tax income of the poorest fifth.

Question 19

Which of the following statements is not correct?

Accepted Answer

A) Welfare programs may encourage illegitimate births. 
B) The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C) Welfare programs may reduce incentives for people to work. 
D) A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families. 
A) Welfare programs may encourage illegitimate births. 
B) The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C) Welfare programs may reduce incentives for people to work. 
D) A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.

Question 20

The poverty rate is the percentage of the population whose family income falls below the poverty line..

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

Fewer than three percent of families are poor for eight or more years.

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

In the United States, long-term poverty, defined as a family having an income below the poverty line for eight or more years, is

The Hicks family owns a blueberry farm in Maine. The Ward family owns a blueberry farm in Massachusetts. A drought in Massachusetts destroys half of the Ward family's harvest for one year. For the Ward family, their

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

When comparing the percentage of income (or expenditure) of the lowest and highest 10 percent of the population,

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Libertarianism identifies a redistribution of income role for government when

Which of the following explains the rise in income inequality in the United States from 1970 to 2011?

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. Approximately what percentage of families in Umakastan have income levels below $74,000?

Suppose that Jamal is moving to a state where personal incomes are distributed randomly. If Jamal believes in liberalism, he would prefer

The maximin criterion is attributed to which political philosophy?

In comparison to the average poverty rate,

Scenario 20-8 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) - $14,000 ​ ​ -Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.​

Critics of the minimum wage argue that

Figure 20-1 Number of Poor -Refer to Figure 20-1. Between 1965 and 2011, during recessions (the shaded bars) the number of individuals in poverty has

The study by economists Cox and Alm found that the 2006 after-tax income of the richest fifth of U.S. households is

Which of the following statements is not correct?

The poverty rate is the percentage of the population whose family income falls below the poverty line..

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

Filters

Scenario 20-8 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) - $14,000 -Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.