Exam 20: Income Inequality and Poverty

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

The Smith family owns an apple orchard in Illinois. The Jones family owns an apple orchard in Wisconsin. A late frost destroys half of the Smith family's harvest for one year. For the Jones family, their

Scenario 20-4 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/5 of income) - $15,000 -Refer to Scenario 20-4. A family earning $100,000 before taxes would have how much after-tax income?

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 eight with two children?

Which of the following is not correct?

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. In 2011, the top fifth of families have

Utilitarianism is

Among all countries in the world, the United States has the most income inequality.

Which of the following groups has the highest poverty rate?

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

Which of the following is not correct?

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. This negative income tax ensures that families earn at least $56,000​.

Which of the following is correct?

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 $18,000 owe?

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. Below what level of income would families start to receive a subsidy from this negative income tax?

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Which of the following is not a characteristic of the Earned Income Tax Credit (EITC)?

Assume that the government proposes a negative income tax that calculates taxes owed by the formula, Taxes Owed = (a Income) - a.What is the value for "a"? b.What is the value for "b"? b. A family with an income of $40,000 pays $5,000 in taxes, and a family with an income of $12,000 receives an income subsidy of $2,000. c.What is the tax liability of a family with an income of $50,000? d. At what level of income will a family neither pay taxes, nor receive an income subsidy?

Table 20-13 The following table shows the distribution of income in Widgetapolis. ​ -Refer to Table 20-13. Sixty percent of all families have incomes below what level?

Libertarians believe that the government should enforce individual rights to ensure that all people have the same opportunities to use their talents to achieve success.