Exam 20: Income Inequality and Poverty

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 × Income) − $10,000. If a family doesn't earn any income, how does the negative income tax affect it?

Table 20-6 Poverty Thresholds in 2018 by Size of Family and Number of Related Children Under 18 Years ​ Source: U. S. Bureau of the Census, Current Population Survey. ​ ​ ​ -Refer to Table 20-6. What is the poverty line in 2018 for a family of six with three children?

Standard measurements of the degree of income inequality take both money income and in-kind transfers into account.

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

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 = (1/4 of income) - $14,000 -Refer to Scenario 20-4. This negative income tax ensures that families earn at least $56,000.

Which of the following is not an example of a welfare program?

Suppose that a family saves and borrows to buffer itself against changes in income. These actions relate to which problem in measuring inequality?

Scenario 20-5 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 20-5. Zooey's friend Alfredo owes $0 in taxes. How much does he earn?

Which political philosophy concludes that equality of opportunities is more important than equality of outcomes?

What is one argument made by proponents of in-kind transfers over cash payments to the needy?

Alyssa currently earns $105,000 a year, while her junior partner, Oakley, earns $65,000 a year. From the perspective of a utilitarian, if both of their incomes are subject to diminishing marginal utility, taking a dollar from Alyssa and giving it to Oakley will

Which of the following statements is characteristic of utilitarianism?

About half of black and Hispanic children in female-headed households live in poverty.

On what type of income do many economists believe that people base their consumption?

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2017?

Based on U.S. data for 2017, the poverty rate is the highest for which group of people?

Temporary Assistance for Needy Families (TANF) is an example of a negative income tax program.

Table 20-7 Distribution of Income in Imagination Number of Families Income Range Average Income 23,500 less than \ 18,000 \ 15,890 42,410 between \ 18,000 and \ 36,000 \ 27,450 57,330 between \ 36,000 and \ 54,000 \ 46,220 63,490 between \ 54,000 and \ 72,000 \ 65,000 24,770 between \ 72,000 and \ 90,000 \ 80,790 23,500 more than \ 90,000 \ 118,750 -Refer to Table 20-7. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Figure 20-2 ​ -Refer to Figure 20-2. Which of the following is consistent with the data reported in the figure?

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.