Question 1

What effect has increased workforce participation by women since the 1950's had on inequality? Why is this the case?

Accepted Answer

The increase in workforce participation

Question 2

The maximin criterion suggests that the focus of social policy would be to:

Accepted Answer

A) elevate the wellbeing of all workers 
B) elevate the wellbeing of those at the bottom of the income distribution 
C) ensure an egalitarian distribution of income 
D) expropriate the factors of production from the capitalist class 
A) elevate the wellbeing of all workers 
B) elevate the wellbeing of those at the bottom of the income distribution 
C) ensure an egalitarian distribution of income 
D) expropriate the factors of production from the capitalist class

Question 3

There are 100 people in society and they have to decide on an income distribution from behind the veil of ignorance.Use the maximin principle to decide which of the following income distributions would be selected by a Rawlsian liberal.Explain your answer.In state A, eight people earn $10m, 92 people earn $5m
In state B, 40 people earn $10m and 59 people earn $7m and 1 person earns $1m.

Accepted Answer

The maximin principle is based on maximi

Question 4

If a time limit is not used on recipient benefits, then the effect may be to:
(i) force mothers to work outside the home
(ii) encourage child abuse by absent fathers
(iii) encourage dependency on government programs

Accepted Answer

A) (i) and (ii) 
B) (i) and (iii) 
C) (ii) and (iii) 
D) (iii) only 
A) (i) and (ii) 
B) (i) and (iii) 
C) (ii) and (iii) 
D) (iii) only

Question 5

For most government programs that are designed to help the poor:

Accepted Answer

A) being poor is typically sufficient to qualify for assistance 
B) being poor, by itself, is typically not sufficient to qualify for assistance 
C) the poor may not receive assistance because the poverty line varies so much that it makes them difficult to identify 
D) recipients of government assistance are often declared ineligible to receive assistance from private sources 
A) being poor is typically sufficient to qualify for assistance 
B) being poor, by itself, is typically not sufficient to qualify for assistance 
C) the poor may not receive assistance because the poverty line varies so much that it makes them difficult to identify 
D) recipients of government assistance are often declared ineligible to receive assistance from private sources

Question 6

Rawls would determine the distribution of income as if we were behind a veil of ignorance that prevented us from knowing our own stations in life.

Accepted Answer

A) True 
 B)False

Question 7

Are there problems in using an absolute scale to measure poverty? If so, carefully explain what these problems are.

Accepted Answer

The problems here include whether expend

Question 8

According to utilitarians, the ultimate objective of private and public actions is to:

Accepted Answer

A) ensure an egalitarian distribution of income 
B) provide for the betterment of the poor 
C) maximise the sum of individual utility 
D) enhance the income of the rich 
A) ensure an egalitarian distribution of income 
B) provide for the betterment of the poor 
C) maximise the sum of individual utility 
D) enhance the income of the rich

Question 9

Table 21-2
Total utility derived from various income levels
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Income } & \text { Peter } & \text { Paul } & \text { Mary } & \text { Jane } \
\hline \$ 1 & 15 & 32 & 20 & 16 \
\hline \$ 2 & 29 & 61 & 38 & 30 \
\hline \$ 3 & 42 & 87 & 54 & 42 \
\hline \$ 4 & 54 & 110 & 68 & 52 \
\hline \$ 5 & 65 & 130 & 80 & 60 \
\hline \$ 6 & 75 & 147 & 90 & 66 \
\hline 77 & 84 & 161 & 98 & 70 \
\hline \$ 8 & 92 & 172 & 103 & 72 \
\hline
\end{array}$$ 
Table 21-2 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 - $3
Paul - $7
Mary - $5
Jane - $3
Is 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 maximises aggregate total utility, how should it distribute the $19 of income?
c.Does Table 21-2 describe a situation characterised by diminishing marginal utility? Explain your answer.

Accepted Answer

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

Question 10

Amy currently earns $80 000 a year, while John earns $30 000 a year.Suppose that both of their incomes are subject to diminishing marginal utility.From a utilitarian perspective taking a dollar from Amy and giving it to John will:

Accepted Answer

A) lower Amy's marginal utility of income 
B) increase John's marginal utility of income 
C) increase society's total utility 
D) do none of the above 
A) lower Amy's marginal utility of income 
B) increase John's marginal utility of income 
C) increase society's total utility 
D) do none of the above

Question 11

An example of a transitory change in income is:

Accepted Answer

A) the increase in income that results from a job promotion linked to your education 
B) the increase in income of California orange growers that results from an orange-killing frost in Florida 
C) the annual cost of living adjustment to your salary 
D) all of the above 
A) the increase in income that results from a job promotion linked to your education 
B) the increase in income of California orange growers that results from an orange-killing frost in Florida 
C) the annual cost of living adjustment to your salary 
D) all of the above

Question 12

Advocates of direct cash payment assistance to the poor argue that although in-kind transfers are generally respectful of individual preferences, such transfers are inefficient.

Accepted Answer

A) True 
 B)False

Question 13

Out of the following countries, the share of total income going to the richest fifth of the population is highest in:

Accepted Answer

A) Australia 
B) Japan 
C) USA 
D) Brazil 
A) Australia 
B) Japan 
C) USA 
D) Brazil

Question 14

According to utilitarianism, the government should choose policies to maximise the total income of everyone in society.

Accepted Answer

A) True 
 B)False

Question 15

Libertarianism identifies a role for government when:

Accepted Answer

A) an egalitarian distribution of income is inconsistent with market outcomes 
B) attorneys are required to facilitate a free market exchange 
C) the income distribution is altered by illegal means (e.g.theft) 
D) workers lose their jobs as a result of structural changes in the economy 
A) an egalitarian distribution of income is inconsistent with market outcomes 
B) attorneys are required to facilitate a free market exchange 
C) the income distribution is altered by illegal means (e.g.theft) 
D) workers lose their jobs as a result of structural changes in the economy

Question 16

When incentives to earn income are distorted by income redistribution programs:

Accepted Answer

A) total income in an economy can fall 
B) total aggregate utility in society can fall 
C) losses can exceed potential gains from greater equality of income 
D) all of the above can occur 
A) total income in an economy can fall 
B) total aggregate utility in society can fall 
C) losses can exceed potential gains from greater equality of income 
D) all of the above can occur

Question 17

Which of the following formulas is most representative of a negative income tax proposal?

Accepted Answer

A) TAXES OWED = (1/5 of INCOM
E)  * 3 
B) TAXES OWED = (1/2 of INCOM
E)  - $25 
C) TAXES OWED = (1/2 of INCOM
E)  * $4 
D) TAXES OWED = (1/3 of INCOM
E)  + $9 000 
A) TAXES OWED = (1/5 of INCOM
E)  * 3 
B) TAXES OWED = (1/2 of INCOM
E)  - $25 
C) TAXES OWED = (1/2 of INCOM
E)  * $4 
D) TAXES OWED = (1/3 of INCOM
E)  + $9 000

Question 18

Graph 21-1  
-Refer to Graph 21-1.According to the graph, if the government imposes a minimum wage below Wo, it is likely to:

Accepted Answer

A) have no effect on employment 
B) provide more income to the working poor than they collectively received before the minimum wage was set 
C) reduce employment to a level below Qo 
D) increase employment to a level above Qo 
A) have no effect on employment 
B) provide more income to the working poor than they collectively received before the minimum wage was set 
C) reduce employment to a level below Qo 
D) increase employment to a level above Qo

Question 19

Libertarians conclude that equality of incomes is more important than equality of opportunity.

Accepted Answer

A) True 
 B)False

Question 20

Suppose income was equally distributed across all families, then:

Accepted Answer

A) 60 per cent of the families would receive exactly 60 per cent of the income 
B) the relative share of income would decline as the number of families are increased 
C) the relative share of income would increase as the number of families are increased 
D) all families would more likely be rich than poor 
A) 60 per cent of the families would receive exactly 60 per cent of the income 
B) the relative share of income would decline as the number of families are increased 
C) the relative share of income would increase as the number of families are increased 
D) all families would more likely be rich than poor

Exam 21: Income Inequity and Poverty

What effect has increased workforce participation by women since the 1950's had on inequality? Why is this the case?

The maximin criterion suggests that the focus of social policy would be to:

If a time limit is not used on recipient benefits, then the effect may be to: (i) force mothers to work outside the home (ii) encourage child abuse by absent fathers (iii) encourage dependency on government programs

For most government programs that are designed to help the poor:

Rawls would determine the distribution of income as if we were behind a veil of ignorance that prevented us from knowing our own stations in life.

Are there problems in using an absolute scale to measure poverty? If so, carefully explain what these problems are.

According to utilitarians, the ultimate objective of private and public actions is to:

Amy currently earns $80 000 a year, while John earns $30 000 a year.Suppose that both of their incomes are subject to diminishing marginal utility.From a utilitarian perspective taking a dollar from Amy and giving it to John will:

An example of a transitory change in income is:

Advocates of direct cash payment assistance to the poor argue that although in-kind transfers are generally respectful of individual preferences, such transfers are inefficient.

Out of the following countries, the share of total income going to the richest fifth of the population is highest in:

According to utilitarianism, the government should choose policies to maximise the total income of everyone in society.

Libertarianism identifies a role for government when:

When incentives to earn income are distorted by income redistribution programs:

Which of the following formulas is most representative of a negative income tax proposal?

Graph 21-1 -Refer to Graph 21-1.According to the graph, if the government imposes a minimum wage below Wo, it is likely to:

Libertarians conclude that equality of incomes is more important than equality of opportunity.

Suppose income was equally distributed across all families, then:

Ten Lessons From 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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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