Question 1

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

Accepted Answer

If income were equally distributed acros

Question 2

A tax system that collects revenue from high-income households and gives transfers and tax concessions to low-income households is known as:

Accepted Answer

A) social security 
B) negative income tax 
C) minimum wage laws 
D) in-kind transfers 
A) social security 
B) negative income tax 
C) minimum wage laws 
D) in-kind transfers

Question 3

What is the political philosophy called in which government should choose policies deemed to be just, as evaluate by an impartial observer behind a 'veil of ignorance':

Accepted Answer

A) utilitarianism 
B) Rawlsianism 
C) libertarianism 
D) 'veil of ignorance' criterion 
A) utilitarianism 
B) Rawlsianism 
C) libertarianism 
D) 'veil of ignorance' criterion

Question 4

The veil of ignorance refers to:

Accepted Answer

A) the fact that most people are unaware of their place in society 
B) the Rawlsianism argument that justice can never be agreed upon 
C) a thought experiment when designing policy where one does not know where he/she will end up in society 
D) the claim that government should maximise the wellbeing of the least well off in society 
A) the fact that most people are unaware of their place in society 
B) the Rawlsianism argument that justice can never be agreed upon 
C) a thought experiment when designing policy where one does not know where he/she will end up in society 
D) the claim that government should maximise the wellbeing of the least well off in society

Question 5

According to the Henderson Commission, the poverty line in Australia was set at:

Accepted Answer

A) 25 per cent of average weekly earnings 
B) 56.5 per cent of average weekly earnings 
C) 65.5 per cent of average weekly earnings 
D) 75 per cent of average weekly earnings 
A) 25 per cent of average weekly earnings 
B) 56.5 per cent of average weekly earnings 
C) 65.5 per cent of average weekly earnings 
D) 75 per cent of average weekly earnings

Question 6

Because people can borrow when they are young, the life cycle theory would suggest that a standard of living depends on:

Accepted Answer

A) aggregate income rather than annual personal income 
B) income averaged across seasons rather than across years 
C) annual extended family income rather than annual personal income 
D) lifetime income rather than annual income 
A) aggregate income rather than annual personal income 
B) income averaged across seasons rather than across years 
C) annual extended family income rather than annual personal income 
D) lifetime income rather than annual income

Question 7

The life cycle effect characterises a lifetime income profile in which income:

Accepted Answer

A) falls during the early years of market activity and peaks at retirement 
B) rises and falls in conjunction with the business cycle 
C) rises as a worker gains maturity and experience 
D) tends to follow a seasonal pattern 
A) falls during the early years of market activity and peaks at retirement 
B) rises and falls in conjunction with the business cycle 
C) rises as a worker gains maturity and experience 
D) tends to follow a seasonal pattern

Question 8

A school voucher system introduced in the United States has lead to:

Accepted Answer

A) less low income households sending their children to private schools 
B) more low income households sending their children to private schools 
C) no change in the number of low income households sending their children to private schools 
D) decrease in the number of private school schools 
A) less low income households sending their children to private schools 
B) more low income households sending their children to private schools 
C) no change in the number of low income households sending their children to private schools 
D) decrease in the number of private school schools

Question 9

The concept of utility is fundamental to utilitarianism and describes the:

Accepted Answer

A) method whereby wealth is stored 
B) method by which society chooses to allocate resources 
C) optimal distribution of wealth in society 
D) level of satisfaction derived from a person's circumstances 
A) method whereby wealth is stored 
B) method by which society chooses to allocate resources 
C) optimal distribution of wealth in society 
D) level of satisfaction derived from a person's circumstances

Question 10

People have their highest saving rates when they are:

Accepted Answer

A) young and single 
B) married with young children 
C) middle-aged 
D) retired 
A) young and single 
B) married with young children 
C) middle-aged 
D) retired

Question 11

Which of the following household units are more likely than average to be living in poverty?
(i) couples without children
(ii) single people
(iii) sole one-parents with children

Accepted Answer

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

Question 12

Under a negative income tax, it is likely for a person who does not earn income to receive assistance from the government.

Accepted Answer

A) True 
 B)False

Question 13

Economic mobility refers to the:

Accepted Answer

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

Question 14

Assume that the government proposes a negative income tax that calculates taxes owed by the formula TAXES OWED = (1/3 * INCOME) - $20 000.Compute the tax that would be owed given each of the following levels of income.
a.$180 000
b.$120 000
c.$60 000
d.$30 000
e.zero

Accepted Answer

a.$40 000

Question 15

Which of the following reasons suggests that income-based measures of poverty are not ideal when considering the poverty rates of young people:

Accepted Answer

A) the economic life cycle of an adult suggests that you will supplement your income when young with borrowing 
B) young people tend to have lower standards and expectations than older people and retirees 
C) young people are not as geographically mobile as older people and therefore then to be stuck in low paying jobs 
D) the incomes of young people is more volatile than average and therefore any one year is not a good measure of income 
A) the economic life cycle of an adult suggests that you will supplement your income when young with borrowing 
B) young people tend to have lower standards and expectations than older people and retirees 
C) young people are not as geographically mobile as older people and therefore then to be stuck in low paying jobs 
D) the incomes of young people is more volatile than average and therefore any one year is not a good measure of income

Question 16

The political philosophy according to which the government should choose policies that maximise the total utility of everyone in society is called:

Accepted Answer

A) utilitarianism 
B) utility maximisation 
C) libertarianism 
D) rawlsianism 
A) utilitarianism 
B) utility maximisation 
C) libertarianism 
D) rawlsianism

Question 17

The most commonly used approach to define the poverty line in Australia is to follow the definition of the Henderson Commission, conducted in 1975.This sets the poverty line at:

Accepted Answer

A) 75.5% of average weekly earnings 
B) 56.5% of average weekly earnings 
C) 50% of average weekly earnings 
D) 25% of average weekly earnings 
A) 75.5% of average weekly earnings 
B) 56.5% of average weekly earnings 
C) 50% of average weekly earnings 
D) 25% of average weekly earnings

Question 18

For each figure below, describe whether it could reflect a possible distribution of income and if so, what is implied about the equality of income depicted.

Accepted Answer

a.This is possible; it implies a perfect

Question 19

Measures of poverty that fail to account for the value of in-kind transfers:

Accepted Answer

A) understate the actual poverty rate 
B) have little effect on the validity of reported poverty rates 
C) are generally more reliable in accounting for annual variation in actual poverty rates 
D) overstate the actual poverty rate 
A) understate the actual poverty rate 
B) have little effect on the validity of reported poverty rates 
C) are generally more reliable in accounting for annual variation in actual poverty rates 
D) overstate the actual poverty rate

Question 20

Evidence suggests that the women's movement has:

Accepted Answer

A) decreased income inequality across households 
B) increased income inequality across households 
C) had no effect on the distribution of income across households 
D) decreased the importance of traditional measures of income inequality 
A) decreased income inequality across households 
B) increased income inequality across households 
C) had no effect on the distribution of income across households 
D) decreased the importance of traditional measures of income inequality

Exam 21: Income Inequity and Poverty

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

A tax system that collects revenue from high-income households and gives transfers and tax concessions to low-income households is known as:

What is the political philosophy called in which government should choose policies deemed to be just, as evaluate by an impartial observer behind a 'veil of ignorance':

The veil of ignorance refers to:

According to the Henderson Commission, the poverty line in Australia was set at:

Because people can borrow when they are young, the life cycle theory would suggest that a standard of living depends on:

The life cycle effect characterises a lifetime income profile in which income:

A school voucher system introduced in the United States has lead to:

The concept of utility is fundamental to utilitarianism and describes the:

People have their highest saving rates when they are:

Which of the following household units are more likely than average to be living in poverty? (i) couples without children (ii) single people (iii) sole one-parents with children

Under a negative income tax, it is likely for a person who does not earn income to receive assistance from the government.

Economic mobility refers to the:

Assume that the government proposes a negative income tax that calculates taxes owed by the formula TAXES OWED = (1/3 * INCOME) - $20 000.Compute the tax that would be owed given each of the following levels of income. a.$180 000 b.$120 000 c.$60 000 d.$30 000 e.zero

Which of the following reasons suggests that income-based measures of poverty are not ideal when considering the poverty rates of young people:

The political philosophy according to which the government should choose policies that maximise the total utility of everyone in society is called:

The most commonly used approach to define the poverty line in Australia is to follow the definition of the Henderson Commission, conducted in 1975.This sets the poverty line at:

For each figure below, describe whether it could reflect a possible distribution of income and if so, what is implied about the equality of income depicted.

Measures of poverty that fail to account for the value of in-kind transfers:

Evidence suggests that the women's movement has:

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

Filters