Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The marketplace allocates resources

Accepted Answer

A)  fairly. 
B)  efficiently. 
C)  to those desiring them least. 
D)  both efficiently and equitably. 
A)  fairly. 
B)  efficiently. 
C)  to those desiring them least. 
D)  both efficiently and equitably.

Question 3

Table 20-9
Poverty Thresholds in 2002, 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 20-9.What is the poverty line for a family of three with one child?

Accepted Answer

A)  $12,072 
B)  $12,400 
C)  $14,480 
D)  $14,494 
A)  $12,072 
B)  $12,400 
C)  $14,480 
D)  $14,494

Question 4

Economists who support minimum-wage legislation are likely to believe that the

Accepted Answer

A)  demand for unskilled labor is relatively inelastic. 
B)  demand for unskilled labor is relatively elastic. 
C)  supply of unskilled labor is relatively elastic. 
D)  supply of unskilled labor is relatively inelastic. 
A)  demand for unskilled labor is relatively inelastic. 
B)  demand for unskilled labor is relatively elastic. 
C)  supply of unskilled labor is relatively elastic. 
D)  supply of unskilled labor is relatively inelastic.

Question 5

The distribution of income for Danville is as follows:  
If the poverty rate in Danville is 33.3 percent,what is the poverty line in Danville?

Accepted Answer

A)  $15,000. 
B)  $20,000. 
C)  $25,000. 
D)  $30,000. 
A)  $15,000. 
B)  $20,000. 
C)  $25,000. 
D)  $30,000.

Question 6

In the U.S.economy,labor earnings make up about

Accepted Answer

A)  one-half of total income. 
B)  two-thirds of total income. 
C)  three-fourths of total income. 
D)  nine-tenths of total income. 
A)  one-half of total income. 
B)  two-thirds of total income. 
C)  three-fourths of total income. 
D)  nine-tenths of total income.

Question 7

Many Democrats who campaigned in the 2006 elections supported raising the U.S.minimum wage.Supporters of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A)  a tax-free way to help the working poor; after all, businesses bear the burden of paying higher wages, not the government. 
B)  better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor; after all, the EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
C)  better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. 
D)  a way to increase employment of those likely to earn the minimum wage. 
A)  a tax-free way to help the working poor; after all, businesses bear the burden of paying higher wages, not the government. 
B)  better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor; after all, the EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
C)  better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. 
D)  a way to increase employment of those likely to earn the minimum wage.

Question 8

A society consists of three individuals: Arthur,Billie,and Chris.In terms of income and utility,Arthur is currently best-off,Billie ranks in the middle,and Chris is worst-off.Which of the following statements is correct?

Accepted Answer

A)  Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility. 
B)  Liberalism suggests that government policies should strive to maximize the sum of Billie's utility and Chris's utility. 
C)  Libertarianism suggests that government policies should strive to maximize Chris's utility. 
D)  Mobilism suggests that the government policies should strive to make Billie better off than Arthur. 
A)  Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility. 
B)  Liberalism suggests that government policies should strive to maximize the sum of Billie's utility and Chris's utility. 
C)  Libertarianism suggests that government policies should strive to maximize Chris's utility. 
D)  Mobilism suggests that the government policies should strive to make Billie better off than Arthur.

Question 9

Based on data from 2008,the top fifth of all families received approximately what percent of all income in the United States?

Accepted Answer

A)  78 percent 
B)  48 percent 
C)  21 percent 
D)  4 percent 
A)  78 percent 
B)  48 percent 
C)  21 percent 
D)  4 percent

Question 10

Since 1959 when the official data on the poverty rate began,the poverty rate was at its highest in

Accepted Answer

A)  1959. 
B)  1968. 
C)  1977. 
D)  1986. 
A)  1959. 
B)  1968. 
C)  1977. 
D)  1986.

Question 11

"An extra dollar of income gives more additional satisfaction to a poor person than to a rich person." This is an important assumption of which political philosophy?

Accepted Answer

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

Question 12

Which of the following is correct?

Accepted Answer

A)  Incomes tend to be high for young workers. 
B)  Incomes tend to rise sharply at retirement. 
C)  Incomes tend to peak at around age 50. 
D)  Current income is more equally distributed than permanent income. 
A)  Incomes tend to be high for young workers. 
B)  Incomes tend to rise sharply at retirement. 
C)  Incomes tend to peak at around age 50. 
D)  Current income is more equally distributed than permanent income.

Question 13

According to the doctrine of liberalism,principles of justice are the result of

Accepted Answer

A)  fair agreement and bargain. 
B)  command-and-control policies. 
C)  domination of the powerful by the weak. 
D)  workers owning the factors of production. 
A)  fair agreement and bargain. 
B)  command-and-control policies. 
C)  domination of the powerful by the weak. 
D)  workers owning the factors of production.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

In-kind transfers are politically popular because

Accepted Answer

A)  they provide high quality food and shelter. 
B)  they provide cash. 
C)  allow resale of food stamps for cash, if needed. 
D)  the public believes that the aid is not going to support alcohol and drug addiction. 
A)  they provide high quality food and shelter. 
B)  they provide cash. 
C)  allow resale of food stamps for cash, if needed. 
D)  the public believes that the aid is not going to support alcohol and drug addiction.

Question 16

Even though the average income in the United States has continued to grow,the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Question 17

The utilitarian justification for redistributing income is based on the assumption of diminishing marginal utility.

Accepted Answer

A) True 
 B)False

Question 18

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

Accepted Answer

A) True 
 B)False

Question 19

In 2008 the top 20% of income earners accounted for over 80% of all income received by United States' families.

Accepted Answer

A) True 
 B)False

Question 20

Scenario 20-1
Suppose that a society is made up of five families whose incomes are as follows:
$120,000; $90,000; $30,000; $30,000; and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where families earning less than $35,000 pay no income tax and families earning more than $35,000 pay 10% of their income in taxes. The income tax revenue collected from those families earning over $35,000 is then redistributed equally to those families earning less than $35,000.
-Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of liberalism prefer?

Accepted Answer

A)  Plan A 
B)  Plan B 
C)  either Plan A or Plan B 
D)  neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy 
A)  Plan A 
B)  Plan B 
C)  either Plan A or Plan B 
D)  neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy

Exam 20: Income Inequality and Poverty.

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

The marketplace allocates resources

Table 20-9 Poverty Thresholds in 2002, 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 20-9.What is the poverty line for a family of three with one child?

Economists who support minimum-wage legislation are likely to believe that the

The distribution of income for Danville is as follows: If the poverty rate in Danville is 33.3 percent,what is the poverty line in Danville?

In the U.S.economy,labor earnings make up about

Many Democrats who campaigned in the 2006 elections supported raising the U.S.minimum wage.Supporters of raising the minimum wage argue that minimum-wage laws are

A society consists of three individuals: Arthur,Billie,and Chris.In terms of income and utility,Arthur is currently best-off,Billie ranks in the middle,and Chris is worst-off.Which of the following statements is correct?

Based on data from 2008,the top fifth of all families received approximately what percent of all income in the United States?

Since 1959 when the official data on the poverty rate began,the poverty rate was at its highest in

"An extra dollar of income gives more additional satisfaction to a poor person than to a rich person." This is an important assumption of which political philosophy?

Which of the following is correct?

According to the doctrine of liberalism,principles of justice are the result of

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

In-kind transfers are politically popular because

Even though the average income in the United States has continued to grow,the poverty rate has increased to over 20% since the early 1970s.

The utilitarian justification for redistributing income is based on the assumption of diminishing marginal utility.

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

In 2008 the top 20% of income earners accounted for over 80% of all income received by United States' families.

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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