Question 1

Which of the following statements is not correct?

Accepted Answer

A)  The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B)  Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C)  The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D)  Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income. 
A)  The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B)  Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C)  The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D)  Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income.

Question 2

A common criticism of government programs that are designed to assist the poor is that

Accepted Answer

A)  those who receive assistance rarely meet the criterion for eligibility. 
B)  the majority of those below the poverty line refuse to accept government assistance. 
C)  they create incentives for people to become "needy." 
D)  they typically account for a majority of annual government expenditures. 
A)  those who receive assistance rarely meet the criterion for eligibility. 
B)  the majority of those below the poverty line refuse to accept government assistance. 
C)  they create incentives for people to become "needy." 
D)  they typically account for a majority of annual government expenditures.

Question 3

Table 20-3
The Distribution of Income in Hapland
  
-Refer to Table 20-3.According to the table,what percent of families in Hapland have income levels below $60,000?

Accepted Answer

A)  80 percent 
B)  60 percent 
C)  50 percent 
D)  40 percent 
A)  80 percent 
B)  60 percent 
C)  50 percent 
D)  40 percent

Question 4

Comparing the United States household income distribution to other countries is

Accepted Answer

A)  easy, because data is available for all countries in the world. 
B)  easy, because some countries collect data on expenditures instead of incomes. 
C)  problematic, because international agreements require countries to standardize their income accounting procedures. 
D)  problematic, because countries collect data in different ways. 
A)  easy, because data is available for all countries in the world. 
B)  easy, because some countries collect data on expenditures instead of incomes. 
C)  problematic, because international agreements require countries to standardize their income accounting procedures. 
D)  problematic, because countries collect data in different ways.

Question 5

In the United States,long-term poverty affects

Accepted Answer

A)  more families than short-term poverty. 
B)  an equal number of families as short-term poverty. 
C)  slightly fewer families than short-term poverty. 
D)  many fewer families than short-term poverty. 
A)  more families than short-term poverty. 
B)  an equal number of families as short-term poverty. 
C)  slightly fewer families than short-term poverty. 
D)  many fewer families than short-term poverty.

Question 6

Figure 20-2
Number of Poor
  
-Refer to Figure 20-2.Between 1959 and 2001 the poverty rate has

Accepted Answer

A)  increased overall. 
B)  decreased overall. 
C)  stayed the same overall. 
D)  moved in the opposite direction of the number of people in poverty. 
A)  increased overall. 
B)  decreased overall. 
C)  stayed the same overall. 
D)  moved in the opposite direction of the number of people in poverty.

Question 7

Which of the following is not correct?

Accepted Answer

A)  Many measures of inequality are based on income, which may not reflect a person's standard of living. 
B)  Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income. 
C)  Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living. 
D)  A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading. 
A)  Many measures of inequality are based on income, which may not reflect a person's standard of living. 
B)  Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income. 
C)  Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living. 
D)  A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.

Question 8

Anti-poverty programs

Accepted Answer

A)  encourage saving among recipient groups. 
B)  impose a very low marginal tax rate on income. 
C)  are only made available to those with no other source of income. 
D)  may discourage the poor from escaping poverty on their own. 
A)  encourage saving among recipient groups. 
B)  impose a very low marginal tax rate on income. 
C)  are only made available to those with no other source of income. 
D)  may discourage the poor from escaping poverty on their own.

Question 9

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

Accepted Answer

A)  transitory income for the year of the frost likely exceeds their permanent income. 
B)  permanent income likely exceeds their transitory income for the year of the frost. 
C)  permanent income will be more affected by the frost than their transitory income. 
D)  Both a and c are correct. 
A)  transitory income for the year of the frost likely exceeds their permanent income. 
B)  permanent income likely exceeds their transitory income for the year of the frost. 
C)  permanent income will be more affected by the frost than their transitory income. 
D)  Both a and c are correct.

Question 10

Which of the following programs would be opposed by philosopher John Rawls?

Accepted Answer

A)  a negative income tax 
B)  the Supplemental Security Income (SSI) program 
C)  a tax plan creating a perfectly egalitarian income distribution 
D)  Rawls would oppose all of the programs. 
A)  a negative income tax 
B)  the Supplemental Security Income (SSI) program 
C)  a tax plan creating a perfectly egalitarian income distribution 
D)  Rawls would oppose all of the programs.

Question 11

Table 20-1
The following table shows the distribution of income in Thomasville.
  
-Refer to Table 20-1.Seventy-five percent of all families have incomes below what level?

Accepted Answer

A)  $28,000 
B)  $50,000 
C)  $85,000 
D)  There is insufficient information to answer this question. 
A)  $28,000 
B)  $50,000 
C)  $85,000 
D)  There is insufficient information to answer this question.

Question 12

Briefly describe the three prominent schools of thought in political philosophy.Identify one of the most well-known philosophers in each school.

Accepted Answer

According to utilitarianism,the governme

Question 13

Income mobility studies suggest that poverty

Accepted Answer

A)  cannot be alleviated by privately sponsored anti-poverty programs. 
B)  cannot be alleviated by government sponsored anti-poverty programs. 
C)  is a long-term problem for a relatively large number of families. 
D)  is not a long-term problem for most families. 
A)  cannot be alleviated by privately sponsored anti-poverty programs. 
B)  cannot be alleviated by government sponsored anti-poverty programs. 
C)  is a long-term problem for a relatively large number of families. 
D)  is not a long-term problem for most families.

Question 14

The federal government sets the poverty line at roughly

Accepted Answer

A)  five times the cost of providing an adequate diet. 
B)  four times the cost of providing an adequate diet. 
C)  three times the cost of providing an adequate diet. 
D)  two times the cost of providing an adequate diet. 
A)  five times the cost of providing an adequate diet. 
B)  four times the cost of providing an adequate diet. 
C)  three times the cost of providing an adequate diet. 
D)  two times the cost of providing an adequate diet.

Question 15

Table 20-1
The following table shows the distribution of income in Thomasville.
  
-Refer to Table 20-1.Fifty percent of all families have incomes below what level?

Accepted Answer

A)  $28,000 
B)  $50,000 
C)  $85,000 
D)  There is insufficient information to answer this question. 
A)  $28,000 
B)  $50,000 
C)  $85,000 
D)  There is insufficient information to answer this question.

Question 16

Assume that the government proposes a negative income tax that calculates taxes owed by the formula,
Taxes Owed = (a x Income) - 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.

a. What is the value for “a"?

b, What is the value for “b"?

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?

Accepted Answer

a.0.25 or

Question 17

The goal of libertarianism is to

Accepted Answer

A)  redistribute income based on the assumption of diminishing marginal utility. 
B)  redistribute income in order to maximize the well-being of the worst-off person in society. 
C)  punish crimes and enforce voluntary agreements but not to redistribute income. 
D)  measure happiness and satisfaction. 
A)  redistribute income based on the assumption of diminishing marginal utility. 
B)  redistribute income in order to maximize the well-being of the worst-off person in society. 
C)  punish crimes and enforce voluntary agreements but not to redistribute income. 
D)  measure happiness and satisfaction.

Question 18

Which of the following statements is not correct?

Accepted Answer

A)  Welfare programs may encourage illegitimate births. 
B)  The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C)  Welfare programs may reduce incentives for people to work. 
D)  A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families. 
A)  Welfare programs may encourage illegitimate births. 
B)  The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C)  Welfare programs may reduce incentives for people to work. 
D)  A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.

Question 19

Libertarians believe that

Accepted Answer

A)  the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  the government should aim to maximize the well-being of the worst-off person in society. 
C)  everyone in society should have equal utility. 
D)  the government should not redistribute income. 
A)  the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  the government should aim to maximize the well-being of the worst-off person in society. 
C)  everyone in society should have equal utility. 
D)  the government should not redistribute income.

Question 20

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A)  improve economic efficiency by reducing poverty. 
B)  reduce economic efficiency because they distort incentives. 
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D)  sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency. 
A)  improve economic efficiency by reducing poverty. 
B)  reduce economic efficiency because they distort incentives. 
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D)  sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.

Exam 20: Income Inequality and Poverty.

Which of the following statements is not correct?

A common criticism of government programs that are designed to assist the poor is that

Table 20-3 The Distribution of Income in Hapland -Refer to Table 20-3.According to the table,what percent of families in Hapland have income levels below $60,000?

Comparing the United States household income distribution to other countries is

In the United States,long-term poverty affects

Figure 20-2 Number of Poor -Refer to Figure 20-2.Between 1959 and 2001 the poverty rate has

Which of the following is not correct?

Anti-poverty programs

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

Which of the following programs would be opposed by philosopher John Rawls?

Table 20-1 The following table shows the distribution of income in Thomasville. -Refer to Table 20-1.Seventy-five percent of all families have incomes below what level?

Briefly describe the three prominent schools of thought in political philosophy.Identify one of the most well-known philosophers in each school.

Income mobility studies suggest that poverty

The federal government sets the poverty line at roughly

Table 20-1 The following table shows the distribution of income in Thomasville. -Refer to Table 20-1.Fifty percent of all families have incomes below what level?

The goal of libertarianism is to

Which of the following statements is not correct?

Libertarians believe that

Government programs that take money from high-income people and give it to low-income people typically

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.

Filters