Question 1

The goal of utilitarians is to

Accepted Answer

A)  punish crimes and enforce voluntary agreements but not to redistribute income. 
B)  redistribute income until each person has equal earnings. 
C)  redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. 
D)  redistribute income based on the assumption of diminishing marginal utility. 
A)  punish crimes and enforce voluntary agreements but not to redistribute income. 
B)  redistribute income until each person has equal earnings. 
C)  redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. 
D)  redistribute income based on the assumption of diminishing marginal utility.

Question 2

Since 1970 the United States' income distribution has become more equal.

Accepted Answer

A) True 
 B)False

Question 3

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

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

Question 4

When the government enacts policies to redistribute income,

Accepted Answer

A)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C)  the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D)  the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient. 
A)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C)  the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D)  the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.

Question 5

Government vouchers to purchase food,also known as food stamps,are an example of

Accepted Answer

A)  an in-kind transfer. 
B)  life-cycle income. 
C)  a negative income tax. 
D)  permanent income. 
A)  an in-kind transfer. 
B)  life-cycle income. 
C)  a negative income tax. 
D)  permanent income.

Question 6

Since the early 1970s,welfare benefits have declined,

Accepted Answer

A)  which is largely due to the success of the negative income tax program. 
B)  which is largely due to the success of private charities. 
C)  yet the percentage of children living with only one parent has increased. 
D)  and the percentage of children living with only one parent has decreased. 
A)  which is largely due to the success of the negative income tax program. 
B)  which is largely due to the success of private charities. 
C)  yet the percentage of children living with only one parent has increased. 
D)  and the percentage of children living with only one parent has decreased.

Question 7

Over the past 50 years,the U.S.poverty rate was at its lowest level in

Accepted Answer

A)  1973. 
B)  1980. 
C)  1990. 
D)  2008. 
A)  1973. 
B)  1980. 
C)  1990. 
D)  2008.

Question 8

The maximin criterion suggests that social policy should

Accepted Answer

A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers. 
A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers.

Question 9

A government's policy of redistributing income makes the income distribution

Accepted Answer

A)  more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
B)  more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
C)  less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
D)  less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
A)  more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
B)  more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient. 
C)  less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient. 
D)  less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.

Question 10

One existing government program that works much like a negative income tax is the Earned Income Tax Credit.

Accepted Answer

A) True 
 B)False

Question 11

Scenario 20-3
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/3 of income) - $15,000
-Refer to Scenario 20-3.Below what level of income would families start to receive a subsidy from this negative income tax?

Accepted Answer

A)  $15,000 
B)  $30,000 
C)  $45,000 
D)  $60,000 
A)  $15,000 
B)  $30,000 
C)  $45,000 
D)  $60,000

Question 12

Table 20-6
  
-Refer to Table 20-6.In both 2007 and 2008,approximately 25% of the population earned less than

Accepted Answer

A)  $15,000. 
B)  $25,000. 
C)  $50,000. 
D)  $100,000. 
A)  $15,000. 
B)  $25,000. 
C)  $50,000. 
D)  $100,000.

Question 13

Scenario 20-3
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/3 of income) - $15,000
-Refer to Scenario 20-3.A family earning $60,000 before taxes would have how much after-tax income?

Accepted Answer

A)  $5,000 
B)  $15,000 
C)  $55,000 
D)  $65,000 
A)  $5,000 
B)  $15,000 
C)  $55,000 
D)  $65,000

Question 14

Which of the following groups has the highest poverty rate?

Accepted Answer

A)  blacks 
B)  Asians 
C)  children (under age 18) 
D)  female households, no spouse present 
A)  blacks 
B)  Asians 
C)  children (under age 18) 
D)  female households, no spouse present

Question 15

Which of the following statements is correct?

Accepted Answer

A)  Less than three percent of families are categorized as poor for eight years or more. 
B)  In the United States, the grandson of a millionaire is much more likely to be rich than the grandson of an average-income person. 
C)  The majority of millionaires in the United States inherited their wealth. 
D)  Most workers have about the same income (adjusted for inflation) when they are young as when they are middle-aged. 
A)  Less than three percent of families are categorized as poor for eight years or more. 
B)  In the United States, the grandson of a millionaire is much more likely to be rich than the grandson of an average-income person. 
C)  The majority of millionaires in the United States inherited their wealth. 
D)  Most workers have about the same income (adjusted for inflation) when they are young as when they are middle-aged.

Question 16

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

Accepted Answer

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

Question 17

Binding minimum-wage laws

Accepted Answer

A)  are most effective at alleviating poverty when labor demand is highly elastic. 
B)  force a market imbalance between the supply and demand for labor. 
C)  increase the efficiency of labor markets. 
D)  are typically associated with a rise in employment among the poor. 
A)  are most effective at alleviating poverty when labor demand is highly elastic. 
B)  force a market imbalance between the supply and demand for labor. 
C)  increase the efficiency of labor markets. 
D)  are typically associated with a rise in employment among the poor.

Question 18

In the United States in 2008,the bottom fifth of the income distribution had incomes below $19,250.

Accepted Answer

A) True 
 B)False

Question 19

Based on U.S.income data from 2008,the bottom fifth of all families received approximately what percent of all income?

Accepted Answer

A)  48 percent 
B)  21 percent 
C)  10 percent 
D)  4 percent 
A)  48 percent 
B)  21 percent 
C)  10 percent 
D)  4 percent

Question 20

Libertarians believe that the government should enforce individual rights to ensure that all people have the same opportunities to use their talents to achieve success.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty.

The goal of utilitarians is to

Since 1970 the United States' income distribution has become more equal.

The life cycle effect characterizes a lifetime income profile in which income

When the government enacts policies to redistribute income,

Government vouchers to purchase food,also known as food stamps,are an example of

Since the early 1970s,welfare benefits have declined,

Over the past 50 years,the U.S.poverty rate was at its lowest level in

The maximin criterion suggests that social policy should

A government's policy of redistributing income makes the income distribution

One existing government program that works much like a negative income tax is the Earned Income Tax Credit.

Table 20-6 -Refer to Table 20-6.In both 2007 and 2008,approximately 25% of the population earned less than

Scenario 20-3 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/3 of income) - $15,000 -Refer to Scenario 20-3.A family earning $60,000 before taxes would have how much after-tax income?

Which of the following groups has the highest poverty rate?

Which of the following statements is correct?

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

Binding minimum-wage laws

In the United States in 2008,the bottom fifth of the income distribution had incomes below $19,250.

Based on U.S.income data from 2008,the bottom fifth of all families received approximately what percent of all income?

Libertarians believe that the government should enforce individual rights to ensure that all people have the same opportunities to use their talents to achieve success.

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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