Question 1

Table 20-4
   
Source: U.S. Bureau of Census
-Refer to Table 20-4.In 2007,the top fifth of families have

Accepted Answer

A)  almost 15 times as much income as the bottom fifth of families. 
B)  96.6% more income than the bottom fifth of families. 
C)  50.3% more income than the bottom fifth of families. 
D)  46.9% more income than the bottom fifth of families. 
A)  almost 15 times as much income as the bottom fifth of families. 
B)  96.6% more income than the bottom fifth of families. 
C)  50.3% more income than the bottom fifth of families. 
D)  46.9% more income than the bottom fifth of families.

Question 2

In 2008,the poverty rate in the United States was

Accepted Answer

A)  2.5 percent. 
B)  12.6 percent. 
C)  13.2 percent. 
D)  22.4 percent. 
A)  2.5 percent. 
B)  12.6 percent. 
C)  13.2 percent. 
D)  22.4 percent.

Question 3

Table 20-1
The following table shows the distribution of income in Thomasville.
  
-Refer to Table 20-1.If the poverty line was $29,075,what would be the poverty rate?

Accepted Answer

A)  less than 25% 
B)  between 25% and 50% 
C)  between 50% and 75% 
D)  There is insufficient information to answer this question. 
A)  less than 25% 
B)  between 25% and 50% 
C)  between 50% and 75% 
D)  There is insufficient information to answer this question.

Question 4

Scenario 20-2
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $20,000
-Refer to Scenario 20-2.A family earning $60,000 before taxes would have how much after-tax income?

Accepted Answer

A)  -$5,000 
B)  $25,000 
C)  $55,000 
D)  $65,000 
A)  -$5,000 
B)  $25,000 
C)  $55,000 
D)  $65,000

Question 5

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.

Accepted Answer

A) True 
 B)False

Question 6

Figure 20-2
Number of Poor
  
-Refer to Figure 20-2.The absolute number of people in poverty

Accepted Answer

A)  is higher in 2001 than in 1959. 
B)  is lower in 2001 than in 1959. 
C)  has not changed between 1959 and 2001. 
D)  has steadily decreased between 1959 and 2001. 
A)  is higher in 2001 than in 1959. 
B)  is lower in 2001 than in 1959. 
C)  has not changed between 1959 and 2001. 
D)  has steadily decreased between 1959 and 2001.

Question 7

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Accepted Answer

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

Question 8

Many economists believe that a family bases its spending decisions on its permanent,or average,income rather than on transitory income.

Accepted Answer

A) True 
 B)False

Question 9

When we compare the income distribution of the United States to those of other countries,we find that the U.S.

Accepted Answer

A)  has one of the most unequal income distributions. 
B)  has one of the most equal income distributions. 
C)  ranks around the middle of the group. 
D)  is second to China as the most unequal distribution. 
A)  has one of the most unequal income distributions. 
B)  has one of the most equal income distributions. 
C)  ranks around the middle of the group. 
D)  is second to China as the most unequal distribution.

Question 10

Which of the following statements about the minimum wage is correct?

Accepted Answer

A)  An increase in the minimum wage enhances the well-being of all unskilled workers. 
B)  An increase in the minimum wage has no effect on the well-being of middle-class families. 
C)  Advocates of the minimum wage argue that the demand for labor is relatively inelastic. 
D)  Critics of the minimum wage argue that it is an undesirable way of helping the poor because it is costly to the government. 
A)  An increase in the minimum wage enhances the well-being of all unskilled workers. 
B)  An increase in the minimum wage has no effect on the well-being of middle-class families. 
C)  Advocates of the minimum wage argue that the demand for labor is relatively inelastic. 
D)  Critics of the minimum wage argue that it is an undesirable way of helping the poor because it is costly to the government.

Question 11

Given the table shown,which country has a more equal income distribution? Explain your answer.

Accepted Answer

Country A has a more equal income distri

Question 12

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.This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)  $5,000 
B)  $10,000 
C)  $15,000 
D)  $30,000 
A)  $5,000 
B)  $10,000 
C)  $15,000 
D)  $30,000

Question 13

The best government policy to reduce poverty is

Accepted Answer

A)  a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps. 
B)  an expanded welfare program because people must have an additional "need" such as small children or a disability. 
C)  an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter. 
D)  not obvious. Government programs to reduce poverty have many advantages but also many disadvantages. 
A)  a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps. 
B)  an expanded welfare program because people must have an additional "need" such as small children or a disability. 
C)  an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter. 
D)  not obvious. Government programs to reduce poverty have many advantages but also many disadvantages.

Question 14

Economic mobility refers to the

Accepted Answer

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

Question 15

Which of the following is not correct?

Accepted Answer

A)  Welfare is a broad term that includes a variety of government programs designed to help poor people. 
B)  Since the early 1970s, welfare benefits adjusted for inflation have increased, as has the percentage of children living with only one parent. 
C)  Critics of welfare programs argue that they can create incentives for unmarried women to have children. 
D)  Supporters argue that welfare doesn't cause the decline of two-parent families. 
A)  Welfare is a broad term that includes a variety of government programs designed to help poor people. 
B)  Since the early 1970s, welfare benefits adjusted for inflation have increased, as has the percentage of children living with only one parent. 
C)  Critics of welfare programs argue that they can create incentives for unmarried women to have children. 
D)  Supporters argue that welfare doesn't cause the decline of two-parent families.

Question 16

Which of the following groups has the lowest 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 17

A disadvantage associated with an Earned Income Tax Credit (EITC)program to reduce poverty is that it

Accepted Answer

A)  encourages illegitimate births because single women with children receive higher payments. 
B)  rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C)  does not help the poor who are unemployed. 
D)  creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage. 
A)  encourages illegitimate births because single women with children receive higher payments. 
B)  rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C)  does not help the poor who are unemployed. 
D)  creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage.

Question 18

The poverty line in the country of Grim is $10,000.The distribution of income for Grim is as follows:  
The poverty rate in Grim is

Accepted Answer

A)  5 percent. 
B)  16.7 percent. 
C)  50 percent. 
D)  83.3 percent. 
A)  5 percent. 
B)  16.7 percent. 
C)  50 percent. 
D)  83.3 percent.

Question 19

Figure 20-4
Poverty Rates by Age
  
-Refer to Figure 20-4.In 1968,the percent of adults aged 18 to 64 years in poverty is

Accepted Answer

A)  higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  lower than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
D)  lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty. 
A)  higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  lower than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
D)  lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty.

Question 20

Which of the following statements is not correct?

Accepted Answer

A)  An advantage of an in-kind transfer is that it prevents an alcoholic from spending a cash benefit on alcohol. 
B)  An advantage of the Supplemental Security Income (SSI) program is that it benefits the sick and disabled. 
C)  An advantage of a negative income tax program is that the poor must work in order to be eligible. 
D)  Minimum wage laws result in higher unemployment among those groups of workers affected by the minimum wage. 
A)  An advantage of an in-kind transfer is that it prevents an alcoholic from spending a cash benefit on alcohol. 
B)  An advantage of the Supplemental Security Income (SSI) program is that it benefits the sick and disabled. 
C)  An advantage of a negative income tax program is that the poor must work in order to be eligible. 
D)  Minimum wage laws result in higher unemployment among those groups of workers affected by the minimum wage.

Exam 20: Income Inequality and Poverty.

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4.In 2007,the top fifth of families have

In 2008,the poverty rate in the United States was

Table 20-1 The following table shows the distribution of income in Thomasville. -Refer to Table 20-1.If the poverty line was $29,075,what would be the poverty rate?

Scenario 20-2 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $20,000 -Refer to Scenario 20-2.A family earning $60,000 before taxes would have how much after-tax income?

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.

Figure 20-2 Number of Poor -Refer to Figure 20-2.The absolute number of people in poverty

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Many economists believe that a family bases its spending decisions on its permanent,or average,income rather than on transitory income.

When we compare the income distribution of the United States to those of other countries,we find that the U.S.

Which of the following statements about the minimum wage is correct?

Given the table shown,which country has a more equal income distribution? Explain your answer.

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.This negative income tax would guarantee what minimum level of income to every family?

The best government policy to reduce poverty is

Economic mobility refers to the

Which of the following is not correct?

Which of the following groups has the lowest poverty rate?

A disadvantage associated with an Earned Income Tax Credit (EITC)program to reduce poverty is that it

The poverty line in the country of Grim is $10,000.The distribution of income for Grim is as follows: The poverty rate in Grim is

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.In 1968,the percent of adults aged 18 to 64 years in poverty is

Which of the following statements is not correct?

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