Question 1

If a government could successfully achieve the maximin criterion,each member of society would have an equal income.

Accepted Answer

A) True 
 B)False

Question 2

In-kind transfers are transfers to the poor

Accepted Answer

A)  in the form of goods and services rather than cash. 
B)  in the form of goods, services, and cash. 
C)  from private charitable organizations only. 
D)  from the federal government only. 
A)  in the form of goods and services rather than cash. 
B)  in the form of goods, services, and cash. 
C)  from private charitable organizations only. 
D)  from the federal government only.

Question 3

Which group would be the least upset by wide variation in the income distribution?

Accepted Answer

A)  utilitarians 
B)  liberals 
C)  libertarians 
D)  Each group would be equally upset. 
A)  utilitarians 
B)  liberals 
C)  libertarians 
D)  Each group would be equally upset.

Question 4

In the United States from 1935 to 2008 the share of total income earned by the bottom fifth of income earners rose and then fell.

Accepted Answer

A) True 
 B)False

Question 5

The US government sets the poverty line equal to approximately

Accepted Answer

A)  three times the cost of providing subsidized housing. 
B)  three times the cost of providing an adequate diet. 
C)  the minimum wage for a single person working 40 hours per week and 50 weeks per year. 
D)  the cost of providing food, shelter, and health care expenses for a family of four. 
A)  three times the cost of providing subsidized housing. 
B)  three times the cost of providing an adequate diet. 
C)  the minimum wage for a single person working 40 hours per week and 50 weeks per year. 
D)  the cost of providing food, shelter, and health care expenses for a family of four.

Question 6

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

Accepted Answer

A)  too expensive for local governments to fund. 
B)  too expensive for local governments to administer. 
C)  imprecise in their ability to help the working poor. 
D)  easy for businesses to pay. 
A)  too expensive for local governments to fund. 
B)  too expensive for local governments to administer. 
C)  imprecise in their ability to help the working poor. 
D)  easy for businesses to pay.

Question 7

A disadvantage associated with a minimum wage law 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)  focuses on children and the disabled while neglecting the working poor. 
D)  may benefit the teenage children of families who are not poor. 
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)  focuses on children and the disabled while neglecting the working poor. 
D)  may benefit the teenage children of families who are not poor.

Question 8

When the government redistributes income to achieve greater equality,it

Accepted Answer

A)  distorts incentives. 
B)  improves efficiency. 
C)  focuses on middle income brackets. 
D)  relies on foreign aid to help balance the budget. 
A)  distorts incentives. 
B)  improves efficiency. 
C)  focuses on middle income brackets. 
D)  relies on foreign aid to help balance the budget.

Question 9

Which of the following is not correct?

Accepted Answer

A)  Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. 
B)  Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. 
C)  Critics argue that in-kind transfers are inefficient and disrespectful. 
D)  In order for a program to qualify as an in-kind transfer, it must have government approval. 
A)  Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. 
B)  Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. 
C)  Critics argue that in-kind transfers are inefficient and disrespectful. 
D)  In order for a program to qualify as an in-kind transfer, it must have government approval.

Question 10

The United States has more income inequality than

Accepted Answer

A)  Brazil. 
B)  Mexico. 
C)  Canada. 
D)  South Africa. 
A)  Brazil. 
B)  Mexico. 
C)  Canada. 
D)  South Africa.

Question 11

Figure 20-4
Poverty Rates by Age
  
-Refer to Figure 20-4.In 1968,the percent of elderly aged 65 and over in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D)  is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty. 
A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D)  is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty.

Question 12

Data for the United States suggests that about how many millionaires inherited their fortunes?

Accepted Answer

A)  one in seven 
B)  one in five 
C)  one in three 
D)  one in two 
A)  one in seven 
B)  one in five 
C)  one in three 
D)  one in two

Question 13

A disadvantage associated with in-kind transfers to reduce poverty is that they

Accepted Answer

A)  are more expensive than a negative income tax. 
B)  are inefficient because they do not allow poor families to make purchases based on their preferences. 
C)  focus on children and the disabled while neglecting the working poor. 
D)  may benefit the teenage children of families who are not poor. 
A)  are more expensive than a negative income tax. 
B)  are inefficient because they do not allow poor families to make purchases based on their preferences. 
C)  focus on children and the disabled while neglecting the working poor. 
D)  may benefit the teenage children of families who are not poor.

Question 14

When incentives to earn income are distorted by income redistribution programs,

Accepted Answer

A)  losses can exceed potential gains from greater equality of income. 
B)  total income in an economy can fall. 
C)  total utility in society can fall. 
D)  All of the above are correct. 
A)  losses can exceed potential gains from greater equality of income. 
B)  total income in an economy can fall. 
C)  total utility in society can fall. 
D)  All of the above are correct.

Question 15

Which of the following statements is correct?

Accepted Answer

A)  The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B)  The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C)  The economic life cycle explains why people base spending decisions on transitory income. 
D)  The United States has more income inequality than some developing countries, such as Mexico and Brazil. 
A)  The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B)  The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C)  The economic life cycle explains why people base spending decisions on transitory income. 
D)  The United States has more income inequality than some developing countries, such as Mexico and Brazil.

Question 16

Which of the following is not an example of a welfare program?

Accepted Answer

A)  Supplemental Security Income (SSI) 
B)  Temporary Assistance for Needy Families (TANF) 
C)  food stamps 
D)  minimum wage laws 
A)  Supplemental Security Income (SSI) 
B)  Temporary Assistance for Needy Families (TANF) 
C)  food stamps 
D)  minimum wage laws

Question 17

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

Accepted Answer

A)  A negative income tax because it would maximize the minimum income of members of society. 
B)  An Earned Income Tax Credit (EIT
C)  because a policy that rewards the working poor would be the most just. 
C)  An in-kind transfer program because it would maximize the total utility of all members of society. 
D)  None of the programs would be favored because each of them forcibly redistributes income that was fairly, if not equally, earned. 
A)  A negative income tax because it would maximize the minimum income of members of society. 
B)  An Earned Income Tax Credit (EIT
C)  because a policy that rewards the working poor would be the most just. 
C)  An in-kind transfer program because it would maximize the total utility of all members of society. 
D)  None of the programs would be favored because each of them forcibly redistributes income that was fairly, if not equally, earned.

Question 18

A family's ability to buy goods and services depends largely on the family's

Accepted Answer

A)  economic mobility. 
B)  place in the economic life cycle. 
C)  transitory income. 
D)  permanent income. 
A)  economic mobility. 
B)  place in the economic life cycle. 
C)  transitory income. 
D)  permanent income.

Question 19

The U.S.welfare system was revised by a 1996 law that

Accepted Answer

A)  consolidated all of the previous assistance programs into a single program. 
B)  limited the amount of time that people could receive assistance. 
C)  said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance. 
D)  turned all federally-run welfare programs over to the states. 
A)  consolidated all of the previous assistance programs into a single program. 
B)  limited the amount of time that people could receive assistance. 
C)  said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance. 
D)  turned all federally-run welfare programs over to the states.

Question 20

A U.S.family earning $80,000 would be in the top 20 percent of income distribution in 2008.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty.

If a government could successfully achieve the maximin criterion,each member of society would have an equal income.

In-kind transfers are transfers to the poor

Which group would be the least upset by wide variation in the income distribution?

In the United States from 1935 to 2008 the share of total income earned by the bottom fifth of income earners rose and then fell.

The US government sets the poverty line equal to approximately

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

A disadvantage associated with a minimum wage law to reduce poverty is that it

When the government redistributes income to achieve greater equality,it

Which of the following is not correct?

The United States has more income inequality than

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.In 1968,the percent of elderly aged 65 and over in poverty is

Data for the United States suggests that about how many millionaires inherited their fortunes?

A disadvantage associated with in-kind transfers to reduce poverty is that they

When incentives to earn income are distorted by income redistribution programs,

Which of the following statements is correct?

Which of the following is not an example of a welfare program?

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

A family's ability to buy goods and services depends largely on the family's

The U.S.welfare system was revised by a 1996 law that

A U.S.family earning $80,000 would be in the top 20 percent of income distribution in 2008.

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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