Question 1

Which of the following benefits is counted as income when the official poverty rate is calculated?

Accepted Answer

A)  Medicaid benefits 
B)  food stamps 
C)  public housing benefits 
D)  none of the above 
E)  all of the above 
A)  Medicaid benefits 
B)  food stamps 
C)  public housing benefits 
D)  none of the above 
E)  all of the above

Question 2

Welfare data show that in the United States

Accepted Answer

A)  most welfare recipients receive benefits only for a short time. 
B)  welfare encourages young women to have children. 
C)  children brought up on welfare tend to remain on welfare as adults. 
D)  having poor parents does not increase the chances of a child's being on welfare as an adult. 
E)  children of poor parents have a 50 percent chance of being middle-income adults. 
A)  most welfare recipients receive benefits only for a short time. 
B)  welfare encourages young women to have children. 
C)  children brought up on welfare tend to remain on welfare as adults. 
D)  having poor parents does not increase the chances of a child's being on welfare as an adult. 
E)  children of poor parents have a 50 percent chance of being middle-income adults.

Question 3

Since 1970, income inequality in the United States has

Accepted Answer

A)  decreased. 
B)  increased. 
C)  remained the same. 
D)  increased throughout the 1970s and 1980s but fell during the 1990s. 
A)  decreased. 
B)  increased. 
C)  remained the same. 
D)  increased throughout the 1970s and 1980s but fell during the 1990s.

Question 4

(I) High implicit marginal tax rates reduce the incentive of the poor to earn. (II) The Samaritan's dilemma is that transfer programs lower the opportunity cost of activities that lead to poverty.

Accepted Answer

A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  II is true; I is false. 
A)  Both I and II are true. 
B)  Both I and II are false. 
C)  I is true; II is false. 
D)  II is true; I is false.

Question 5

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

Accepted Answer

A)  improve economic efficiency because they 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 because they 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.

Question 6

Which of the following is not counted as income when the official poverty rate is calculated?

Accepted Answer

A)  Medicaid benefits 
B)  dividends derived from the ownership of stock 
C)  earnings derived from a part-time job 
D)  money income derived from transfer payments 
A)  Medicaid benefits 
B)  dividends derived from the ownership of stock 
C)  earnings derived from a part-time job 
D)  money income derived from transfer payments

Question 7

Figure 15-1  
As shown in Figure 15-1, the distance between points B and D means that 60 percent of families earn less of total income than required for perfect equality.

Accepted Answer

A)  30 percent 
B)  60 percent 
C)  90 percent 
D)  insufficient information to answer question. 
A)  30 percent 
B)  60 percent 
C)  90 percent 
D)  insufficient information to answer question.

Question 8

Figure 15-4  
Figure 15-4 shows the Lorenz Curve for three countries, I, II, and III. Which of the following statements is true?

Accepted Answer

A)  Country I has the most unequal income distribution. 
B)  Country II has the most unequal income distribution. 
C)  Country I has the most equal income distribution. 
D)  Country III has the most equal income distribution. 
E)  Country II has a more equal income distribution than Country I. 
A)  Country I has the most unequal income distribution. 
B)  Country II has the most unequal income distribution. 
C)  Country I has the most equal income distribution. 
D)  Country III has the most equal income distribution. 
E)  Country II has a more equal income distribution than Country I.

Question 9

The Earned Income Tax Credit

Accepted Answer

A)  tends to increase income inequality. 
B)  is a program that provides additional income to workers with above-average incomes. 
C)  tends to reduce income inequality. 
D)  is both a and b. 
A)  tends to increase income inequality. 
B)  is a program that provides additional income to workers with above-average incomes. 
C)  tends to reduce income inequality. 
D)  is both a and b.

Question 10

It would be more reasonable to use annual income data as an index of economic inequality if all of the households

Accepted Answer

A)  filed tax returns and thus all their income were known. 
B)  were different with regard to their age and size characteristics. 
C)  were more similar with regard to size, age, education, and other major factors that are linked to income. 
D)  were more similar with regard to their hair color, height, and weight. 
A)  filed tax returns and thus all their income were known. 
B)  were different with regard to their age and size characteristics. 
C)  were more similar with regard to size, age, education, and other major factors that are linked to income. 
D)  were more similar with regard to their hair color, height, and weight.

Question 11

The idea that transfer benefits to the poor encourage behavior that increases the risk of poverty is known as the

Accepted Answer

A)  Samaritan's dilemma. 
B)  rule of inverse benefits. 
C)  implicit marginal tax law. 
D)  Smith paradox. 
A)  Samaritan's dilemma. 
B)  rule of inverse benefits. 
C)  implicit marginal tax law. 
D)  Smith paradox.

Question 12

Andy observes that the income distribution between the richest and poorest people in the population has remained fixed for decades. He concludes that the rich stay rich and the poor stay poor. Is this a valid conclusion, or has Andy missed something?

Accepted Answer

What Andy has missed is the possibility

Question 13

What percent of the families classified as poor in 2009 were headed by an elderly (age 65 and over) person?

Accepted Answer

A)  approximately two-thirds 
B)  approximately 9 percent 
C)  approximately 32 percent 
D)  approximately 50 percent 
A)  approximately two-thirds 
B)  approximately 9 percent 
C)  approximately 32 percent 
D)  approximately 50 percent

Question 14

Which of the following contributed to the increase in income inequality among families in the United States during the 1980s and 1990s?

Accepted Answer

A)  an increase in the highest marginal tax rates that forced high income earners to work more in order to maintain their income 
B)  an increase in the proportion of both single-parent and dual-earner families 
C)  a decrease in the size of the earnings differential between college graduates and high school graduates 
D)  all of the above 
A)  an increase in the highest marginal tax rates that forced high income earners to work more in order to maintain their income 
B)  an increase in the proportion of both single-parent and dual-earner families 
C)  a decrease in the size of the earnings differential between college graduates and high school graduates 
D)  all of the above

Question 15

In 2009, the percentage of all U.S. families officially considered to be in poverty was approximately

Accepted Answer

A)  5 percent. 
B)  11 percent. 
C)  22 percent. 
D)  31 percent. 
A)  5 percent. 
B)  11 percent. 
C)  22 percent. 
D)  31 percent.

Question 16

The sharp reduction in marginal tax rates during the 1980s

Accepted Answer

A)  reduced the incentive of high-income Americans to work. 
B)  increased the incentive of high-income Americans to utilize tax shelters. 
C)  increased the unemployment rate of high-income Americans. 
D)  increased the visible income of high-income Americans. 
A)  reduced the incentive of high-income Americans to work. 
B)  increased the incentive of high-income Americans to utilize tax shelters. 
C)  increased the unemployment rate of high-income Americans. 
D)  increased the visible income of high-income Americans.

Which of the following benefits is counted as income when the official poverty rate is calculated?

Welfare data show that in the United States

Since 1970, income inequality in the United States has

(I) High implicit marginal tax rates reduce the incentive of the poor to earn. (II) The Samaritan's dilemma is that transfer programs lower the opportunity cost of activities that lead to poverty.

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

Which of the following is not counted as income when the official poverty rate is calculated?

Figure 15-1 As shown in Figure 15-1, the distance between points B and D means that 60 percent of families earn less of total income than required for perfect equality.

Figure 15-4 Figure 15-4 shows the Lorenz Curve for three countries, I, II, and III. Which of the following statements is true?

The Earned Income Tax Credit

It would be more reasonable to use annual income data as an index of economic inequality if all of the households

The idea that transfer benefits to the poor encourage behavior that increases the risk of poverty is known as the

Andy observes that the income distribution between the richest and poorest people in the population has remained fixed for decades. He concludes that the rich stay rich and the poor stay poor. Is this a valid conclusion, or has Andy missed something?

What percent of the families classified as poor in 2009 were headed by an elderly (age 65 and over) person?

Which of the following contributed to the increase in income inequality among families in the United States during the 1980s and 1990s?

In 2009, the percentage of all U.S. families officially considered to be in poverty was approximately

The sharp reduction in marginal tax rates during the 1980s

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Applying the Basics: Special Topics in Economics

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Exam 15: Income Inequality and Poverty

Which of the following benefits is counted as income when the official poverty rate is calculated?

Welfare data show that in the United States

Since 1970, income inequality in the United States has

(I) High implicit marginal tax rates reduce the incentive of the poor to earn. (II) The Samaritan's dilemma is that transfer programs lower the opportunity cost of activities that lead to poverty.

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

Which of the following is not counted as income when the official poverty rate is calculated?

Figure 15-1 As shown in Figure 15-1, the distance between points B and D means that 60 percent of families earn less of total income than required for perfect equality.

Figure 15-4 Figure 15-4 shows the Lorenz Curve for three countries, I, II, and III. Which of the following statements is true?

The Earned Income Tax Credit

It would be more reasonable to use annual income data as an index of economic inequality if all of the households

The idea that transfer benefits to the poor encourage behavior that increases the risk of poverty is known as the

Andy observes that the income distribution between the richest and poorest people in the population has remained fixed for decades. He concludes that the rich stay rich and the poor stay poor. Is this a valid conclusion, or has Andy missed something?

What percent of the families classified as poor in 2009 were headed by an elderly (age 65 and over) person?

Which of the following contributed to the increase in income inequality among families in the United States during the 1980s and 1990s?

In 2009, the percentage of all U.S. families officially considered to be in poverty was approximately

The sharp reduction in marginal tax rates during the 1980s

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Applying the Basics: Special Topics in Economics

Filters