Question 1

Which of the following formulas is most representative of a negative income tax proposal?

Accepted Answer

A) Taxes Owed = (1/4 of Income) × $2 
B) Taxes Owed = (1/2 of Income) × 3/4 
C) Taxes Owed = (1/2 of Income) + $15,000 
D) Taxes Owed = (1/3 of Income) - $15,000 
A) Taxes Owed = (1/4 of Income) × $2 
B) Taxes Owed = (1/2 of Income) × 3/4 
C) Taxes Owed = (1/2 of Income) + $15,000 
D) Taxes Owed = (1/3 of Income) - $15,000

Question 2

Based on U.S.data for 2003,the poverty rate is the highest for which group of people?

Accepted Answer

A) children 
B) married couples 
C) female households, no spouse present 
D) the elderly 
A) children 
B) married couples 
C) female households, no spouse present 
D) the elderly

Question 3

Which of the following statements is characteristic of utilitarianism?

Accepted Answer

A) An extra dollar of income provides higher marginal utility to a poor person than to a rich person. 
B) Social policies should be created behind a "veil of ignorance." 
C) Society should strive to maximize the utility of its wealthiest member. 
D) Equality of opportunity is more important than equality of incomes. 
A) An extra dollar of income provides higher marginal utility to a poor person than to a rich person. 
B) Social policies should be created behind a "veil of ignorance." 
C) Society should strive to maximize the utility of its wealthiest member. 
D) Equality of opportunity is more important than equality of incomes.

Question 4

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 5

The top 5 percent of U.S.annual family income in 2003 was $170,082 or more.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 20-1
Suppose that a society is made up of five families whose incomes are as follows:
$120,000; $90,000; $30,000; $30,000; and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where the poverty line is $35,000; families earning over $35,000 pay 10% of their income in taxes, and families earning less than $35,000 pay no income tax.
-Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of liberalism prefer?

Accepted Answer

A) Plan A 
B) Plan B 
C) either Plan A or Plan B 
D) neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy 
A) Plan A 
B) Plan B 
C) either Plan A or Plan B 
D) neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy

Question 7

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

Accepted Answer

A) People will alter their behaviors. 
B) Incentives will be distorted. 
C) Total utility will necessarily be constant. 
D) The allocation of resources will be less efficient. 
A) People will alter their behaviors. 
B) Incentives will be distorted. 
C) Total utility will necessarily be constant. 
D) The allocation of resources will be less efficient.

Exam 20: Income Inequality and Poverty

Which of the following formulas is most representative of a negative income tax proposal?

Based on U.S.data for 2003,the poverty rate is the highest for which group of people?

Which of the following statements is characteristic of utilitarianism?

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

The top 5 percent of U.S.annual family income in 2003 was $170,082 or more.

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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