Question 1

Figure 20-1
Number of Poor
  
-Refer to Figure 20-1.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 2

The Temporary Assistance for Needy Families program has been criticized by some who claim the program

Accepted Answer

A) increases the number of poor. 
B) encourages "shotgun weddings." 
C) increases adult illiteracy rates. 
D) All of the above are correct. 
A) increases the number of poor. 
B) encourages "shotgun weddings." 
C) increases adult illiteracy rates. 
D) All of the above are correct.

Question 3

Would the maximin criterion achieve perfect income equality?

Accepted Answer

A) Yes.There would be no way to reallocate resources to raise the utility of the poor. 
B) Yes.The maximin criterion would eliminate poverty. 
C) No.It is impossible for complete equality to benefit the worst-off people in society. 
D) No.Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society. 
A) Yes.There would be no way to reallocate resources to raise the utility of the poor. 
B) Yes.The maximin criterion would eliminate poverty. 
C) No.It is impossible for complete equality to benefit the worst-off people in society. 
D) No.Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society.

Question 4

Suppose that Jake and Abby each win $1,000 in a state lottery.Jake spends his winnings on a new television.Abby saves her winnings for a "rainy day." Which of the following is correct?

Accepted Answer

A) Both Jake and Abby's behaviors suggest that they base their purchasing decisions on transitory income. 
B) Jake's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income.Abby's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income. 
C) Jake's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income.Abby's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income. 
D) Both Jake and Abby's behaviors suggest that they base their purchasing decisions on permanent income. 
A) Both Jake and Abby's behaviors suggest that they base their purchasing decisions on transitory income. 
B) Jake's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income.Abby's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income. 
C) Jake's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income.Abby's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income. 
D) Both Jake and Abby's behaviors suggest that they base their purchasing decisions on permanent income.

Question 5

The concept of utility is fundamental to utilitarianism and describes the

Accepted Answer

A) optimal distribution of wealth in society. 
B) level of satisfaction derived from a person's circumstances. 
C) method by which society chooses to allocate resources. 
D) method whereby wealth is stored. 
A) optimal distribution of wealth in society. 
B) level of satisfaction derived from a person's circumstances. 
C) method by which society chooses to allocate resources. 
D) method whereby wealth is stored.

Question 6

Which group (or groups)would be the most upset by wide variation in the income distribution?

Accepted Answer

A) utilitarians 
B) utilitarians and liberals 
C) libertarians 
D) liberals and libertarians 
A) utilitarians 
B) utilitarians and liberals 
C) libertarians 
D) liberals and libertarians

Question 7

Based on data from 2003,approximately what percent of all income in the United States did the top fifth of all families receive?

Accepted Answer

A) 78 percent 
B) 48 percent 
C) 21 percent 
D) 4 percent 
A) 78 percent 
B) 48 percent 
C) 21 percent 
D) 4 percent

Question 8

The philosopher John Rawls argued that

Accepted Answer

A) people would choose income equality if they had to determine an economic distribution system before knowing their place in it. 
B) people would choose income inequality to allow the maximum use of their individual talents. 
C) government has a role to ensure income equality to prevent social unrest. 
D) people would choose income equality because it is morally right. 
A) people would choose income equality if they had to determine an economic distribution system before knowing their place in it. 
B) people would choose income inequality to allow the maximum use of their individual talents. 
C) government has a role to ensure income equality to prevent social unrest. 
D) people would choose income equality because it is morally right.

Question 9

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 10

Which of the following is an example of a welfare program?

Accepted Answer

A) Temporary Assistance for Needy Families (TANF) 
B) Capital Gains Tax (CGT) 
C) Life Cycle Transfers (LCT) 
D) North American Free Trade Agreement (NAFT
A)  
A) Temporary Assistance for Needy Families (TANF) 
B) Capital Gains Tax (CGT) 
C) Life Cycle Transfers (LCT) 
D) North American Free Trade Agreement (NAFT
A)

Question 11

A libertarian is likely to argue that

Accepted Answer

A) outcomes always dominate processes. 
B) only individual members of society can earn income. 
C) government has no role in the economy. 
D) society is responsible for ensuring an equal distribution of income. 
A) outcomes always dominate processes. 
B) only individual members of society can earn income. 
C) government has no role in the economy. 
D) society is responsible for ensuring an equal distribution of income.

Question 12

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 × Income)- 10,000.A family that earns an income of $30,000 will

Accepted Answer

A) neither pay taxes nor receive an income subsidy. 
B) receive an income subsidy of $500. 
C) pay $1,000 in taxes. 
D) pay $600 in taxes. 
A) neither pay taxes nor receive an income subsidy. 
B) receive an income subsidy of $500. 
C) pay $1,000 in taxes. 
D) pay $600 in taxes.

Question 13

Which of the following statements is correct?

Accepted Answer

A) The distribution of annual income accurately reflects the distribution of living standards. 
B) Permanent incomes are more equally distributed than annual incomes. 
C) Transitory changes in income generally have a significant impact on a family's standard of living. 
D) Annual income is more equally distributed than permanent income. 
A) The distribution of annual income accurately reflects the distribution of living standards. 
B) Permanent incomes are more equally distributed than annual incomes. 
C) Transitory changes in income generally have a significant impact on a family's standard of living. 
D) Annual income is more equally distributed than permanent income.

Question 14

The poverty line is adjusted each year to reflect changes in the

Accepted Answer

A) number of people currently on public assistance. 
B) level of prices. 
C) nutritional content of an "adequate" diet. 
D) size of a family. 
A) number of people currently on public assistance. 
B) level of prices. 
C) nutritional content of an "adequate" diet. 
D) size of a family.

Question 15

Income inequality in an economy is traditionally measured by

Accepted Answer

A) using a Bell curve. 
B) calculating the percentage of families that fall into broad income classifications. 
C) referring to standard international distribution tables. 
D) using a Poisson distribution. 
A) using a Bell curve. 
B) calculating the percentage of families that fall into broad income classifications. 
C) referring to standard international distribution tables. 
D) using a Poisson distribution.

Question 16

A U.S.family earning $80,000 would be in the top 20 percent of income distribution in 2003.

Accepted Answer

A) True 
 B)False

Question 17

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 × Income)- 10,000.A family that earns an income of $60,000 will

Accepted Answer

A) pay $10,000 in taxes. 
B) receive an income subsidy of $3,000. 
C) receive an income subsidy of $10,000. 
D) neither pay taxes nor receive an income subsidy. 
A) pay $10,000 in taxes. 
B) receive an income subsidy of $3,000. 
C) receive an income subsidy of $10,000. 
D) neither pay taxes nor receive an income subsidy.

Question 18

Worldwide economic growth has

Accepted Answer

A) increased inequality among individuals worldwide. 
B) benefited wealthier nations at the expense of poorer nations. 
C) reduced the number of people living in extreme poverty. 
D) Both a and b are correct. 
A) increased inequality among individuals worldwide. 
B) benefited wealthier nations at the expense of poorer nations. 
C) reduced the number of people living in extreme poverty. 
D) Both a and b are correct.

Question 19

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 20

Figure 20-1
Number of Poor
  
-Refer to Figure 20-1.Between 1959 and 2001 the poverty rate has

Accepted Answer

A) increased. 
B) decreased. 
C) stayed the same. 
D) moved in the opposite direction of the number of people in poverty. 
A) increased. 
B) decreased. 
C) stayed the same. 
D) moved in the opposite direction of the number of people in poverty.

Exam 20: Income Inequality and Poverty

Figure 20-1 Number of Poor -Refer to Figure 20-1.The absolute number of people in poverty

The Temporary Assistance for Needy Families program has been criticized by some who claim the program

Would the maximin criterion achieve perfect income equality?

Suppose that Jake and Abby each win $1,000 in a state lottery.Jake spends his winnings on a new television.Abby saves her winnings for a "rainy day." Which of the following is correct?

The concept of utility is fundamental to utilitarianism and describes the

Which group (or groups)would be the most upset by wide variation in the income distribution?

Based on data from 2003,approximately what percent of all income in the United States did the top fifth of all families receive?

The philosopher John Rawls argued that

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

Which of the following is an example of a welfare program?

A libertarian is likely to argue that

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 × Income)- 10,000.A family that earns an income of $30,000 will

Which of the following statements is correct?

The poverty line is adjusted each year to reflect changes in the

Income inequality in an economy is traditionally measured by

A U.S.family earning $80,000 would be in the top 20 percent of income distribution in 2003.

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 × Income)- 10,000.A family that earns an income of $60,000 will

Worldwide economic growth has

Binding minimum-wage laws

Figure 20-1 Number of Poor -Refer to Figure 20-1.Between 1959 and 2001 the poverty rate has

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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