Question 1

Which of the following is accurate regarding income statistics?

Accepted Answer

A) Current annual income is also an accurate indicator of relative economic status for the same individual over a longer period such as a decade or lifetime. 
B) When there is substantial income mobility,one's current position in the income distribution will not be a very good indicator as to what one's position will be a few years in the future. 
C) Recent studies indicate that there is a strong positive relationship between the relative income position of a family and the relative income position of their children and grandchildren. 
D) Even though annual income data camouflage the fact,high-income earners generally maintain their status year after year,while those with low current incomes tend to stay poor year after year. 
A) Current annual income is also an accurate indicator of relative economic status for the same individual over a longer period such as a decade or lifetime. 
B) When there is substantial income mobility,one's current position in the income distribution will not be a very good indicator as to what one's position will be a few years in the future. 
C) Recent studies indicate that there is a strong positive relationship between the relative income position of a family and the relative income position of their children and grandchildren. 
D) Even though annual income data camouflage the fact,high-income earners generally maintain their status year after year,while those with low current incomes tend to stay poor year after year.

Question 2

Which of the following is true?

Accepted Answer

A) The distribution of income after taxes and transfers is considered more equal than when they are excluded. 
B) The distribution of lifetime income tends to be more unequal than the distribution of annual income. 
C) The distribution of income has become more equal in recent years. 
D) Developed,industrialized countries generally tend to have higher income inequality than less-developed countries. 
A) The distribution of income after taxes and transfers is considered more equal than when they are excluded. 
B) The distribution of lifetime income tends to be more unequal than the distribution of annual income. 
C) The distribution of income has become more equal in recent years. 
D) Developed,industrialized countries generally tend to have higher income inequality than less-developed countries.

Question 3

Compared to those with lower incomes,families with higher incomes are more likely to be headed by a

Accepted Answer

A) person age 65 years and older. 
B) husband and wife team with one but not the other in the labor force. 
C) single-parent. 
D) college graduate. 
A) person age 65 years and older. 
B) husband and wife team with one but not the other in the labor force. 
C) single-parent. 
D) college graduate.

Question 4

Over the past two decades,the earnings gap between college graduates and those with only a high school education has

Accepted Answer

A) decreased substantially. 
B) increased substantially. 
C) remained the same. 
D) fluctuated in a random pattern. 
A) decreased substantially. 
B) increased substantially. 
C) remained the same. 
D) fluctuated in a random pattern.

Question 5

Programs that limit the eligibility of transfer recipients to those with low income are called

Accepted Answer

A) social security programs. 
B) means-tested programs. 
C) single-parent family programs. 
D) social insurance programs. 
A) social security programs. 
B) means-tested programs. 
C) single-parent family programs. 
D) social insurance programs.

Question 6

The mythical country of Quitar has just established a policy to give very generous in-kind benefits to the nation's poor,currently defined as those earning less than $10,000 a year.Several years later,the poverty rate has not fallen.Why not?

Accepted Answer

If poverty is only measured based on cas

Question 7

"There is considerable movement up and down the economic ladder.Relative income positions often change over time." This statement is

Accepted Answer

A) true;at different points in time people tend to change position in the income distribution 
B) only true for industrialized countries 
C) false;people tend to stay in the same place within the income distribution 
D) false;people tend to stay in the same quintile that their parents were in 
A) true;at different points in time people tend to change position in the income distribution 
B) only true for industrialized countries 
C) false;people tend to stay in the same place within the income distribution 
D) false;people tend to stay in the same quintile that their parents were in

Question 8

Figure 15-1
  
-As shown in Figure 15-1,the degree of unequal income distribution is measured by the area between the

Accepted Answer

A) Lorenz curve and the horizontal axis. 
B) Lorenz curve and the vertical axis. 
C) Perfect equality line and the origin. 
D) Perfect equality line and the Lorenz curve. 
A) Lorenz curve and the horizontal axis. 
B) Lorenz curve and the vertical axis. 
C) Perfect equality line and the origin. 
D) Perfect equality line and the Lorenz curve.

Question 9

Imagine two cities,Engelgrad and Legreeville,where the rich,middle,and poor income recipients in one city have annual incomes identical to their counterparts' incomes in the other city.In Engelgrad,the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that.In Legreeville,however,the poor remain poor and the rich remain rich.Which of the following is true about the two cities?

Accepted Answer

A) Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical. 
B) The degree of lifetime income inequality in the two cities is identical. 
C) The income mobility of people in the two cities is identical. 
D) The distribution of annual income is more unequal in Legreeville. 
A) Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical. 
B) The degree of lifetime income inequality in the two cities is identical. 
C) The income mobility of people in the two cities is identical. 
D) The distribution of annual income is more unequal in Legreeville.

Question 10

When deciding whether to classify a family as in poverty,official figures

Accepted Answer

A) count all transfer and welfare benefits received by the family as income. 
B) do not count in-kind benefits in the calculation of the family's income. 
C) do not count cash benefits in the calculation of the family's income. 
D) do not count any transfer or welfare benefits as income. 
A) count all transfer and welfare benefits received by the family as income. 
B) do not count in-kind benefits in the calculation of the family's income. 
C) do not count cash benefits in the calculation of the family's income. 
D) do not count any transfer or welfare benefits as income.

Question 11

Which one of the following groups has a below-average incidence of poverty?

Accepted Answer

A) divorced or separated persons 
B) African Americans and other minorities 
C) families headed by a female 
D) persons between the ages of 35 and 54 
A) divorced or separated persons 
B) African Americans and other minorities 
C) families headed by a female 
D) persons between the ages of 35 and 54

Question 12

Because the United States has a progressive tax system,the distribution of income after taking into account the effects of taxes and transfers is

Accepted Answer

A) less equal than the distribution of before-tax income. 
B) more equal than the distribution of before-tax income. 
C) exactly the same as the distribution of before-tax income. 
D) none of the above. 
A) less equal than the distribution of before-tax income. 
B) more equal than the distribution of before-tax income. 
C) exactly the same as the distribution of before-tax income. 
D) none of the above.

Question 13

Figure 15-2
  
-If this economy's distribution of income becomes more equal,then the Lorenz curve shown in Figure 15-2 will

Accepted Answer

A) move closer to the 45° line. 
B) become more bowed outward. 
C) lie above the 45° line. 
D) shift down and to the right. 
A) move closer to the 45° line. 
B) become more bowed outward. 
C) lie above the 45° line. 
D) shift down and to the right.

Question 14

In 2009,high-income families (the top 20 percent)in the United States earned approximately ____ percent of the total before-tax income.

Accepted Answer

A) 34 
B) 48 
C) 62 
D) 79 
A) 34 
B) 48 
C) 62 
D) 79

Question 15

The level of money income below which a family is considered poor is called the

Accepted Answer

A) bottom 20 percent of the income distribution. 
B) poverty threshold income level. 
C) guaranteed income level. 
D) subsistence income level. 
A) bottom 20 percent of the income distribution. 
B) poverty threshold income level. 
C) guaranteed income level. 
D) subsistence income level.

Question 16

"Annual income during the prime working years may overstate the economic well-being of most households over their lifetime." This statement is

Accepted Answer

A) false 
B) true 
C) only true for single-earner families 
D) indeterminate;averages can't be composed here--we must know more about the individuals and their earnings patterns 
A) false 
B) true 
C) only true for single-earner families 
D) indeterminate;averages can't be composed here--we must know more about the individuals and their earnings patterns

Question 17

Figure 15-3
  
-As shown in Figure 15-3,40 percent of families earned a cumulative share of about ____ percent of income.

Accepted Answer

A) 5 
B) 15 
C) 30 
D) 50 
A) 5 
B) 15 
C) 30 
D) 50

Question 18

Assume that Jill is a single parent who is in poverty.She receives food stamps and Medicaid.For every $100 that she earns,Jill loses $20 of her food stamp benefits and $15 in her Medicaid benefits.Jill's implicit marginal tax rate from these two programs is

Accepted Answer

A) 20 percent. 
B) 30 percent. 
C) 35 percent. 
D) 45 percent. 
A) 20 percent. 
B) 30 percent. 
C) 35 percent. 
D) 45 percent.

Question 19

Most studies indicate that the degree of income inequality in the United States has

Accepted Answer

A) been increasing in recent decades. 
B) been declining in recent decades. 
C) been constant since 1970. 
D) fluctuated widely from year to year. 
A) been increasing in recent decades. 
B) been declining in recent decades. 
C) been constant since 1970. 
D) fluctuated widely from year to year.

Question 20

Figure 15-4
  
-Figure 15-4 shows the Lorenz Curve for three countries,I,II,and III.Of the three countries shown,

Accepted Answer

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

Exam 28: Income Inequality and Poverty

Which of the following is accurate regarding income statistics?

Which of the following is true?

Compared to those with lower incomes,families with higher incomes are more likely to be headed by a

Over the past two decades,the earnings gap between college graduates and those with only a high school education has

Programs that limit the eligibility of transfer recipients to those with low income are called

The mythical country of Quitar has just established a policy to give very generous in-kind benefits to the nation's poor,currently defined as those earning less than $10,000 a year.Several years later,the poverty rate has not fallen.Why not?

"There is considerable movement up and down the economic ladder.Relative income positions often change over time." This statement is

Figure 15-1 -As shown in Figure 15-1,the degree of unequal income distribution is measured by the area between the

When deciding whether to classify a family as in poverty,official figures

Which one of the following groups has a below-average incidence of poverty?

Because the United States has a progressive tax system,the distribution of income after taking into account the effects of taxes and transfers is

Figure 15-2 -If this economy's distribution of income becomes more equal,then the Lorenz curve shown in Figure 15-2 will

In 2009,high-income families (the top 20 percent)in the United States earned approximately ____ percent of the total before-tax income.

The level of money income below which a family is considered poor is called the

"Annual income during the prime working years may overstate the economic well-being of most households over their lifetime." This statement is

Figure 15-3 -As shown in Figure 15-3,40 percent of families earned a cumulative share of about ____ percent of income.

Assume that Jill is a single parent who is in poverty.She receives food stamps and Medicaid.For every $100 that she earns,Jill loses $20 of her food stamp benefits and $15 in her Medicaid benefits.Jill's implicit marginal tax rate from these two programs is

Most studies indicate that the degree of income inequality in the United States has

Figure 15-4 -Figure 15-4 shows the Lorenz Curve for three countries,I,II,and III.Of the three countries shown,

The Economic Approach

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Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

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Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

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Great Debates in Economics: Keynes Versus Hayek

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Lessons From the Great Depression

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Earnings Differences Between Men and Women

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