Question 1

Figure 15-1
  
-As shown in Figure 15-1,80 percent of families earned a cumulative share of about ____ of income.

Accepted Answer

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

Question 2

Which of the following is true?

Accepted Answer

A) With time,most of those with low incomes at a point in time move up the income ladder only to be replaced by others who are youthful,inexperienced,or the victim of current misfortune. 
B) Recent studies indicate that there is virtually no relationship between the relative income position of grandparents and their grandchildren. 
C) Both a and b are true. 
D) Neither a nor b is true. 
A) With time,most of those with low incomes at a point in time move up the income ladder only to be replaced by others who are youthful,inexperienced,or the victim of current misfortune. 
B) Recent studies indicate that there is virtually no relationship between the relative income position of grandparents and their grandchildren. 
C) Both a and b are true. 
D) Neither a nor b is true.

Question 3

Compared to those with higher incomes,low-income families are more likely to

Accepted Answer

A) be headed by a person between 35 and 55 years of age. 
B) have both a husband and a wife in the labor force. 
C) be single-parent families. 
D) be headed by a college graduate. 
A) be headed by a person between 35 and 55 years of age. 
B) have both a husband and a wife in the labor force. 
C) be single-parent families. 
D) be headed by a college graduate.

Question 4

Since 1980,income inequality (as measured by the income share of the highest 20 percent of income earners relative to the lowest 20 percent)has

Accepted Answer

A) been virtually unchanged. 
B) increased. 
C) decreased. 
D) fluctuated in a random pattern. 
A) been virtually unchanged. 
B) increased. 
C) decreased. 
D) fluctuated in a random pattern.

Question 5

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 6

Which of the following is true?

Accepted Answer

A) The close link between personal income and provision of productive resources to others provides individuals with a strong incentive to develop skills. 
B) Income can be taxed away from some and transferred to others without altering the incentive to engage in productive activities. 
C) Holding technology constant,the size of the economic pie available for distribution among economic participants is fixed. 
D) In a democratic setting,the government's tax and spending policies can redistribute income without influencing the size of the economic pie. 
E) Both b and d are correct. 
A) The close link between personal income and provision of productive resources to others provides individuals with a strong incentive to develop skills. 
B) Income can be taxed away from some and transferred to others without altering the incentive to engage in productive activities. 
C) Holding technology constant,the size of the economic pie available for distribution among economic participants is fixed. 
D) In a democratic setting,the government's tax and spending policies can redistribute income without influencing the size of the economic pie. 
E) Both b and d are correct.

Question 7

Means-tested income transfers refer to

Accepted Answer

A) the average amount of the annual governmental transfers. 
B) transfers that are limited to families with an income below a certain cutoff point. 
C) income transfers that are specifically paid for by the top 1 percent (wealthiest)of tax payers. 
D) none of the above. 
A) the average amount of the annual governmental transfers. 
B) transfers that are limited to families with an income below a certain cutoff point. 
C) income transfers that are specifically paid for by the top 1 percent (wealthiest)of tax payers. 
D) none of the above.

Question 8

Figure 15-1
  
-As shown in Figure 15-1,60 percent of families earned a cumulative share of about ____ of income.

Accepted Answer

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

Question 9

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 10

In a market economy,differences in incomes will

Accepted Answer

A) reflect the relative scarcity of resources. 
B) provide individuals with an incentive to supply resources that are valued by others. 
C) determine the income distribution among market participants. 
D) do all of the above. 
A) reflect the relative scarcity of resources. 
B) provide individuals with an incentive to supply resources that are valued by others. 
C) determine the income distribution among market participants. 
D) do all of the above.

Question 11

Figure 15-1
  
-As shown in Figure 15-1,the perfect equality line is drawn between points

Accepted Answer

A) A and B. 
B) B and D. 
C) A and C along the straight line. 
D) A and C along the curve. 
A) A and B. 
B) B and D. 
C) A and C along the straight line. 
D) A and C along the curve.

Question 12

Which of the following is true of the tax and transfer programs of the United States?

Accepted Answer

A) Tax-transfer programs persistently redistribute income from the rich to the poor. 
B) Social Security,the largest transfer program,redirects income toward the elderly,a group with above-average levels of both income and wealth. 
C) The bulk of agriculture subsidies go to large farmers with above-average incomes. 
D) Taxes generally take a larger share of the income of the poor than is true for those with higher incomes. 
E) Both b and c are true. 
A) Tax-transfer programs persistently redistribute income from the rich to the poor. 
B) Social Security,the largest transfer program,redirects income toward the elderly,a group with above-average levels of both income and wealth. 
C) The bulk of agriculture subsidies go to large farmers with above-average incomes. 
D) Taxes generally take a larger share of the income of the poor than is true for those with higher incomes. 
E) Both b and c are true.

Question 13

Which of the following is true?

Accepted Answer

A) Taxes and transfers generally increase the income share of the bottom quintile of income recipients,while reducing the share of the top group of earners. 
B) In a market economy,the distribution of income is determined by the quantity and value of the resources supplied by the various individuals,and nearly half the value of resources owned by the rich was inherited. 
C) Between 1980 and 2009,the income share received by the highest quintile of earners fell,while the share received by the bottom quintile of earners rose. 
D) All of the above are true. 
A) Taxes and transfers generally increase the income share of the bottom quintile of income recipients,while reducing the share of the top group of earners. 
B) In a market economy,the distribution of income is determined by the quantity and value of the resources supplied by the various individuals,and nearly half the value of resources owned by the rich was inherited. 
C) Between 1980 and 2009,the income share received by the highest quintile of earners fell,while the share received by the bottom quintile of earners rose. 
D) All of the above are true.

Question 14

Which of the following is true?

Accepted Answer

A) During any given year,the size of the economic pie available for allocation to individuals is fixed. 
B) When the link between worker productivity and reward is weakened,individuals have less incentive to create income. 
C) If they reduce income inequality,taxes and income transfers will not alter the incentive of individuals to engage in productive activity. 
D) The total output of an economy is unrelated to the distribution of income. 
A) During any given year,the size of the economic pie available for allocation to individuals is fixed. 
B) When the link between worker productivity and reward is weakened,individuals have less incentive to create income. 
C) If they reduce income inequality,taxes and income transfers will not alter the incentive of individuals to engage in productive activity. 
D) The total output of an economy is unrelated to the distribution of income.

Question 15

Which of the following programs is most clearly advantageous to those with lower levels of income?

Accepted Answer

A) farm subsidy programs 
B) the Social Security retirement program 
C) the Earned Income Tax Credit 
D) credit subsidies provided by the Import-Export bank to business firms that sell goods abroad 
A) farm subsidy programs 
B) the Social Security retirement program 
C) the Earned Income Tax Credit 
D) credit subsidies provided by the Import-Export bank to business firms that sell goods abroad

Question 16

This year,Sue earned $2,000 more than last year.As a result,she received $500 less in government transfers.Therefore,Sue's implicit marginal tax rate is

Accepted Answer

A) 15 percent. 
B) 25 percent. 
C) 40 percent. 
D) 75 percent. 
A) 15 percent. 
B) 25 percent. 
C) 40 percent. 
D) 75 percent.

Exam 28: Income Inequality and Poverty

Figure 15-1 -As shown in Figure 15-1,80 percent of families earned a cumulative share of about ____ of income.

Which of the following is true?

Compared to those with higher incomes,low-income families are more likely to

Since 1980,income inequality (as measured by the income share of the highest 20 percent of income earners relative to the lowest 20 percent)has

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

Which of the following is true?

Means-tested income transfers refer to

Figure 15-1 -As shown in Figure 15-1,60 percent of families earned a cumulative share of about ____ of income.

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

In a market economy,differences in incomes will

Figure 15-1 -As shown in Figure 15-1,the perfect equality line is drawn between points

Which of the following is true of the tax and transfer programs of the United States?

Which of the following is true?

Which of the following is true?

Which of the following programs is most clearly advantageous to those with lower levels of income?

This year,Sue earned $2,000 more than last year.As a result,she received $500 less in government transfers.Therefore,Sue's implicit marginal tax rate is

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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

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

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Modern Macroeconomics and Monetary Policy

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Consumer Choice and Elasticity

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The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

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Lessons From the Great Depression

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