Question 1

Which of the following groups are overrepresented among those with low incomes?

Accepted Answer

A) youthful inexperienced workers 
B) college students working on graduate degrees 
C) single-parent families 
D) all of the above 
A) youthful inexperienced workers 
B) college students working on graduate degrees 
C) single-parent families 
D) all of the above

Question 2

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 3

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 4

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 5

If complete equality of income were legislated, which of the following would economics predict?

Accepted Answer

A) People would become richer. 
B) Society would gain utility from the extra goods produced. 
C) Individuals would willingly work longer hours and thus produce more. 
D) The incentive to produce and perform efficiently would be virtually eliminated. 
A) People would become richer. 
B) Society would gain utility from the extra goods produced. 
C) Individuals would willingly work longer hours and thus produce more. 
D) The incentive to produce and perform efficiently would be virtually eliminated.

Question 6

Compared to high-income families, low-income families tend to have

Accepted Answer

A) more earners per family. 
B) fewer persons per family. 
C) more full-time workers per family. 
D) both b and c. 
A) more earners per family. 
B) fewer persons per family. 
C) more full-time workers per family. 
D) both b and c.

Question 7

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 8

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 9

Which of the following is true?

Accepted Answer

A) The best distribution of income can be determined objectively. 
B) The transfer of income from one group to another is costly; it will generally reduce total output. 
C) Positive economics can determine the variation in incomes that would be best for an economy. 
D) The fairness of an income distribution is determined by its pattern (the measured degree of income inequality). 
E) All of the above are true. 
A) The best distribution of income can be determined objectively. 
B) The transfer of income from one group to another is costly; it will generally reduce total output. 
C) Positive economics can determine the variation in incomes that would be best for an economy. 
D) The fairness of an income distribution is determined by its pattern (the measured degree of income inequality). 
E) All of the above are true.

Question 10

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 11

Data suggest that the large increase in government spending on income transfers over the past three decades has been accompanied by

Accepted Answer

A) a reduced poverty rate for the nonelderly. 
B) a more equal distribution of income. 
C) fewer single-parent families because a married couple receives benefits twice as large. 
D) none of the above. 
A) a reduced poverty rate for the nonelderly. 
B) a more equal distribution of income. 
C) fewer single-parent families because a married couple receives benefits twice as large. 
D) none of the above.

Question 12

Which of the following contributed most to the large increases in poverty since 1960?

Accepted Answer

A) increases in air pollution and other externalities 
B) federal government budget deficits 
C) the increase in the number of elderly individuals 
D) rising poverty rates among households headed by females 
E) the increase in the number of households headed by females 
A) increases in air pollution and other externalities 
B) federal government budget deficits 
C) the increase in the number of elderly individuals 
D) rising poverty rates among households headed by females 
E) the increase in the number of households headed by females

Question 13

Which of the following is accurate regarding income statistics?

Accepted Answer

A) Current annual income is also an accurate indicator of relative economic status over a longer period, such as a decade or lifetime. 
B) Inequalities of income observed at one point in time with annual income data overstate the degree of true income inequality in lifetime income. 
C) Recent studies indicate that the relative income position of a family generally determines the relative income position of their children and grandchildren. 
D) High-income earners generally maintain their status year after year, whereas 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 over a longer period, such as a decade or lifetime. 
B) Inequalities of income observed at one point in time with annual income data overstate the degree of true income inequality in lifetime income. 
C) Recent studies indicate that the relative income position of a family generally determines the relative income position of their children and grandchildren. 
D) High-income earners generally maintain their status year after year, whereas those with low current incomes tend to stay poor year after year.

Question 14

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 15

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 16

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 17

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 18

Evaluate this sentence, "The best way to get rid of poverty is to increase government expenditures on welfare programs."

Accepted Answer

A) This sentence is inherently true. By providing the poor with more money they will no longer remain in poverty. 
B) This sentence is true. Everyone would be better off if we increased government transfer programs. 
C) This sentence is false. Increasing transfer benefits like welfare will lower the opportunity cost of making decisions that can lead to poverty 
D) This sentence is false. Increasing government expenditures will only be harmful to those in poverty. 
A) This sentence is inherently true. By providing the poor with more money they will no longer remain in poverty. 
B) This sentence is true. Everyone would be better off if we increased government transfer programs. 
C) This sentence is false. Increasing transfer benefits like welfare will lower the opportunity cost of making decisions that can lead to poverty 
D) This sentence is false. Increasing government expenditures will only be harmful to those in poverty.

Question 19

Compared to low-income families, upper-income families are likely to

Accepted Answer

A) be larger in size. 
B) be headed by an adult of prime working age (between 35 years and 64 years). 
C) have more than one family member working. 
D) be all of the above. 
A) be larger in size. 
B) be headed by an adult of prime working age (between 35 years and 64 years). 
C) have more than one family member working. 
D) be all of the above.

Question 20

This year, Tammy earned $15,000 and she paid 15 percent in income and payroll taxes. She qualified for Medicaid and food stamps. For every $100 that she earns, Tammy loses $35 in Medicaid benefits and $15 in food stamps. Tammy faces an effective marginal tax rate of

Accepted Answer

A) 15 percent. 
B) 35 percent. 
C) 50 percent. 
D) 65 percent. 
A) 15 percent. 
B) 35 percent. 
C) 50 percent. 
D) 65 percent.

Exam 15: Income Inequality and Poverty

Which of the following groups are overrepresented among those with low incomes?

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

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

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

If complete equality of income were legislated, which of the following would economics predict?

Compared to high-income families, low-income families tend to have

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

In a market economy, differences in incomes will

Which of the following is true?

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

Data suggest that the large increase in government spending on income transfers over the past three decades has been accompanied by

Which of the following contributed most to the large increases in poverty since 1960?

Which of the following is accurate regarding income statistics?

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?

Which of the following is true?

Since 1970, income inequality in the United States has

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

Evaluate this sentence, "The best way to get rid of poverty is to increase government expenditures on welfare programs."

Compared to low-income families, upper-income families are likely to

This year, Tammy earned $15,000 and she paid 15 percent in income and payroll taxes. She qualified for Medicaid and food stamps. For every $100 that she earns, Tammy loses $35 in Medicaid benefits and $15 in food stamps. Tammy faces an effective marginal tax rate of

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: 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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters