Question 1

At the break-even income level:

Accepted Answer

A) the tax levied on an individual is equal to zero. 
B) the transfer income received by an individual is equal to zero. 
C) the tax taken from an individual is greater than the transfer income received by him. 
D) the tax taken from an individual is equal to the transfer income received by him. 
E) the tax taken from an individual is less than the transfer income received by him. 
A) the tax levied on an individual is equal to zero. 
B) the transfer income received by an individual is equal to zero. 
C) the tax taken from an individual is greater than the transfer income received by him. 
D) the tax taken from an individual is equal to the transfer income received by him. 
E) the tax taken from an individual is less than the transfer income received by him.

Question 2

In order to ensure that the poor countries experience higher levels of economic growth,private property rights and title to property have to be created.

Accepted Answer

A) True 
 B)False

Question 3

Measures which aim at eliminating the income disparity between the rich and the poor affect incentives to work,innovate,take risks,acquire education,and so on.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following refers to per capita income?

Accepted Answer

A) National income divided by number of households 
B) National income divided by number of people 
C) Number of households divided by national income 
D) Number of people divided by national income 
E) Number of people divided by domestic income 
A) National income divided by number of households 
B) National income divided by number of people 
C) Number of households divided by national income 
D) Number of people divided by national income 
E) Number of people divided by domestic income

Question 5

Which of the following is an absolute measure of poverty?

Accepted Answer

A) Gini co-efficient 
B) Per capita income 
C) HiLo ratio 
D) Hoover index 
E) Theil index 
A) Gini co-efficient 
B) Per capita income 
C) HiLo ratio 
D) Hoover index 
E) Theil index

Question 6

If the negative income tax rate is 25 percent and the break-even income of a family of four is $50,000,the guaranteed income floor is:

Accepted Answer

A) $10,000. 
B) $15,000. 
C) $10,500. 
D) $12,500. 
E) $15,500. 
A) $10,000. 
B) $15,000. 
C) $10,500. 
D) $12,500. 
E) $15,500.

Question 7

Which of the following results from the market system of resource allocation?

Accepted Answer

A) Equitable distribution of resources 
B) High opportunity cost of production 
C) Excess supply of goods and services resulting in decreased profits 
D) Unequal distribution of income and wealth 
E) Allocation of the goods and services to them who need them the most 
A) Equitable distribution of resources 
B) High opportunity cost of production 
C) Excess supply of goods and services resulting in decreased profits 
D) Unequal distribution of income and wealth 
E) Allocation of the goods and services to them who need them the most

Question 8

If for each dollar earned,$0.50 is taken out of the transfer received by a family of four,the negative income tax rate is 50 percent.

Accepted Answer

A) True 
 B)False

Question 9

If an individual who earns $20,000 pays $2,000 in taxes and another individual who earns $100,000 pays $10,000 in taxes,then these individuals are being taxed under a _______ tax system.

Accepted Answer

A) toll 
B) regressive 
C) progressive 
D) proportional 
E) negative income 
A) toll 
B) regressive 
C) progressive 
D) proportional 
E) negative income

Question 10

The higher the HiLo ratio,the more the top income quintile earns relative to the bottom quintile.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following tax structures helps in reducing income inequality?

Accepted Answer

A) Proportional tax structure 
B) Regressive tax structure 
C) Indirect tax structure 
D) Progressive tax structure 
E) A combination of proportional and regressive tax structure. 
A) Proportional tax structure 
B) Regressive tax structure 
C) Indirect tax structure 
D) Progressive tax structure 
E) A combination of proportional and regressive tax structure.

Question 12

Assume that any given percentage of the population earns an equal percentage of real GDP.This percentage of population will be represented by:

Accepted Answer

A) a point below the line of income equality. 
B) a line lying below the line of income equality. 
C) a point on the line of income equality. 
D) a line lying above the line of income equality. 
E) a point above the line of income equality. 
A) a point below the line of income equality. 
B) a line lying below the line of income equality. 
C) a point on the line of income equality. 
D) a line lying above the line of income equality. 
E) a point above the line of income equality.

Question 13

The main transfer programs of the U.S.government include each of the following,except:

Accepted Answer

A) social insurance. 
B) cash welfare or public assistance. 
C) in-kind transfers. 
D) veterans' benefits. 
E) employment programs. 
A) social insurance. 
B) cash welfare or public assistance. 
C) in-kind transfers. 
D) veterans' benefits. 
E) employment programs.

Question 14

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2
  
-Refer to Table 19.2.The tax structure which leads to maximum income inequality is:

Accepted Answer

A) Beta. 
B) Alpha. 
C) Eta. 
D) Gamma. 
E) Delta. 
A) Beta. 
B) Alpha. 
C) Eta. 
D) Gamma. 
E) Delta.

Question 15

Income inequality is indicated by a Lorenz curve that:

Accepted Answer

A) bows up,away from the line of income equality. 
B) bows down,away from the line of income equality. 
C) lies parallel to the line of income equality. 
D) coincides with the line of income equality. 
E) approaches the vertical axis. 
A) bows up,away from the line of income equality. 
B) bows down,away from the line of income equality. 
C) lies parallel to the line of income equality. 
D) coincides with the line of income equality. 
E) approaches the vertical axis.

Question 16

Even when legal title is established in the developing countries,it is often difficult to use that title because of the failure of countries to enforce people's ownership of property.

Accepted Answer

A) True 
 B)False

Question 17

The guaranteed transfer income of Angela's family,which consists of her parents and her sister,is $15,000.This implies,if the family earns nothing it will receive a transfer of $15,000.If a negative tax rate of 50 percent is levied,the family's break-even income is:

Accepted Answer

A) $20,000. 
B) $22,500. 
C) $7,500. 
D) $15,000. 
E) $30,000. 
A) $20,000. 
B) $22,500. 
C) $7,500. 
D) $15,000. 
E) $30,000.

Question 18

Suppose all families of four,who earn nothing,are guaranteed a transfer payment of $20,000 and the government levies a negative tax rate of 20 percent.Calculate the income level below which all such families will receive some income benefits.

Accepted Answer

A) $100,000 
B) $50,000 
C) $150,000 
D) $40,000 
E) $80,000 
A) $100,000 
B) $50,000 
C) $150,000 
D) $40,000 
E) $80,000

Question 19

The negative income tax had not gained political acceptability because:

Accepted Answer

A) the politicians favor transfer of dollars rather than in-kind benefits. 
B) it increases the opportunity cost of leisure. 
C) the break-even income level is high. 
D) it raises the labor cost borne by the producers. 
E) it redistributes income from the poor to the rich. 
A) the politicians favor transfer of dollars rather than in-kind benefits. 
B) it increases the opportunity cost of leisure. 
C) the break-even income level is high. 
D) it raises the labor cost borne by the producers. 
E) it redistributes income from the poor to the rich.

Question 20

Those who argue that welfare programs are a drag on the economy are of the view that welfare programs funded by taxes:

Accepted Answer

A) reduce the opportunity cost of labor. 
B) raise the incidence of poverty and income inequality. 
C) raise the incentive to work. 
D) reduce the tax-liability of the tax-payers. 
E) reduce the demand for labor. 
A) reduce the opportunity cost of labor. 
B) raise the incidence of poverty and income inequality. 
C) raise the incentive to work. 
D) reduce the tax-liability of the tax-payers. 
E) reduce the demand for labor.

Exam 19: Income Distribution,Poverty and Government Policy

At the break-even income level:

In order to ensure that the poor countries experience higher levels of economic growth,private property rights and title to property have to be created.

Measures which aim at eliminating the income disparity between the rich and the poor affect incentives to work,innovate,take risks,acquire education,and so on.

Which of the following refers to per capita income?

Which of the following is an absolute measure of poverty?

If the negative income tax rate is 25 percent and the break-even income of a family of four is $50,000,the guaranteed income floor is:

Which of the following results from the market system of resource allocation?

If for each dollar earned,$0.50 is taken out of the transfer received by a family of four,the negative income tax rate is 50 percent.

If an individual who earns $20,000 pays $2,000 in taxes and another individual who earns $100,000 pays $10,000 in taxes,then these individuals are being taxed under a _______ tax system.

The higher the HiLo ratio,the more the top income quintile earns relative to the bottom quintile.

Which of the following tax structures helps in reducing income inequality?

Assume that any given percentage of the population earns an equal percentage of real GDP.This percentage of population will be represented by:

The main transfer programs of the U.S.government include each of the following,except:

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2 -Refer to Table 19.2.The tax structure which leads to maximum income inequality is:

Income inequality is indicated by a Lorenz curve that:

Even when legal title is established in the developing countries,it is often difficult to use that title because of the failure of countries to enforce people's ownership of property.

The guaranteed transfer income of Angela's family,which consists of her parents and her sister,is $15,000.This implies,if the family earns nothing it will receive a transfer of $15,000.If a negative tax rate of 50 percent is levied,the family's break-even income is:

Suppose all families of four,who earn nothing,are guaranteed a transfer payment of $20,000 and the government levies a negative tax rate of 20 percent.Calculate the income level below which all such families will receive some income benefits.

The negative income tax had not gained political acceptability because:

Those who argue that welfare programs are a drag on the economy are of the view that welfare programs funded by taxes:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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