Question 1

The largest in-kind transfer received by the poor households in the U.S.is:

Accepted Answer

A) Old-Age,Survivors,and Disability Insurance. 
B) the Head Start special education program for poor children. 
C) Medicaid,which provides long-term medical care for the poor. 
D) the food stamp program,which distributes food coupons to poor households. 
E) Temporary Assistance for Needy Families 
A) Old-Age,Survivors,and Disability Insurance. 
B) the Head Start special education program for poor children. 
C) Medicaid,which provides long-term medical care for the poor. 
D) the food stamp program,which distributes food coupons to poor households. 
E) Temporary Assistance for Needy Families

Question 2

Experiences of Russia and China prove that,greater the governmental intervention in the market,more equal will be the income distribution in the economy.

Accepted Answer

A) True 
 B)False

Question 3

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 example of a progressive tax is the:

Accepted Answer

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

Question 4

A proportional tax tends to:

Accepted Answer

A) reduce income inequality. 
B) increase overall income inequality. 
C) leave the income distribution essentially unchanged. 
D) increase income inequality among the rich. 
E) generate additional tax revenues for the government. 
A) reduce income inequality. 
B) increase overall income inequality. 
C) leave the income distribution essentially unchanged. 
D) increase income inequality among the rich. 
E) generate additional tax revenues for the government.

Question 5

Taxes are one method of funding the poverty alleviation programs by the government.Which of the following is an important impact of taxes?

Accepted Answer

A) Taxes increase workers' incentives to work for longer hours. 
B) Taxes raise the disposable income of the workers. 
C) Imposition of taxes make the government popular among the people. 
D) Taxes reduce the opportunity cost of leisure. 
E) Taxes reduce the demand for labor. 
A) Taxes increase workers' incentives to work for longer hours. 
B) Taxes raise the disposable income of the workers. 
C) Imposition of taxes make the government popular among the people. 
D) Taxes reduce the opportunity cost of leisure. 
E) Taxes reduce the demand for labor.

Question 6

Which of the following is an example of in-kind transfer?

Accepted Answer

A) Social security benefits 
B) Food stamps 
C) Disability pensions 
D) Unemployment compensations 
E) Earned income tax credit 
A) Social security benefits 
B) Food stamps 
C) Disability pensions 
D) Unemployment compensations 
E) Earned income tax credit

Question 7

One of the major causes of economic backwardness in the poor countries is:

Accepted Answer

A) the absence of public goods. 
B) the absence of private property rights. 
C) a lack of government intervention in the market. 
D) the absence of commonly owned resources. 
E) a lack of foreign aid. 
A) the absence of public goods. 
B) the absence of private property rights. 
C) a lack of government intervention in the market. 
D) the absence of commonly owned resources. 
E) a lack of foreign aid.

Question 8

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.Which of the following tax policies is regressive by nature?

Accepted Answer

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

Question 9

Which of the following transfer programs in the U.S.is funded by a national tax but administered by state governments?

Accepted Answer

A) Social security 
B) Veterans' Administration Benefit program 
C) Unemployment insurance 
D) Food stamps 
E) National Guard activities 
A) Social security 
B) Veterans' Administration Benefit program 
C) Unemployment insurance 
D) Food stamps 
E) National Guard activities

Question 10

The 45-degree line splitting the distance between the axes in a Lorenz Curve is the:

Accepted Answer

A) line of equal share of expenditure. 
B) line of equivalent income. 
C) line of income equality. 
D) line of average income. 
E) line of absolute inequality. 
A) line of equal share of expenditure. 
B) line of equivalent income. 
C) line of income equality. 
D) line of average income. 
E) line of absolute inequality.

Question 11

For the negative income tax to eradicate poverty:

Accepted Answer

A) the guaranteed level of income has to be equal to the poverty line. 
B) the break-even income has to be equal to the poverty line. 
C) the negative income tax rate has to equal 50 percent. 
D) the guaranteed level of income has to be equal to the break-even income. 
E) the guaranteed level of income has to be equal to the tax paid. 
A) the guaranteed level of income has to be equal to the poverty line. 
B) the break-even income has to be equal to the poverty line. 
C) the negative income tax rate has to equal 50 percent. 
D) the guaranteed level of income has to be equal to the break-even income. 
E) the guaranteed level of income has to be equal to the tax paid.

Question 12

A proportional tax is a tax whose rate increases as the tax base widens.

Accepted Answer

A) True 
 B)False

Question 13

The measures of absolute poverty:

Accepted Answer

A) are inversely related to the degree of income equality in a country. 
B) are directly related to the degree of income equality in a country. 
C) depend on the prosperity of the poorest 50 percent of population. 
D) determine the degree of income inequality. 
E) are completely independent of the degree of income inequality. 
A) are inversely related to the degree of income equality in a country. 
B) are directly related to the degree of income equality in a country. 
C) depend on the prosperity of the poorest 50 percent of population. 
D) determine the degree of income inequality. 
E) are completely independent of the degree of income inequality.

Question 14

If the Gini coefficient for the United States is 0.47 and that for India is 0.36,which of the following statements is true?

Accepted Answer

A) The U.S.being an industrialized nation has a lower income inequality than India. 
B) The Lorenz curve for the U.S.lies above the Lorenz curve for India. 
C) India in spite of being a developing nation has a lesser income inequality than the U.S. 
D) The Lorenz curve for India would coincide with the line of perfect equality. 
E) The distribution of income in both the economies are equal. 
A) The U.S.being an industrialized nation has a lower income inequality than India. 
B) The Lorenz curve for the U.S.lies above the Lorenz curve for India. 
C) India in spite of being a developing nation has a lesser income inequality than the U.S. 
D) The Lorenz curve for India would coincide with the line of perfect equality. 
E) The distribution of income in both the economies are equal.

Question 15

The figure below shows two Lorenz curves,Y and Z. Figure 19.1  
- In Figure 19.1,which of the following could occur in the short run given the introduction of a regressive income tax?

Accepted Answer

A) The Lorenz curve OZB would shift to OYB. 
B) The Lorenz curve OYB would coincide with the line OXB. 
C) The Lorenz curve OZB would coincide with the line OXB. 
D) The Lorenz curve OYB would coincide with the horizontal axis. 
E) The Lorenz curve would shift from OYB to OZB. 
A) The Lorenz curve OZB would shift to OYB. 
B) The Lorenz curve OYB would coincide with the line OXB. 
C) The Lorenz curve OZB would coincide with the line OXB. 
D) The Lorenz curve OYB would coincide with the horizontal axis. 
E) The Lorenz curve would shift from OYB to OZB.

Question 16

The table given below shows the annual incomes of a family of four and the corresponding transfer incomes. Table 19.3
 
- Refer to Table 19.3.Suppose the government changes the guaranteed income floor to $3,000.What is the new break-even level of income if the negative income tax rate is changed to 20 percent?

Accepted Answer

A) $3,000 
B) $15,000 
C) $6,000 
D) $5,000 
E) $30,000 
A) $3,000 
B) $15,000 
C) $6,000 
D) $5,000 
E) $30,000

Question 17

It has been observed that the most prosperous nations are those which have enjoyed stable democratic governments.This implies there is a link between a history of stable democracy and national well-being.

Accepted Answer

A) True 
 B)False

Question 18

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.Which of the tax policies is an example of a proportional tax?

Accepted Answer

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

Question 19

Income distribution across the world is highly uneven,hence the corresponding Gini coefficient is very small.

Accepted Answer

A) True 
 B)False

Question 20

The farther the Lorenz curve from the line of perfect equality the lower is the income inequality.

Accepted Answer

A) True 
 B)False

Exam 19: Income Distribution,Poverty and Government Policy

The largest in-kind transfer received by the poor households in the U.S.is:

Experiences of Russia and China prove that,greater the governmental intervention in the market,more equal will be the income distribution in the economy.

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 example of a progressive tax is the:

A proportional tax tends to:

Taxes are one method of funding the poverty alleviation programs by the government.Which of the following is an important impact of taxes?

Which of the following is an example of in-kind transfer?

One of the major causes of economic backwardness in the poor countries is:

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.Which of the following tax policies is regressive by nature?

Which of the following transfer programs in the U.S.is funded by a national tax but administered by state governments?

The 45-degree line splitting the distance between the axes in a Lorenz Curve is the:

For the negative income tax to eradicate poverty:

A proportional tax is a tax whose rate increases as the tax base widens.

The measures of absolute poverty:

If the Gini coefficient for the United States is 0.47 and that for India is 0.36,which of the following statements is true?

The figure below shows two Lorenz curves,Y and Z. Figure 19.1 - In Figure 19.1,which of the following could occur in the short run given the introduction of a regressive income tax?

It has been observed that the most prosperous nations are those which have enjoyed stable democratic governments.This implies there is a link between a history of stable democracy and national well-being.

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.Which of the tax policies is an example of a proportional tax?

Income distribution across the world is highly uneven,hence the corresponding Gini coefficient is very small.

The farther the Lorenz curve from the line of perfect equality the lower is the income inequality.

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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