Question 1

An imposition of tax by the government for funding welfare programs raises the cost of labor to firms as:

Accepted Answer

A) the demand for labor increases. 
B) the demand for labor decreases. 
C) the supply of labor decreases. 
D) the supply of labor increases. 
E) the opportunity cost of leisure increases. 
A) the demand for labor increases. 
B) the demand for labor decreases. 
C) the supply of labor decreases. 
D) the supply of labor increases. 
E) the opportunity cost of leisure increases.

Question 2

The allocations of goods and services from one group in a society to another are called:

Accepted Answer

A) mutually voluntary exchanges. 
B) in-kind transfers. 
C) grants. 
D) economic rents. 
E) transfer earnings. 
A) mutually voluntary exchanges. 
B) in-kind transfers. 
C) grants. 
D) economic rents. 
E) transfer earnings.

Question 3

The world Lorenz curve coincides with the line of income equality because the average income of the different countries are more or less equal.

Accepted Answer

A) True 
 B)False

Question 4

The horizontal and vertical axes of the Lorenz curve respectively measure:

Accepted Answer

A) total income and total expenditure as cumulative percentages. 
B) total income and total population as cumulative percentages. 
C) total population and total expenditure as cumulative percentages. 
D) total expenditure and total income as cumulative percentages. 
E) total population and total income as cumulative percentages. 
A) total income and total expenditure as cumulative percentages. 
B) total income and total population as cumulative percentages. 
C) total population and total expenditure as cumulative percentages. 
D) total expenditure and total income as cumulative percentages. 
E) total population and total income as cumulative percentages.

Question 5

Which of the following is a cash transfer received from the government?

Accepted Answer

A) Medicaid 
B) Earned Income Tax Credit 
C) Food stamps 
D) Housing assistance 
E) Free education 
A) Medicaid 
B) Earned Income Tax Credit 
C) Food stamps 
D) Housing assistance 
E) Free education

Question 6

If the Gini co-efficient for any economy is 0.85,which of the following statements is true?

Accepted Answer

A) The national income of this economy is more or less equally distributed. 
B) The Lorenz curve for the economy will bow above the line of perfect equality. 
C) The Lorenz curve for the economy will coincide with the line of perfect equality. 
D) The Lorenz curve for the economy will bow down below the line of perfect equality. 
E) The Lorenz curve for the economy will be a rectangle. 
A) The national income of this economy is more or less equally distributed. 
B) The Lorenz curve for the economy will bow above the line of perfect equality. 
C) The Lorenz curve for the economy will coincide with the line of perfect equality. 
D) The Lorenz curve for the economy will bow down below the line of perfect equality. 
E) The Lorenz curve for the economy will be a rectangle.

Question 7

At each point on the line of income equality,the percentage of total population and the percentage of total income are equal.

Accepted Answer

A) True 
 B)False

Question 8

Following are the controversies over how poverty should be measured,except:

Accepted Answer

A) government transfers and other programs are not properly taken into account in the measures of poverty. 
B) the poverty measures do not distinguish among the needs of different individuals. 
C) the concept of poverty line does not draw any distinction between income and purchasing power. 
D) the concept of poverty line does not take into account the expenditure on food by each family. 
E) the income generated in the underground economy are not taken into account. 
A) government transfers and other programs are not properly taken into account in the measures of poverty. 
B) the poverty measures do not distinguish among the needs of different individuals. 
C) the concept of poverty line does not draw any distinction between income and purchasing power. 
D) the concept of poverty line does not take into account the expenditure on food by each family. 
E) the income generated in the underground economy are not taken into account.

Question 9

Unemployment insurance programs provide benefits to permanently unemployed people.

Accepted Answer

A) True 
 B)False

Question 10

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1
 
- Refer to Table 19.1.What percentage of households earn 31.5% of the income?

Accepted Answer

A) Bottom 20% 
B) Top 20% 
C) Bottom 60% 
D) Top 40% 
E) Top 10% 
A) Bottom 20% 
B) Top 20% 
C) Bottom 60% 
D) Top 40% 
E) Top 10%

Question 11

Someone who has the desire to work but has no exceptional abilities and has not acquired the skills necessary for a well-paying job is likely to escape poverty completely.

Accepted Answer

A) True 
 B)False

Question 12

The figure given below shows the Lorenz curves of two countries (Country A and Country B). Figure 19.2
Total income (cumulative percentage)   Total population (cumuative percentage)
-In Figure 19.2,the poorest 60 percent of the population in Country B receive:

Accepted Answer

A) 30 percent of the national income. 
B) 40 percent of the national income. 
C) 60 percent of the national income. 
D) 20 percent of the national income. 
E) 10 percent of the national income. 
A) 30 percent of the national income. 
B) 40 percent of the national income. 
C) 60 percent of the national income. 
D) 20 percent of the national income. 
E) 10 percent of the national income.

Question 13

If everyone had the same income,then the Lorenz curve would:

Accepted Answer

A) be the line of income equality. 
B) bow down below the line of income equality. 
C) be a parallel line lying below the line of income equality. 
D) bow up above the line of income equality. 
E) be a curve that intersects the line of income equality at its mid-point. 
A) be the line of income equality. 
B) bow down below the line of income equality. 
C) be a parallel line lying below the line of income equality. 
D) bow up above the line of income equality. 
E) be a curve that intersects the line of income equality at its mid-point.

Question 14

The diagram that represents how income is distributed among members of a population is known as a(n):

Accepted Answer

A) Indifference curve. 
B) Laffer curve. 
C) Edgeworth box. 
D) Lorenz curve. 
E) Phillips curve 
A) Indifference curve. 
B) Laffer curve. 
C) Edgeworth box. 
D) Lorenz curve. 
E) Phillips curve

Question 15

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1
 
- According to Table 19.1,what percentage of income is received by the top 40% of the population?

Accepted Answer

A) 41.6% 
B) 51.9% 
C) 60.8% 
D) 56.2% 
E) 68.6% 
A) 41.6% 
B) 51.9% 
C) 60.8% 
D) 56.2% 
E) 68.6%

Question 16

Foreign aid at times actually hinders economic growth by creating wrong incentives.

Accepted Answer

A) True 
 B)False

Question 17

Supplementary Security Incomes are provided to those by the U.S.government who:

Accepted Answer

A) regularly pay a social security tax. 
B) are below 65 years of age. 
C) lack the required education to be absorbed in the job market. 
D) earn less than $4,500 per year. 
E) are temporarily unemployed. 
A) regularly pay a social security tax. 
B) are below 65 years of age. 
C) lack the required education to be absorbed in the job market. 
D) earn less than $4,500 per year. 
E) are temporarily unemployed.

Question 18

Transfer programs are so named because they transfer:

Accepted Answer

A) the burden of poverty alleviation from the church to the state. 
B) the poverty from the country side to the city. 
C) the responsibility for maintaining minimum standards of living from the federal government to state governments. 
D) income from the relatively high-income people to relatively low-income people. 
E) the incidence of poverty from predominantly ethnic groups to the majority white population. 
A) the burden of poverty alleviation from the church to the state. 
B) the poverty from the country side to the city. 
C) the responsibility for maintaining minimum standards of living from the federal government to state governments. 
D) income from the relatively high-income people to relatively low-income people. 
E) the incidence of poverty from predominantly ethnic groups to the majority white population.

Question 19

If the income floor for a family of four is $25,000 and the negative income tax rate is 20 percent,the break-even income should be:

Accepted Answer

A) $125,000. 
B) $250,000. 
C) $100,000. 
D) $200,000. 
E) $225,000. 
A) $125,000. 
B) $250,000. 
C) $100,000. 
D) $200,000. 
E) $225,000.

Question 20

The table below shows the monthly income of a family and the fuel assistance received from the government. Table 19.4
  
-Refer to Table 19.4.What is the marginal penalty on working (in terms of reduced fuel assistance) borne by the family when its income rises from $200 to $300?

Accepted Answer

A) $40 
B) $50 
C) $80 
D) $60 
E) $100 
A) $40 
B) $50 
C) $80 
D) $60 
E) $100

Exam 19: Income Distribution,Poverty and Government Policy

An imposition of tax by the government for funding welfare programs raises the cost of labor to firms as:

The allocations of goods and services from one group in a society to another are called:

The world Lorenz curve coincides with the line of income equality because the average income of the different countries are more or less equal.

The horizontal and vertical axes of the Lorenz curve respectively measure:

Which of the following is a cash transfer received from the government?

If the Gini co-efficient for any economy is 0.85,which of the following statements is true?

At each point on the line of income equality,the percentage of total population and the percentage of total income are equal.

Following are the controversies over how poverty should be measured,except:

Unemployment insurance programs provide benefits to permanently unemployed people.

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1 - Refer to Table 19.1.What percentage of households earn 31.5% of the income?

Someone who has the desire to work but has no exceptional abilities and has not acquired the skills necessary for a well-paying job is likely to escape poverty completely.

The figure given below shows the Lorenz curves of two countries (Country A and Country B). Figure 19.2 Total income (cumulative percentage) Total population (cumuative percentage) -In Figure 19.2,the poorest 60 percent of the population in Country B receive:

If everyone had the same income,then the Lorenz curve would:

The diagram that represents how income is distributed among members of a population is known as a(n):

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1 - According to Table 19.1,what percentage of income is received by the top 40% of the population?

Foreign aid at times actually hinders economic growth by creating wrong incentives.

Supplementary Security Incomes are provided to those by the U.S.government who:

Transfer programs are so named because they transfer:

If the income floor for a family of four is $25,000 and the negative income tax rate is 20 percent,the break-even income should be:

The table below shows the monthly income of a family and the fuel assistance received from the government. Table 19.4 -Refer to Table 19.4.What is the marginal penalty on working (in terms of reduced fuel assistance) borne by the family when its income rises from $200 to $300?

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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