Question 1

-Use the above table. What percentage of income is received by the poorest 20% of the population?

Accepted Answer

A)  20 percent 
B)  13.3 percent 
C)  11.1 percent 
D)  7.0 percent 
A)  20 percent 
B)  13.3 percent 
C)  11.1 percent 
D)  7.0 percent C

Question 2

A diagonal straight line on a Lorenz curve represents

Accepted Answer

A)  a perfectly unequal distribution of income (one person has everything). 
B)  a perfectly equal distribution of income. 
C)  a high level of inequality in the distribution of income. 
D)  an oblique distribution of income. 
A)  a perfectly unequal distribution of income (one person has everything). 
B)  a perfectly equal distribution of income. 
C)  a high level of inequality in the distribution of income. 
D)  an oblique distribution of income. B

Question 3

"The typical age-earning cycle provides evidence of economic discrimination by age." Do you agree or disagree? Why?

Accepted Answer

Disagree. The typical age-earning cycle starts with a low income, builds gradually to a peak at around age 50, and then gradually drops until it approaches zero at retirement. The variations of earning by age, however, reflect many economic factors other than age, including work experience and productivity, and the number of hours per week that are worked. Therefore, the age-earning cycle alone is not evidence of age discrimination.

Question 4

All of the following are income in kind EXCEPT

Accepted Answer

A)  government provided housing. 
B)  government provided education. 
C)  tips received by a waitress. 
D)  goods produced in the home. 
A)  government provided housing. 
B)  government provided education. 
C)  tips received by a waitress. 
D)  goods produced in the home.

Question 5

"To each according to what he or she produces" describes the ________ theory of income determination.

Accepted Answer

A)  productivity 
B)  egalitarian 
C)  equity 
D)  needs 
A)  productivity 
B)  egalitarian 
C)  equity 
D)  needs

Question 6

All of the following are income in kind EXCEPT

Accepted Answer

A)  income received from family members. 
B)  services produced in the home. 
C)  government provided food stamps. 
D)  government provided medical aid. 
A)  income received from family members. 
B)  services produced in the home. 
C)  government provided food stamps. 
D)  government provided medical aid.

Question 7

Originally, the threshold income level used to determine official poverty statistics was based on

Accepted Answer

A)  a per capita income of $3000 in 1955 prices. 
B)  the lowest income of the second quartile of families in the country. 
C)  an income three times greater than necessary to purchase a nutritionally adequate diet. 
D)  figures developed by a committee in the American Economic Association. 
A)  a per capita income of $3000 in 1955 prices. 
B)  the lowest income of the second quartile of families in the country. 
C)  an income three times greater than necessary to purchase a nutritionally adequate diet. 
D)  figures developed by a committee in the American Economic Association.

Question 8

Merit is judged by one's ability to produce

Accepted Answer

A)  what is considered useful by society. 
B)  what is considered valuable by society. 
C)  what is considered beneficial to society. 
D)  all of the above 
A)  what is considered useful by society. 
B)  what is considered valuable by society. 
C)  what is considered beneficial to society. 
D)  all of the above

Question 9

Explain the two theories of desired income distribution: the egalitarian principle and the productivity standard.

Accepted Answer

The egalitarian principle suggests that

Question 10

The top 5 percent of health care users in the United States account for

Accepted Answer

A)  30 percent of all health costs. 
B)  over 50 percent of all health costs. 
C)  over 75 percent of all health costs. 
D)  almost 90 percent of all health costs. 
A)  30 percent of all health costs. 
B)  over 50 percent of all health costs. 
C)  over 75 percent of all health costs. 
D)  almost 90 percent of all health costs.

Question 11

Which of the following sources of productivity is the most difficult to acquire?

Accepted Answer

A)  education 
B)  experience 
C)  talent 
D)  training 
A)  education 
B)  experience 
C)  talent 
D)  training

Question 12

Relative poverty

Accepted Answer

A)  has been eliminated in the United States. 
B)  will always be with us. 
C)  has never existed in the United States. 
D)  can be eliminated in the next 20 years. 
A)  has been eliminated in the United States. 
B)  will always be with us. 
C)  has never existed in the United States. 
D)  can be eliminated in the next 20 years.

Question 13

All of the following are criticisms of the Lorenz curve analysis EXCEPT

Accepted Answer

A)  income-in-kind is not figured in. 
B)  the inequality gap is not an issue that economists study. 
C)  different sizes of households are ignored. 
D)  it does not take into consideration lifetime earnings. 
A)  income-in-kind is not figured in. 
B)  the inequality gap is not an issue that economists study. 
C)  different sizes of households are ignored. 
D)  it does not take into consideration lifetime earnings.

Question 14

If a nation's Lorenz curve lies on the 45 degree line of income equality, then

Accepted Answer

A)  more of the nation's income is received by the lowest 20 percent of families than by the highest 20 percent. 
B)  income is unequally distributed. 
C)  more of the nation's income is received by the highest 20 percent of families than by the lowest percent. 
D)  the income received by each 20 percent of families is 20 percent of the total income. 
A)  more of the nation's income is received by the lowest 20 percent of families than by the highest 20 percent. 
B)  income is unequally distributed. 
C)  more of the nation's income is received by the highest 20 percent of families than by the lowest percent. 
D)  the income received by each 20 percent of families is 20 percent of the total income.

Question 15

Which of the following would NOT be considered a determinant of marginal productivity?

Accepted Answer

A)  talent 
B)  gender 
C)  experience 
D)  training 
A)  talent 
B)  gender 
C)  experience 
D)  training

Question 16

Which of the following statements about the Earned Income Tax Credit Program (EITC) program is FALSE?

Accepted Answer

A)  On net the EITC discourages work by low- or moderate- income earners more than it rewards work. 
B)  It provides rebates of Social Security taxes to low-income workers. 
C)  Recipients who receive benefit payments under Social Security are also eligible for SSI. 
D)  It is the largest poverty reduction program in the U.S.. 
A)  On net the EITC discourages work by low- or moderate- income earners more than it rewards work. 
B)  It provides rebates of Social Security taxes to low-income workers. 
C)  Recipients who receive benefit payments under Social Security are also eligible for SSI. 
D)  It is the largest poverty reduction program in the U.S..

Question 17

Which of the following statements is true about income and wealth?

Accepted Answer

A)  Income is a flow measure and wealth is a stock measure. 
B)  Income is a stock measure and wealth is a flow measure. 
C)  Both income and wealth are flow measures. 
D)  Both income and wealth are stock measures. 
A)  Income is a flow measure and wealth is a stock measure. 
B)  Income is a stock measure and wealth is a flow measure. 
C)  Both income and wealth are flow measures. 
D)  Both income and wealth are stock measures.

Question 18

The return on human capital

Accepted Answer

A)  tends to be much greater than the return on physical capital. 
B)  tends to be much lower than the return on physical capital. 
C)  is similar to the return on physical capital. 
D)  cannot be related to the return on physical capital since human capital and physical capital are so different. 
A)  tends to be much greater than the return on physical capital. 
B)  tends to be much lower than the return on physical capital. 
C)  is similar to the return on physical capital. 
D)  cannot be related to the return on physical capital since human capital and physical capital are so different.

Question 19

What is the age-earnings cycle? What is the typical age-earnings profile for a U.S. resident?

Accepted Answer

The age-earnings cycle is the regular ea

Question 20

A major benefit of a health savings account is that it

Accepted Answer

A)  combats moral hazard. 
B)  means more health care services will be demanded. 
C)  eliminates rising health care costs. 
D)  creates the incentive to see a doctor regularly. 
A)  combats moral hazard. 
B)  means more health care services will be demanded. 
C)  eliminates rising health care costs. 
D)  creates the incentive to see a doctor regularly.

Exam 30: Income, Poverty, and Health Care

-Use the above table. What percentage of income is received by the poorest 20% of the population?

A diagonal straight line on a Lorenz curve represents

"The typical age-earning cycle provides evidence of economic discrimination by age." Do you agree or disagree? Why?

All of the following are income in kind EXCEPT

"To each according to what he or she produces" describes the ________ theory of income determination.

All of the following are income in kind EXCEPT

Originally, the threshold income level used to determine official poverty statistics was based on

Merit is judged by one's ability to produce

Explain the two theories of desired income distribution: the egalitarian principle and the productivity standard.

The top 5 percent of health care users in the United States account for

Which of the following sources of productivity is the most difficult to acquire?

Relative poverty

All of the following are criticisms of the Lorenz curve analysis EXCEPT

If a nation's Lorenz curve lies on the 45 degree line of income equality, then

Which of the following would NOT be considered a determinant of marginal productivity?

Which of the following statements about the Earned Income Tax Credit Program (EITC) program is FALSE?

Which of the following statements is true about income and wealth?

The return on human capital

What is the age-earnings cycle? What is the typical age-earnings profile for a U.S. resident?

A major benefit of a health savings account is that it

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