Question 1

Income inequality is something that occurs in all countries.

Accepted Answer

A) True 
 B)False

Question 2

The utilitarian case for redistributing income is based on the assumption of:

Accepted Answer

A)  a notion of fairness engendered by equality 
B)  diminishing marginal utility 
C)  rising marginal utility 
D)  collective consensus 
A)  a notion of fairness engendered by equality 
B)  diminishing marginal utility 
C)  rising marginal utility 
D)  collective consensus

Question 3

Which of the following will occur when government policies to make income distribution more equitable? (i) total utility is constant
(ii) the allocation of resources is less efficient
(iii) incentives are distorted

Accepted Answer

A)  (i) 
B)  (i) and (ii) 
C)  (ii) and (iii) 
D)  (i) and (iii) 
A)  (i) 
B)  (i) and (ii) 
C)  (ii) and (iii) 
D)  (i) and (iii)

Question 4

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has 'leaky buckets' at its disposal:

Accepted Answer

A)  full egalitarian policies will always dominate competing policy options 
B)  affirmative action programs are doomed to failure 
C)  equality of economic opportunity is an unattainable goal 
D)  it should not try to reach complete equality in income 
A)  full egalitarian policies will always dominate competing policy options 
B)  affirmative action programs are doomed to failure 
C)  equality of economic opportunity is an unattainable goal 
D)  it should not try to reach complete equality in income

Question 5

Discuss the life cycle hypothesis of income distribution.

Accepted Answer

The life cycle hypothesis takes into acc

Question 6

Minimum-wage legislation is likely to be least effective in reducing poverty when the demand for labour is inelastic.

Accepted Answer

A) True 
 B)False

Question 7

Many policies to help the poor are effective at encouraging the poor to escape from poverty.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following factors is correlated with poverty? (i) age
(ii) race
(iii) family composition

Accepted Answer

A)  (i) and (ii) 
B)  (i) and (iii) 
C)  (ii) and (iii) 
D)  (i), (ii) and (iii) 
A)  (i) and (ii) 
B)  (i) and (iii) 
C)  (ii) and (iii) 
D)  (i), (ii) and (iii)

Question 9

Saving and borrowing behaviour is indicative of a family:

Accepted Answer

A)  that has a difficult time balancing its standard of living 
B)  that is most likely to be on the upper end of the income distribution 
C)  adjusting its standard of living to reflect transitory changes in income 
D)  that is most likely to be poor 
A)  that has a difficult time balancing its standard of living 
B)  that is most likely to be on the upper end of the income distribution 
C)  adjusting its standard of living to reflect transitory changes in income 
D)  that is most likely to be poor

Question 10

A family's ability to buy goods and services depends largely on its:

Accepted Answer

A)  permanent income 
B)  transitory income 
C)  lifetime income 
D)  in-kind transfers 
A)  permanent income 
B)  transitory income 
C)  lifetime income 
D)  in-kind transfers

Question 11

In-kind transfers are:

Accepted Answer

A)  non-monetary goods and services given to the poor 
B)  benefits that are transferred to the rich 
C)  provided by kindly and caring people 
D)  obtained primarily by the middle class 
A)  non-monetary goods and services given to the poor 
B)  benefits that are transferred to the rich 
C)  provided by kindly and caring people 
D)  obtained primarily by the middle class

Question 12

Are there problems in using an absolute scale to measure poverty? If so, carefully explain what these problems are.

Accepted Answer

The problems here include whether expend

Question 13

According to utilitarians, the ultimate objective of private and public actions is to:

Accepted Answer

A)  ensure an egalitarian distribution of income 
B)  provide for the betterment of the poor 
C)  maximise the sum of individual utility 
D)  enhance the income of the rich 
A)  ensure an egalitarian distribution of income 
B)  provide for the betterment of the poor 
C)  maximise the sum of individual utility 
D)  enhance the income of the rich

Question 14

Which of the following statements about a negative income tax system are true? (i) it would eliminate tax progressivity
(ii) it would collect more tax from high-income households
(iii) it would give transfers to low-income households

Accepted Answer

A)  (i) only 
B)  (i) and (ii) 
C)  (i) and (iii) 
D)  (ii) and (iii) 
A)  (i) only 
B)  (i) and (ii) 
C)  (i) and (iii) 
D)  (ii) and (iii)

Question 15

Rawls would determine the distribution of income as if we were behind a veil of ignorance that prevented us from knowing our own stations in life.

Accepted Answer

A) True 
 B)False

Question 16

In general, which of the following would libertarians conclude is more important than equality?

Accepted Answer

A)  income 
B)  entrepreneurial compensation 
C)  capital compensation 
D)  opportunity 
A)  income 
B)  entrepreneurial compensation 
C)  capital compensation 
D)  opportunity

Question 17

Present the basic premise of the life cycle theory and discuss why it is used to dispel concerns about an unequal income distribution.

Accepted Answer

The life cycle theory claims that spendi

Question 18

Which of the following are common criticisms of government programs designed to assist the poor? (i) they create incentives for people to become 'needy'
(ii) those who receive assistance rarely meet the criterion for eligibility
(iii) they typically account for a majority of annual government expenditures

Accepted Answer

A)  (i) only 
B)  (i) and (ii) 
C)  (i) and (iii) 
D)  (ii) and (iii) 
A)  (i) only 
B)  (i) and (ii) 
C)  (i) and (iii) 
D)  (ii) and (iii)

Question 19

A comparison of measures of household income equality across countries:

Accepted Answer

A)  reveals the structure of income accounting procedures 
B)  is difficult due to differences in how data are collected 
C)  is impossible, since each country measures income in a different currency 
D)  is relatively simple since international agreements require countries to standardise their income accounting procedures 
A)  reveals the structure of income accounting procedures 
B)  is difficult due to differences in how data are collected 
C)  is impossible, since each country measures income in a different currency 
D)  is relatively simple since international agreements require countries to standardise their income accounting procedures

Question 20

A person's earnings depend on:

Accepted Answer

A)  how well the economy is doing 
B)  whether or not the economy is experiencing inflation 
C)  the supply and demand for that person's labour 
D)  how much profit that person's employer is able to make 
A)  how well the economy is doing 
B)  whether or not the economy is experiencing inflation 
C)  the supply and demand for that person's labour 
D)  how much profit that person's employer is able to make

Exam 21: Income Inequity and Poverty

Income inequality is something that occurs in all countries.

The utilitarian case for redistributing income is based on the assumption of:

Which of the following will occur when government policies to make income distribution more equitable? (i) total utility is constant (ii) the allocation of resources is less efficient (iii) incentives are distorted

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has 'leaky buckets' at its disposal:

Discuss the life cycle hypothesis of income distribution.

Minimum-wage legislation is likely to be least effective in reducing poverty when the demand for labour is inelastic.

Many policies to help the poor are effective at encouraging the poor to escape from poverty.

Which of the following factors is correlated with poverty? (i) age (ii) race (iii) family composition

Saving and borrowing behaviour is indicative of a family:

A family's ability to buy goods and services depends largely on its:

In-kind transfers are:

Are there problems in using an absolute scale to measure poverty? If so, carefully explain what these problems are.

According to utilitarians, the ultimate objective of private and public actions is to:

Which of the following statements about a negative income tax system are true? (i) it would eliminate tax progressivity (ii) it would collect more tax from high-income households (iii) it would give transfers to low-income households

Rawls would determine the distribution of income as if we were behind a veil of ignorance that prevented us from knowing our own stations in life.

In general, which of the following would libertarians conclude is more important than equality?

Present the basic premise of the life cycle theory and discuss why it is used to dispel concerns about an unequal income distribution.

A comparison of measures of household income equality across countries:

A person's earnings depend on:

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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