Question 1

Figure 20-2
Poverty Rates by Age  
-Refer to Figure 20-2.In 1968,the percent of elderly aged 65 and over in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D)  is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty. 
A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D)  is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty.

Question 2

In 2005,the poverty rate in the United States was

Accepted Answer

A)  2.5 percent. 
B)  12.6 percent. 
C)  11.1 percent. 
D)  22.4 percent. 
A)  2.5 percent. 
B)  12.6 percent. 
C)  11.1 percent. 
D)  22.4 percent.

Question 3

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

Accepted Answer

A)  People will alter their behaviors. 
B)  Incentives will be distorted. 
C)  Total utility will remain constant. 
D)  The allocation of resources will be less efficient . 
A)  People will alter their behaviors. 
B)  Incentives will be distorted. 
C)  Total utility will remain constant. 
D)  The allocation of resources will be less efficient .

Question 4

The maximin criterion suggests that social policy should

Accepted Answer

A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers. 
A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers.

Question 5

Scenario 20-1
Suppose that a society is made up of five families whose incomes are as follows:
$120,000;$90,000;$30,000;$30,000;and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where the poverty line is $35,000;families earning over $35,000 pay 10% of their income in taxes,and families earning less than $35,000 pay no income tax.
-Raising total utility is the prime objective of which political philosophy?

Accepted Answer

A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  None of the above is correct. 
A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  None of the above is correct.

Question 6

Based on U.S.income data from 2005,the top fifth of all families received

Accepted Answer

A)  the same share of income as the bottom fifth. 
B)  twice as much income as the bottom fifth. 
C)  approximately 5 times more income than the bottom fifth. 
D)  more than 10 times more income than the bottom fifth. 
A)  the same share of income as the bottom fifth. 
B)  twice as much income as the bottom fifth. 
C)  approximately 5 times more income than the bottom fifth. 
D)  more than 10 times more income than the bottom fifth.

Question 7

A commonly-used gauge of poverty is the

Accepted Answer

A)  income inequality rate. 
B)  average income rate. 
C)  poverty rate. 
D)  social inequality rate. 
A)  income inequality rate. 
B)  average income rate. 
C)  poverty rate. 
D)  social inequality rate.

Question 8

Explain the concept of diminishing marginal utility,and describe the role that it plays in the utilitarian argument for the redistribution of income.

Accepted Answer

Diminishing marginal utility refers to t

Question 9

The marketplace allocates resources

Accepted Answer

A)  fairly. 
B)  efficiently. 
C)  to those desiring them least. 
D)  both efficiently and equitably. 
A)  fairly. 
B)  efficiently. 
C)  to those desiring them least. 
D)  both efficiently and equitably.

Question 10

Figure 20-3  
-Refer to Figure 20-3.An effective minimum wage would be set at a level

Accepted Answer

A)  above Wo,and employment would rise above Qo. 
B)  above Wo,and employment would fall below Qo. 
C)  below Wo,and employment would rise above Qo. 
D)  below Wo,and employment would fall below Qo. 
A)  above Wo,and employment would rise above Qo. 
B)  above Wo,and employment would fall below Qo. 
C)  below Wo,and employment would rise above Qo. 
D)  below Wo,and employment would fall below Qo.

Question 11

A common criticism of welfare programs is that they

Accepted Answer

A)  create self-reliant individuals. 
B)  encourage strong family values. 
C)  encourage illegitimate births. 
D)  have increasing benefits over time,in real terms. 
A)  create self-reliant individuals. 
B)  encourage strong family values. 
C)  encourage illegitimate births. 
D)  have increasing benefits over time,in real terms.

Question 12

A negative income tax system would

Accepted Answer

A)  make taxes more regressive. 
B)  sever the link between tax policy and income distribution. 
C)  collect from high-income households and give transfers to low-income households. 
D)  eliminate progressive tax rates. 
A)  make taxes more regressive. 
B)  sever the link between tax policy and income distribution. 
C)  collect from high-income households and give transfers to low-income households. 
D)  eliminate progressive tax rates.

Question 13

In the Temporary Assistance for Needy Families program,most families

Accepted Answer

A)  must have both parents in the home to qualify. 
B)  are female head-of-household families in which the father is absent. 
C)  have adult children with disabilities living at home. 
D)  are ineligible to receive assistance from other support programs. 
A)  must have both parents in the home to qualify. 
B)  are female head-of-household families in which the father is absent. 
C)  have adult children with disabilities living at home. 
D)  are ineligible to receive assistance from other support programs.

Question 14

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Accepted Answer

A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  Welfarism. 
A)  Utilitarianism. 
B)  Liberalism. 
C)  Libertarianism. 
D)  Welfarism.

Question 15

Income mobility studies suggest that poverty

Accepted Answer

A)  cannot be alleviated by privately sponsored anti-poverty programs. 
B)  cannot be alleviated by government sponsored anti-poverty programs. 
C)  is a long-term problem for a relatively large number of families. 
D)  is not a long-term problem for most families. 
A)  cannot be alleviated by privately sponsored anti-poverty programs. 
B)  cannot be alleviated by government sponsored anti-poverty programs. 
C)  is a long-term problem for a relatively large number of families. 
D)  is not a long-term problem for most families.

Question 16

The study by economists Cox and Alm found that the 2006 after-tax income of the richest fifth of U.S.households is

Accepted Answer

A)  equal to the after-tax income of the poorest fifth. 
B)  7 times the after-tax income of the poorest fifth. 
C)  14 times the after-tax income of the poorest fifth. 
D)  21 times the after-tax income of the poorest fifth. 
A)  equal to the after-tax income of the poorest fifth. 
B)  7 times the after-tax income of the poorest fifth. 
C)  14 times the after-tax income of the poorest fifth. 
D)  21 times the after-tax income of the poorest fifth.

Question 17

According to the maximin criterion,income should be transferred from the rich to the poor as long as it

Accepted Answer

A)  raises the well-being of the least fortunate. 
B)  does not alter incentives to work and save. 
C)  promotes an equal distribution of income. 
D)  does not lower the welfare of the elderly. 
A)  raises the well-being of the least fortunate. 
B)  does not alter incentives to work and save. 
C)  promotes an equal distribution of income. 
D)  does not lower the welfare of the elderly.

Question 18

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Accepted Answer

A)  trickle-down effects. 
B)  enhancing market efficiency. 
C)  redistributing income. 
D)  maintaining the status quo income distribution. 
A)  trickle-down effects. 
B)  enhancing market efficiency. 
C)  redistributing income. 
D)  maintaining the status quo income distribution.

Question 19

Figure 20-2
Poverty Rates by Age  
-Refer to Figure 20-2.In 1968,the percent of children under age 18 in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
D)  lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 and over in poverty. 
A)  higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
D)  lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 and over in poverty.

Question 20

Which of the following statements is characteristic of utilitarianism?

Accepted Answer

A)  An extra dollar of income provides higher marginal utility to a poor person than to a rich person. 
B)  Social policies should be created behind a "veil of ignorance." 
C)  Society should strive to maximize the utility of its wealthiest member. 
D)  Equality of opportunity is more important than equality of incomes. 
A)  An extra dollar of income provides higher marginal utility to a poor person than to a rich person. 
B)  Social policies should be created behind a "veil of ignorance." 
C)  Society should strive to maximize the utility of its wealthiest member. 
D)  Equality of opportunity is more important than equality of incomes.

Exam 20: Income Inequality and Poverty

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.In 1968,the percent of elderly aged 65 and over in poverty is

In 2005,the poverty rate in the United States was

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

The maximin criterion suggests that social policy should

Based on U.S.income data from 2005,the top fifth of all families received

A commonly-used gauge of poverty is the

Explain the concept of diminishing marginal utility,and describe the role that it plays in the utilitarian argument for the redistribution of income.

The marketplace allocates resources

Figure 20-3 -Refer to Figure 20-3.An effective minimum wage would be set at a level

A common criticism of welfare programs is that they

A negative income tax system would

In the Temporary Assistance for Needy Families program,most families

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Income mobility studies suggest that poverty

The study by economists Cox and Alm found that the 2006 after-tax income of the richest fifth of U.S.households is

According to the maximin criterion,income should be transferred from the rich to the poor as long as it

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.In 1968,the percent of children under age 18 in poverty is

Which of the following statements is characteristic of utilitarianism?

Ten Principles of 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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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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