Question 1

In-kind transfers are transfers to the poor

Accepted Answer

A)  in the form of goods and services rather than cash. 
B)  in the form of goods,services,and cash. 
C)  from private charitable organizations only. 
D)  from the federal government only. 
A)  in the form of goods and services rather than cash. 
B)  in the form of goods,services,and cash. 
C)  from private charitable organizations only. 
D)  from the federal government only.

Question 2

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Accepted Answer

A high marginal tax rate exists on welfa

Question 3

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income)- 10,000.A family that earns an income of $30,000 will

Accepted Answer

A)  neither pay taxes nor receive an income subsidy. 
B)  receive an income subsidy of $500. 
C)  pay $1,000 in taxes. 
D)  pay $600 in taxes. 
A)  neither pay taxes nor receive an income subsidy. 
B)  receive an income subsidy of $500. 
C)  pay $1,000 in taxes. 
D)  pay $600 in taxes.

Question 4

The percentage of families with incomes below the poverty line

Accepted Answer

A)  is defined as the 10 percent of U.S.households with the lowest incomes. 
B)  is known as the poverty rate. 
C)  is known as the unemployment rate. 
D)  rises as the general income level rises. 
A)  is defined as the 10 percent of U.S.households with the lowest incomes. 
B)  is known as the poverty rate. 
C)  is known as the unemployment rate. 
D)  rises as the general income level rises.

Question 5

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Accepted Answer

A)  Trade can make everyone better off. 
B)  The cost of something is what you give up to get it. 
C)  People face trade-offs. 
D)  Markets are usually a good way to organize economic activity. 
A)  Trade can make everyone better off. 
B)  The cost of something is what you give up to get it. 
C)  People face trade-offs. 
D)  Markets are usually a good way to organize economic activity.

Question 6

When the government redistributes income to achieve greater equality,it

Accepted Answer

A)  distorts incentives. 
B)  improves efficiency. 
C)  focuses on middle income brackets. 
D)  relies on foreign aid to help balance the budget. 
A)  distorts incentives. 
B)  improves efficiency. 
C)  focuses on middle income brackets. 
D)  relies on foreign aid to help balance the budget.

Question 7

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 * Income)- $10,000.
Compute the tax that would be owed given each level of income. 
a.$120,000
b.$90,000
c.$60,000
d.$30,000
e.$0

Accepted Answer

a.$30,000
b.$20,000
c.$10,000

Question 8

Critics of the minimum wage argue that

Accepted Answer

A)  labor demand is inelastic so firms can adjust production. 
B)  too many older employees benefit at the expense of teenage workers. 
C)  many minimum-wage earners are teenagers from middle-class families. 
D)  All of the above are correct. 
A)  labor demand is inelastic so firms can adjust production. 
B)  too many older employees benefit at the expense of teenage workers. 
C)  many minimum-wage earners are teenagers from middle-class families. 
D)  All of the above are correct.

Question 9

Which of the following is an example of a welfare program?

Accepted Answer

A)  Temporary Assistance for Needy Families (TANF). 
B)  Capital Gains Tax (CGT). 
C)  Life Cycle Transfers (LCT). 
D)  North American Free Trade Agreement (NAFT
A) . 
A)  Temporary Assistance for Needy Families (TANF). 
B)  Capital Gains Tax (CGT). 
C)  Life Cycle Transfers (LCT). 
D)  North American Free Trade Agreement (NAFT
A) .

Question 10

Libertarians believe that in considering economic fairness,one should primarily consider the

Accepted Answer

A)  outcome of the system. 
B)  process by which outcomes arise. 
C)  maximin criterion. 
D)  maximizing total social utility. 
A)  outcome of the system. 
B)  process by which outcomes arise. 
C)  maximin criterion. 
D)  maximizing total social utility.

Question 11

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Accepted Answer

A)  can never be funded through taxes on labor income. 
B)  must always achieve a full egalitarian society. 
C)  only benefits the middle class. 
D)  always falls short of a fully egalitarian society. 
A)  can never be funded through taxes on labor income. 
B)  must always achieve a full egalitarian society. 
C)  only benefits the middle class. 
D)  always falls short of a fully egalitarian society.

Question 12

Figure 20-2
Poverty Rates by Age  
-Refer to Figure 20-2.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Accepted Answer

A)  declined,while the percentage of children under age 18 in poverty has also declined. 
B)  declined,while the percentage of children under age 18 in poverty has increased. 
C)  increased,while the percentage of children under age 18 in poverty has declined. 
D)  increased,while the percentage of children under age 18 in poverty has also increased. 
A)  declined,while the percentage of children under age 18 in poverty has also declined. 
B)  declined,while the percentage of children under age 18 in poverty has increased. 
C)  increased,while the percentage of children under age 18 in poverty has declined. 
D)  increased,while the percentage of children under age 18 in poverty has also increased.

Question 13

Assume that the government proposes a negative income tax that calculates taxes owed by the formula,Taxes Owed = (a *Income)- 
a.What is the value for "a"?
b.What is the value for "b"?
b.A family with an income of $40,000 pays $5,000 in taxes,and a family with an income of $12,000 receives an income subsidy of $2,000.
c.What is the tax liability of a family with an income of $50,000?
d.At what level of income will a family neither pay taxes,nor receive an income subsidy?

Accepted Answer

a.0.25 or

Question 14

Which of the following statements is correct?

Accepted Answer

A)  An advantage of a minimum-wage law is that it may benefit unskilled workers who are not low-income workers. 
B)  An advantage of a negative income tax program is that a poor person who chooses not to work many hours would receive a cash benefit. 
C)  An advantage of an Earned Income Tax Credit (EIT
C) is that a person who is unable to work due to a disability does not benefit from the program. 
D)  Following the reform of welfare in 1996 there was a large decrease in the welfare rolls. 
A)  An advantage of a minimum-wage law is that it may benefit unskilled workers who are not low-income workers. 
B)  An advantage of a negative income tax program is that a poor person who chooses not to work many hours would receive a cash benefit. 
C)  An advantage of an Earned Income Tax Credit (EIT
C) is that a person who is unable to work due to a disability does not benefit from the program. 
D)  Following the reform of welfare in 1996 there was a large decrease in the welfare rolls.

Question 15

Explain the relationship between labor earnings and the distribution of income.

Accepted Answer

A person's earnings depend on the supply

Question 16

According to a utilitarian,total social utility will be maximized when marginal dollars are distributed to the people with the

Accepted Answer

A)  lowest marginal utility of income. 
B)  highest marginal utility of income. 
C)  highest total utility from their income. 
D)  most productive labor resources. 
A)  lowest marginal utility of income. 
B)  highest marginal utility of income. 
C)  highest total utility from their income. 
D)  most productive labor resources.

Question 17

Susan won $2,000 at the blackjack tables on her birthday.Her winnings are an example of

Accepted Answer

A)  permanent income. 
B)  life-cycle income. 
C)  transitory income. 
D)  an in-kind transfer. 
A)  permanent income. 
B)  life-cycle income. 
C)  transitory income. 
D)  an in-kind transfer.

Question 18

Economists who study economic mobility have found that,if a father earns 20 percent above his generation's average income,his son will most likely earn

Accepted Answer

A)  an income equal to his generation's average income. 
B)  8 percent above his generation's average income. 
C)  5 percent below his generation's average income. 
D)  3 percent above his generation's average income. 
A)  an income equal to his generation's average income. 
B)  8 percent above his generation's average income. 
C)  5 percent below his generation's average income. 
D)  3 percent above his generation's average income.

Question 19

Economists study poverty and income inequality in order to answer which of the following questions?

Accepted Answer

A)  What are people's wages? 
B)  How does labor-force experience affect wages? 
C)  How much inequality is there in society? 
D)  How do people adjust their behavior due to taxation? 
A)  What are people's wages? 
B)  How does labor-force experience affect wages? 
C)  How much inequality is there in society? 
D)  How do people adjust their behavior due to taxation?

Question 20

Which of the following is correct?

Accepted Answer

A)  Incomes tend to be high for young workers. 
B)  Incomes tend to rise sharply at retirement. 
C)  Incomes tend to peak at around age 50. 
D)  Current income is more equally distributed than permanent income. 
A)  Incomes tend to be high for young workers. 
B)  Incomes tend to rise sharply at retirement. 
C)  Incomes tend to peak at around age 50. 
D)  Current income is more equally distributed than permanent income.

Exam 20: Income Inequality and Poverty

In-kind transfers are transfers to the poor

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income)- 10,000.A family that earns an income of $30,000 will

The percentage of families with incomes below the poverty line

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

When the government redistributes income to achieve greater equality,it

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 * Income)- $10,000. Compute the tax that would be owed given each level of income. a.$120,000 b.$90,000 c.$60,000 d.$30,000 e.$0

Critics of the minimum wage argue that

Which of the following is an example of a welfare program?

Libertarians believe that in considering economic fairness,one should primarily consider the

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Which of the following statements is correct?

Explain the relationship between labor earnings and the distribution of income.

According to a utilitarian,total social utility will be maximized when marginal dollars are distributed to the people with the

Susan won $2,000 at the blackjack tables on her birthday.Her winnings are an example of

Economists who study economic mobility have found that,if a father earns 20 percent above his generation's average income,his son will most likely earn

Economists study poverty and income inequality in order to answer which of the following questions?

Which of the following is correct?

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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