Question 1

Which of the following statements is correct?

Accepted Answer

A)  Followers of the liberalism political philosophy believe that society should maximize the total of individual utilities. 
B)  The poverty line is adjusted for regional differences in the costs of raising children. 
C)  One advantage to the Earned Income Tax Credit (EIT
C) is that it benefits the working poor. 
D)  When family incomes rise in poor countries,young children are more likely to be taken out of school to work on family farms. 
A)  Followers of the liberalism political philosophy believe that society should maximize the total of individual utilities. 
B)  The poverty line is adjusted for regional differences in the costs of raising children. 
C)  One advantage to the Earned Income Tax Credit (EIT
C) is that it benefits the working poor. 
D)  When family incomes rise in poor countries,young children are more likely to be taken out of school to work on family farms.

Question 2

An example of an in-kind transfer to the poor is

Accepted Answer

A)  the negative income tax. 
B)  the Earned Income Tax Credit (EIT
C) . 
C)  Medicaid. 
D)  Temporary Assistance for Needy Families (TANF). 
A)  the negative income tax. 
B)  the Earned Income Tax Credit (EIT
C) . 
C)  Medicaid. 
D)  Temporary Assistance for Needy Families (TANF).

Question 3

When designing public policies,which income group would philosopher John Rawls argue needs the most attention?

Accepted Answer

A)  Individuals located in the bottom fifth of the income distribution. 
B)  Individuals located at the average income level.. 
C)  Individuals located in the top fifth of the income distribution. 
D)  Individuals located in the top five percent of the income distribution. 
A)  Individuals located in the bottom fifth of the income distribution. 
B)  Individuals located at the average income level.. 
C)  Individuals located in the top fifth of the income distribution. 
D)  Individuals located in the top five percent of the income distribution.

Question 4

Free trade and economic growth have reduced poverty worldwide.

Accepted Answer

A) True 
 B)False

Question 5

According to the doctrine of liberalism,principles of justice are the result of

Accepted Answer

A)  fair agreement and bargain. 
B)  command-and-control policies. 
C)  domination of the powerful by the weak. 
D)  workers owning the factors of production. 
A)  fair agreement and bargain. 
B)  command-and-control policies. 
C)  domination of the powerful by the weak. 
D)  workers owning the factors of production.

Question 6

An example of a transitory change in income is the

Accepted Answer

A)  annual cost of living adjustment to your salary. 
B)  increase in income that results from a job promotion linked to your education. 
C)  increase in income of California orange growers that results from an orange-killing frost in Florida. 
D)  All of the above are correct. 
A)  annual cost of living adjustment to your salary. 
B)  increase in income that results from a job promotion linked to your education. 
C)  increase in income of California orange growers that results from an orange-killing frost in Florida. 
D)  All of the above are correct.

Question 7

Which of the following is not correct?

Accepted Answer

A)  Poverty is correlated with race. 
B)  Poverty is correlated with age. 
C)  Poverty is correlated with family composition. 
D)  Poverty is correlated with country of origin. 
A)  Poverty is correlated with race. 
B)  Poverty is correlated with age. 
C)  Poverty is correlated with family composition. 
D)  Poverty is correlated with country of origin.

Question 8

A goal of libertarians is to provide citizens with equal opportunities rather than to ensure equal outcomes.

Accepted Answer

A) True 
 B)False

Question 9

Binding minimum-wage laws

Accepted Answer

A)  are most effective at alleviating poverty when labor demand is highly elastic. 
B)  force a market imbalance between the supply and demand for labor. 
C)  increase the efficiency of labor markets. 
D)  are typically associated with a rise in employment among the poor. 
A)  are most effective at alleviating poverty when labor demand is highly elastic. 
B)  force a market imbalance between the supply and demand for labor. 
C)  increase the efficiency of labor markets. 
D)  are typically associated with a rise in employment among the poor.

Question 10

Which of the following is not a reason given by economist Tyler Cowen for increased income inequality?

Accepted Answer

A)  Higher income inequality among older populations than younger populations. 
B)  Lower in-kind transfers made by governments. 
C)  A larger number of educated people in the U.S.population. 
D)  The increasing numbers of older people in the U.S.population overall. 
A)  Higher income inequality among older populations than younger populations. 
B)  Lower in-kind transfers made by governments. 
C)  A larger number of educated people in the U.S.population. 
D)  The increasing numbers of older people in the U.S.population overall.

Question 11

Which of the following statements is not correct?

Accepted Answer

A)  An advantage of an in-kind transfer is that it prevents an alcoholic from spending a cash benefit on alcohol. 
B)  An advantage of the Supplemental Security Income (SSI)program is that it benefits the sick and disabled. 
C)  An advantage of a negative income tax program is that it encourages the poor to work in order to be eligible. 
D)  An advantage of a minimum wage law is that it benefits some unskilled workers. 
A)  An advantage of an in-kind transfer is that it prevents an alcoholic from spending a cash benefit on alcohol. 
B)  An advantage of the Supplemental Security Income (SSI)program is that it benefits the sick and disabled. 
C)  An advantage of a negative income tax program is that it encourages the poor to work in order to be eligible. 
D)  An advantage of a minimum wage law is that it benefits some unskilled workers.

Question 12

Since 1959 the United States' income distribution has become more equal.

Accepted Answer

A) True 
 B)False

Question 13

A government's policy of redistributing income makes the income distribution

Accepted Answer

A)  more equal,distorts incentives,alters behavior,and makes the allocation of resources more efficient. 
B)  more equal,distorts incentives,alters behavior,and makes the allocation of resources less efficient. 
C)  less equal,distorts incentives,alters behavior,and makes the allocation of resources more efficient. 
D)  less equal,distorts incentives,alters behavior,and makes the allocation of resources less efficient. 
A)  more equal,distorts incentives,alters behavior,and makes the allocation of resources more efficient. 
B)  more equal,distorts incentives,alters behavior,and makes the allocation of resources less efficient. 
C)  less equal,distorts incentives,alters behavior,and makes the allocation of resources more efficient. 
D)  less equal,distorts incentives,alters behavior,and makes the allocation of resources less efficient.

Question 14

Table 20-1
  
-When we compare the income distribution of the United States to those of other countries,we find that the U.S.

Accepted Answer

A)  has one of the most unequal income distributions. 
B)  has one of the most equal income distributions. 
C)  ranks in the middle of the group. 
D)  is second to China as the most unequal distribution. 
A)  has one of the most unequal income distributions. 
B)  has one of the most equal income distributions. 
C)  ranks in the middle of the group. 
D)  is second to China as the most unequal distribution.

Question 15

The poverty rate is a measure of the percentage of people whose incomes fall below

Accepted Answer

A)  a relative level of income. 
B)  an absolute level of income. 
C)  the median income for a family of three. 
D)  the bottom 20 percent of the income distribution. 
A)  a relative level of income. 
B)  an absolute level of income. 
C)  the median income for a family of three. 
D)  the bottom 20 percent of the income distribution.

Question 16

Which of the following statements is not correct?

Accepted Answer

A)  The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B)  Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C)  The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D)  Because people can borrow and save to smooth out changes in income,their standard of living in any one year depends more on lifetime income than on a particular year's income. 
A)  The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B)  Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C)  The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D)  Because people can borrow and save to smooth out changes in income,their standard of living in any one year depends more on lifetime income than on a particular year's income.

Question 17

The poverty line in the country of Grim is $10,000.The distribution of income for Grim is as follows:
 
The poverty rate in Grim is

Accepted Answer

A)  5 percent. 
B)  16.7 percent. 
C)  50 percent. 
D)  83.3 percent. 
A)  5 percent. 
B)  16.7 percent. 
C)  50 percent. 
D)  83.3 percent.

Question 18

Which of the following statements is not correct?

Accepted Answer

A)  The biggest explanation for international child labor is poverty. 
B)  Critics of the welfare system argue that it breaks up families. 
C)  One of the problems with measuring income inequality is valuing in-kind transfers. 
D)  Utilitarians believe that the government should punish crimes but should not redistribute income. 
A)  The biggest explanation for international child labor is poverty. 
B)  Critics of the welfare system argue that it breaks up families. 
C)  One of the problems with measuring income inequality is valuing in-kind transfers. 
D)  Utilitarians believe that the government should punish crimes but should not redistribute income.

Question 19

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

Accepted Answer

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

Question 20

The US government sets the poverty line equal to approximately

Accepted Answer

A)  three times the cost of providing subsidized housing. 
B)  three times the cost of providing an adequate diet. 
C)  the minimum wage for a single person working 40 hours per week and 50 weeks per year. 
D)  the cost of providing food,shelter,and health care expenses for a family of four. 
A)  three times the cost of providing subsidized housing. 
B)  three times the cost of providing an adequate diet. 
C)  the minimum wage for a single person working 40 hours per week and 50 weeks per year. 
D)  the cost of providing food,shelter,and health care expenses for a family of four.

Exam 20: Income Inequality and Poverty

Which of the following statements is correct?

An example of an in-kind transfer to the poor is

When designing public policies,which income group would philosopher John Rawls argue needs the most attention?

Free trade and economic growth have reduced poverty worldwide.

According to the doctrine of liberalism,principles of justice are the result of

An example of a transitory change in income is the

Which of the following is not correct?

A goal of libertarians is to provide citizens with equal opportunities rather than to ensure equal outcomes.

Binding minimum-wage laws

Which of the following is not a reason given by economist Tyler Cowen for increased income inequality?

Which of the following statements is not correct?

Since 1959 the United States' income distribution has become more equal.

A government's policy of redistributing income makes the income distribution

Table 20-1 -When we compare the income distribution of the United States to those of other countries,we find that the U.S.

The poverty rate is a measure of the percentage of people whose incomes fall below

Which of the following statements is not correct?

The poverty line in the country of Grim is $10,000.The distribution of income for Grim is as follows: The poverty rate in Grim is

Which of the following statements is not correct?

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

The US government sets the poverty line equal to approximately

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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