Question 1

Most children work in which sector of the economy?

Accepted Answer

A)  agriculture 
B)  manufacturing 
C)  information technology 
D)  service sector jobs,such as McDonalds 
A)  agriculture 
B)  manufacturing 
C)  information technology 
D)  service sector jobs,such as McDonalds

Question 2

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

Accepted Answer

A) True 
 B)False

Question 3

Measures of poverty that fail to account for the value of in-kind transfers

Accepted Answer

A)  understate the actual poverty rate. 
B)  have little effect on the validity of reported poverty rates. 
C)  are generally more reliable measures of actual poverty rates. 
D)  overstate the actual poverty rate. 
A)  understate the actual poverty rate. 
B)  have little effect on the validity of reported poverty rates. 
C)  are generally more reliable measures of actual poverty rates. 
D)  overstate the actual poverty rate.

Question 4

From 1935 to 2005 the share of total income earned by the bottom fifth of income earners rose and then fell.

Accepted Answer

A) True 
 B)False

Question 5

Figure 20-1
Number of Poor  
-Refer to Figure 20-1.The absolute number of people in poverty

Accepted Answer

A)  is higher in 2001 than in 1959. 
B)  is lower in 2001 than in 1959. 
C)  has not changed between 1959 and 2001. 
D)  has steadily decreased between 1959 and 2001. 
A)  is higher in 2001 than in 1959. 
B)  is lower in 2001 than in 1959. 
C)  has not changed between 1959 and 2001. 
D)  has steadily decreased between 1959 and 2001.

Question 6

The United States has more income inequality than Japan,Germany,and Canada.

Accepted Answer

A) True 
 B)False

Question 7

Based on U.S.data for 2005,the poverty rate is the highest for which group of people?

Accepted Answer

A)  children 
B)  married couples 
C)  female households,no spouse present 
D)  the elderly 
A)  children 
B)  married couples 
C)  female households,no spouse present 
D)  the elderly

Question 8

Explain what is meant by "in-kind transfer" programs.Briefly outline the advantages and disadvantages of an in-kind transfer program.

Accepted Answer

An in-kind transfer program distributes

Question 9

Libertarians believe that

Accepted Answer

A)  it is more important to evaluate the process by which economic outcomes are produced,rather than the outcomes themselves. 
B)  government should attempt to redistribute income from the rich to the poor when the gap between rich and poor is more than 20%. 
C)  Efficiency of opportunities is more important than efficiency of income levels. 
D)  it is more important to evaluate economic outcomes first and then the process that produced them. 
A)  it is more important to evaluate the process by which economic outcomes are produced,rather than the outcomes themselves. 
B)  government should attempt to redistribute income from the rich to the poor when the gap between rich and poor is more than 20%. 
C)  Efficiency of opportunities is more important than efficiency of income levels. 
D)  it is more important to evaluate economic outcomes first and then the process that produced them.

Question 10

The elderly represent the largest demographic group in poverty.

Accepted Answer

A) True 
 B)False

Question 11

The normal life cycle pattern of income

Accepted Answer

A)  contributes to more inequality in the distribution of annual income and to more inequality in living standards. 
B)  contributes to more inequality in the distribution of annual income,but it does not necessarily contribute to more inequality in living standards. 
C)  contributes to less inequality in the distribution of annual income and to less inequality in living standards. 
D)  has no effect on either the distribution of annual income or on living standards. 
A)  contributes to more inequality in the distribution of annual income and to more inequality in living standards. 
B)  contributes to more inequality in the distribution of annual income,but it does not necessarily contribute to more inequality in living standards. 
C)  contributes to less inequality in the distribution of annual income and to less inequality in living standards. 
D)  has no effect on either the distribution of annual income or on living standards.

Question 12

When incentives to earn income are distorted by income redistribution programs,

Accepted Answer

A)  losses can exceed potential gains from greater equality of income. 
B)  total income in an economy can fall. 
C)  total utility in society can fall. 
D)  All of the above are correct. 
A)  losses can exceed potential gains from greater equality of income. 
B)  total income in an economy can fall. 
C)  total utility in society can fall. 
D)  All of the above are correct.

Question 13

Which of the following is not discussed by economist Tyler Cowen as an alternative to measuring inequality by income?

Accepted Answer

A)  Leisure. 
B)  Happiness. 
C)  Consumption. 
D)  Age. 
A)  Leisure. 
B)  Happiness. 
C)  Consumption. 
D)  Age.

Question 14

Utilitarianism is

Accepted Answer

A)  a liberal religion that focuses on individual rights. 
B)  a political philosophy that believes the government should choose policies deemed to be just by an impartial observer. 
C)  a political philosophy that believes the government should not redistribute income. 
D)  a political philosophy that believes the government should choose policies to maximize the total utility of society. 
A)  a liberal religion that focuses on individual rights. 
B)  a political philosophy that believes the government should choose policies deemed to be just by an impartial observer. 
C)  a political philosophy that believes the government should not redistribute income. 
D)  a political philosophy that believes the government should choose policies to maximize the total utility of society.

Question 15

Figure 20-1
Number of Poor  
-Refer to Figure 20-1.Between 1965 and 2001,during recessions (the shaded bars)the number of individuals in poverty has

Accepted Answer

A)  increased. 
B)  decrease. 
C)  not changed. 
D)  decreased and then increased. 
A)  increased. 
B)  decrease. 
C)  not changed. 
D)  decreased and then increased.

Question 16

Table 20-4
Poverty Thresholds in 2002,by Size of Family and Number of Related Children Under 18 Years
[Dollars]
   Source: U.S.Bureau of the Census,Current Population Survey.
-Refer to Table 20-4.What is the poverty line for a family of six with three children?

Accepted Answer

A)  $21,469 
B)  $24,797 
C)  $25,738 
D)  $28,718 
A)  $21,469 
B)  $24,797 
C)  $25,738 
D)  $28,718

Question 17

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

Accepted Answer

A)  11.1 percent. 
B)  16.7 percent. 
C)  27.8 percent. 
D)  55.5 percent. 
A)  11.1 percent. 
B)  16.7 percent. 
C)  27.8 percent. 
D)  55.5 percent.

Question 18

Which of the following statements is correct?

Accepted Answer

A)  An disadvantage of Supplemental Security Income (SSI)is that it does not encourage families to break up in order to qualify for assistance. 
B)  A disadvantage of in-kind transfer programs such as food stamps is that they force recipients to purchase from a restricted set of items which may not include things that the poor need the most such as diapers or cleaning supplies. 
C)  A disadvantage of minimum wage laws is that they are expensive for state and local governments to fund. 
D)  An advantage of a negative income tax is that it encourages the poor to work in order to receive government assistance. 
A)  An disadvantage of Supplemental Security Income (SSI)is that it does not encourage families to break up in order to qualify for assistance. 
B)  A disadvantage of in-kind transfer programs such as food stamps is that they force recipients to purchase from a restricted set of items which may not include things that the poor need the most such as diapers or cleaning supplies. 
C)  A disadvantage of minimum wage laws is that they are expensive for state and local governments to fund. 
D)  An advantage of a negative income tax is that it encourages the poor to work in order to receive government assistance.

Question 19

Which of the following statements is not correct?

Accepted Answer

A)  An advantage of the Earned Income Tax Credit (EIT
C) is that it targets the working poor better than the minimum wage because it does not benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
B)  A disadvantage of in-kind transfer programs such as food stamps is that they force recipients to purchase from a restricted set of items which may not include things that the poor need the most such as diapers or cleaning supplies. 
C)  A disadvantage of minimum wage laws is that they are expensive for state and local governments to fund. 
D)  Effective minimum wage laws create a surplus of labor. 
A)  An advantage of the Earned Income Tax Credit (EIT
C) is that it targets the working poor better than the minimum wage because it does not benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
B)  A disadvantage of in-kind transfer programs such as food stamps is that they force recipients to purchase from a restricted set of items which may not include things that the poor need the most such as diapers or cleaning supplies. 
C)  A disadvantage of minimum wage laws is that they are expensive for state and local governments to fund. 
D)  Effective minimum wage laws create a surplus of labor.

Question 20

A tax provision that works much like a negative income tax is the

Accepted Answer

A)  Earned Income Tax Credit (EIT
C) . 
B)  Temporary Assistance for Needy Families (TANF). 
C)  deduction for charitable contributions. 
D)  mortgage interest rate deduction. 
A)  Earned Income Tax Credit (EIT
C) . 
B)  Temporary Assistance for Needy Families (TANF). 
C)  deduction for charitable contributions. 
D)  mortgage interest rate deduction.

Exam 20: Income Inequality and Poverty

Most children work in which sector of the economy?

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

Measures of poverty that fail to account for the value of in-kind transfers

From 1935 to 2005 the share of total income earned by the bottom fifth of income earners rose and then fell.

Figure 20-1 Number of Poor -Refer to Figure 20-1.The absolute number of people in poverty

The United States has more income inequality than Japan,Germany,and Canada.

Based on U.S.data for 2005,the poverty rate is the highest for which group of people?

Explain what is meant by "in-kind transfer" programs.Briefly outline the advantages and disadvantages of an in-kind transfer program.

Libertarians believe that

The elderly represent the largest demographic group in poverty.

The normal life cycle pattern of income

When incentives to earn income are distorted by income redistribution programs,

Which of the following is not discussed by economist Tyler Cowen as an alternative to measuring inequality by income?

Utilitarianism is

Figure 20-1 Number of Poor -Refer to Figure 20-1.Between 1965 and 2001,during recessions (the shaded bars)the number of individuals in poverty has

Table 20-4 Poverty Thresholds in 2002,by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U.S.Bureau of the Census,Current Population Survey. -Refer to Table 20-4.What is the poverty line for a family of six with three children?

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

Which of the following statements is correct?

Which of the following statements is not correct?

A tax provision that works much like a negative income tax is the

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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