Question 1

Which of the following statements is not correct?

Accepted Answer

A)  The poverty line is an absolute level of income set by the federal government below which a family is considered to be in poverty. 
B)  The poverty line is approximately equal to three times the cost of providing an adequate diet. 
C)  The poverty line is adjusted annually to reflect changes in price levels. 
D)  The poverty line is adjusted semiannually to reflect changes in fuel prices. 
A)  The poverty line is an absolute level of income set by the federal government below which a family is considered to be in poverty. 
B)  The poverty line is approximately equal to three times the cost of providing an adequate diet. 
C)  The poverty line is adjusted annually to reflect changes in price levels. 
D)  The poverty line is adjusted semiannually to reflect changes in fuel prices.

Question 2

The poverty rate is

Accepted Answer

A)  a measure of income inequality across families. 
B)  the percentage of the population whose family income falls below a specified level. 
C)  an absolute level of income set by the federal government for each family size. 
D)  measured by the number of in-kind transfers that a family receives. 
A)  a measure of income inequality across families. 
B)  the percentage of the population whose family income falls below a specified level. 
C)  an absolute level of income set by the federal government for each family size. 
D)  measured by the number of in-kind transfers that a family receives.

Question 3

Measuring poverty using an absolute income scale like the poverty line can be misleading because

Accepted Answer

A)  income measures do not include the value of in-kind transfers. 
B)  money is more highly valued by the poor than by the rich. 
C)  the poor are not likely to participate in the labor market. 
D)  income measures are not adjusted for the effects of labor-market discrimination. 
A)  income measures do not include the value of in-kind transfers. 
B)  money is more highly valued by the poor than by the rich. 
C)  the poor are not likely to participate in the labor market. 
D)  income measures are not adjusted for the effects of labor-market discrimination.

Question 4

In the United States,labor earnings are what percent of total income?

Accepted Answer

A)  75 percent 
B)  70 percent 
C)  65 percent 
D)  50 percent 
A)  75 percent 
B)  70 percent 
C)  65 percent 
D)  50 percent

Question 5

In 2005,the poverty rate in the United States was 12.6 percent.This means that 12.6 percent

Accepted Answer

A)  of the population had a total family income that fell below the poverty line. 
B)  of the population had a total family income that was above the poverty line. 
C)  of the population had a total family income below $10,000. 
D)  of the population had a total family income above $50,000. 
A)  of the population had a total family income that fell below the poverty line. 
B)  of the population had a total family income that was above the poverty line. 
C)  of the population had a total family income below $10,000. 
D)  of the population had a total family income above $50,000.

Question 6

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A)  improve economic efficiency by reducing poverty. 
B)  reduce economic efficiency because they distort incentives. 
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D)  sometimes improve,sometimes reduce,and sometimes have no effect on economic efficiency. 
A)  improve economic efficiency by reducing poverty. 
B)  reduce economic efficiency because they distort incentives. 
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D)  sometimes improve,sometimes reduce,and sometimes have no effect on economic efficiency.

Question 7

About four out of five millionaires in the United States earned their money rather than inherited it.

Accepted Answer

A) True 
 B)False

Question 8

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 75 year old individual?

Accepted Answer

A)  $8,628 
B)  $9,359 
C)  $12,353 
D)  $12,400 
A)  $8,628 
B)  $9,359 
C)  $12,353 
D)  $12,400

Question 9

The 2005 U.S.distribution of income shows that the top 5 percent of families have approximately what share of income?

Accepted Answer

A)  1 percent 
B)  5 percent 
C)  10 percent 
D)  20 percent 
A)  1 percent 
B)  5 percent 
C)  10 percent 
D)  20 percent

Question 10

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Accepted Answer

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

Question 11

When the government taxes income as part of a redistribution program,

Accepted Answer

A)  the poor pay higher taxes. 
B)  the rich always benefit more than the poor. 
C)  the poor are encouraged to work. 
D)  incentives to earn income are diminished. 
A)  the poor pay higher taxes. 
B)  the rich always benefit more than the poor. 
C)  the poor are encouraged to work. 
D)  incentives to earn income are diminished.

Question 12

What percentage of millionaires in the United States are self-made?

Accepted Answer

A)  20 percent 
B)  40 percent 
C)  60 percent 
D)  80 percent 
A)  20 percent 
B)  40 percent 
C)  60 percent 
D)  80 percent

Question 13

The federal government sets the poverty line at roughly

Accepted Answer

A)  five times the cost of providing an adequate diet. 
B)  four times the cost of providing an adequate diet. 
C)  three times the cost of providing an adequate diet. 
D)  two times the cost of providing an adequate diet. 
A)  five times the cost of providing an adequate diet. 
B)  four times the cost of providing an adequate diet. 
C)  three times the cost of providing an adequate diet. 
D)  two times the cost of providing an adequate diet.

Question 14

The United States has more income inequality than

Accepted Answer

A)  Brazil. 
B)  Mexico. 
C)  Canada. 
D)  South Africa. 
A)  Brazil. 
B)  Mexico. 
C)  Canada. 
D)  South Africa.

Question 15

In comparison to the average poverty rate,

Accepted Answer

A)  children and the elderly are more likely to be poor. 
B)  children and the elderly are less likely to be poor. 
C)  children are more likely to be poor,but the elderly are less likely to be poor. 
D)  children are less likely to be poor,but the elderly are more likely to be poor. 
A)  children and the elderly are more likely to be poor. 
B)  children and the elderly are less likely to be poor. 
C)  children are more likely to be poor,but the elderly are less likely to be poor. 
D)  children are less likely to be poor,but the elderly are more likely to be poor.

Question 16

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

Accepted Answer

A)  In-kind transfers. 
B)  Economic life cycle. 
C)  Transitory versus permanent income. 
D)  Economic mobility. 
A)  In-kind transfers. 
B)  Economic life cycle. 
C)  Transitory versus permanent income. 
D)  Economic mobility.

Question 17

When the government enacts policies to redistribute income,

Accepted Answer

A)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C)  the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D)  the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient. 
A)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C)  the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D)  the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.

Question 18

If the U.S.government determines that the cost of feeding an urban family of four is $5,200 per year,then the official poverty line for a family of that type is

Accepted Answer

A)  $10,400. 
B)  $15,600. 
C)  $20,800. 
D)  $26,000. 
A)  $10,400. 
B)  $15,600. 
C)  $20,800. 
D)  $26,000.

Question 19

Which of the following groups has the highest poverty rate?

Accepted Answer

A)  Blacks. 
B)  Asians. 
C)  Children (under age 18). 
D)  Female-headed households. 
A)  Blacks. 
B)  Asians. 
C)  Children (under age 18). 
D)  Female-headed households.

Question 20

If the U.S.government determines that the cost of feeding an urban family of six is $6,000 per year,then the official poverty line for a family of that type is

Accepted Answer

A)  $6,000. 
B)  $12,000. 
C)  $18,000. 
D)  $36,000. 
A)  $6,000. 
B)  $12,000. 
C)  $18,000. 
D)  $36,000.

Exam 20: Income Inequality and Poverty

Which of the following statements is not correct?

The poverty rate is

Measuring poverty using an absolute income scale like the poverty line can be misleading because

In the United States,labor earnings are what percent of total income?

In 2005,the poverty rate in the United States was 12.6 percent.This means that 12.6 percent

Government programs that take money from high-income people and give it to low-income people typically

About four out of five millionaires in the United States earned their money rather than inherited it.

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 75 year old individual?

The 2005 U.S.distribution of income shows that the top 5 percent of families have approximately what share of income?

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

When the government taxes income as part of a redistribution program,

What percentage of millionaires in the United States are self-made?

The federal government sets the poverty line at roughly

The United States has more income inequality than

In comparison to the average poverty rate,

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

When the government enacts policies to redistribute income,

If the U.S.government determines that the cost of feeding an urban family of four is $5,200 per year,then the official poverty line for a family of that type is

Which of the following groups has the highest poverty rate?

If the U.S.government determines that the cost of feeding an urban family of six is $6,000 per year,then the official poverty line for a family of that type is

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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