Question 1

Supporters of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A)  a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. 
B)  better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
C)  better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. 
D)  a way to increase employment of those likely to earn the minimum wage. 
A)  a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government. 
B)  better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage. 
C)  better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol. 
D)  a way to increase employment of those likely to earn the minimum wage.

Question 2

Figure 20-3  
-Refer to Figure 20-3. 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 3

The best government policy to reduce poverty is

Accepted Answer

A)  a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps. 
B)  an expanded welfare program because people must have an additional "need" such as small children or a disability. 
C)  an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter. 
D)  not obvious. Government programs to reduce poverty have many advantages but also many disadvantages. 
A)  a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps. 
B)  an expanded welfare program because people must have an additional "need" such as small children or a disability. 
C)  an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter. 
D)  not obvious. Government programs to reduce poverty have many advantages but also many disadvantages.

Question 4

"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 5

The elderly represent the largest demographic group in poverty.

Accepted Answer

A) True 
 B)False

Question 6

Since 1959 when the official data on the poverty rate began, the poverty rate was at its highest in

Accepted Answer

A)  1959. 
B)  1968. 
C)  1977. 
D)  1986. 
A)  1959. 
B)  1968. 
C)  1977. 
D)  1986.

Question 7

Scenario 20-5
Suppose the government implemented a negative income tax and used the following formula to compute a family's
tax liability:
Taxes owed = (1/4 of income) - $10,000
-Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)  $5,000 
B)  $10,000 
C)  $15,000 
D)  $25,000 
A)  $5,000 
B)  $10,000 
C)  $15,000 
D)  $25,000

Question 8

Which political philosophy believes that the government should equalize the incomes of all members of society?

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 9

Economic mobility in the United States is

Accepted Answer

A)  uncommon. Over 50 percent of poor families remain poor for 8 or more years. 
B)  uncommon. Over 75 percent of poor families remain poor for 8 or more years. 
C)  common. Fewer than 3 percent of poor families remain poor for 8 or more years. 
D)  common. Fewer than 1 percent of poor families remain poor for 8 or more years. 
A)  uncommon. Over 50 percent of poor families remain poor for 8 or more years. 
B)  uncommon. Over 75 percent of poor families remain poor for 8 or more years. 
C)  common. Fewer than 3 percent of poor families remain poor for 8 or more years. 
D)  common. Fewer than 1 percent of poor families remain poor for 8 or more years.

Question 10

People can borrow and lend money to smooth out short term variations in income known as what kind of changes?

Accepted Answer

The answer of People can borrow and lend money to...

Question 11

The utilitarian justification for redistributing income is based on the assumption of diminishing marginal utility.

Accepted Answer

A) True 
 B)False

Question 12

In 2011, the poverty rate in the United States was 15 percent. This means that 15 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 13

Table 20-3
The Distribution of Income in Edgerton
  
-Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?

Accepted Answer

A)  under $28,000 
B)  between $28,000 and $43,999 
C)  between $44,000 and $75,999 
D)  between $76,000 and $87,999 
A)  under $28,000 
B)  between $28,000 and $43,999 
C)  between $44,000 and $75,999 
D)  between $76,000 and $87,999

Question 14

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3   Income) - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

Accepted Answer

A)  It will receive an income subsidy of $1,000. 
B)  It will receive an income subsidy of $3,000. 
C)  It will receive an income subsidy of $10,000. 
D)  It will not be affected at all, since the negative income tax requires a family to earn income. 
A)  It will receive an income subsidy of $1,000. 
B)  It will receive an income subsidy of $3,000. 
C)  It will receive an income subsidy of $10,000. 
D)  It will not be affected at all, since the negative income tax requires a family to earn income.

Question 15

Comparing the US to other countries ranked by inequality,

Accepted Answer

A)  the US has a less equal distribution of income than some countries, but a more equal distribution of income than others. 
B)  the US has one of the most equal distributions of income. 
C)  the US has one of the least equal distributions of income. 
D)  the US has a more equal distribution of income than other economically advanced countries such as Japan, Germany, and France. 
A)  the US has a less equal distribution of income than some countries, but a more equal distribution of income than others. 
B)  the US has one of the most equal distributions of income. 
C)  the US has one of the least equal distributions of income. 
D)  the US has a more equal distribution of income than other economically advanced countries such as Japan, Germany, and France.

Question 16

Table 20-14
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.
   Source: US Census Bureau
-Refer to Table 20-14. The trend in income inequality from 1980 to 2010 is .

Accepted Answer

The answer of Table 20-14
Income Inequality in the United States
The...

Question 17

In 2011, the top 20% of US families had more than times as much income as the bottom 20%.

Accepted Answer

The answer of In 2011, the top 20% of US...

Question 18

With which three demographic variables is poverty correlated?

Accepted Answer

race, age,

Question 19

Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer. Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida. Which of the following is correct?

Accepted Answer

A)  Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income. 
B)  Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. 
C)  Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. 
D)  Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income. 
A)  Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income. 
B)  Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. 
C)  Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. 
D)  Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income.

Question 20

In general, which of the following would libertarians argue is more important than equal outcomes?

Accepted Answer

A)  equal opportunities 
B)  equal incomes 
C)  providing a social safety net 
D)  offering the opportunity to purchase social insurance 
A)  equal opportunities 
B)  equal incomes 
C)  providing a social safety net 
D)  offering the opportunity to purchase social insurance

Exam 20: Income Inequality and Poverty

Supporters of raising the minimum wage argue that minimum-wage laws are

Figure 20-3 -Refer to Figure 20-3. In 1968, the percent of children under age 18 in poverty is

The best government policy to reduce poverty is

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

The elderly represent the largest demographic group in poverty.

Since 1959 when the official data on the poverty rate began, the poverty rate was at its highest in

Scenario 20-5 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $10,000 -Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Which political philosophy believes that the government should equalize the incomes of all members of society?

Economic mobility in the United States is

People can borrow and lend money to smooth out short term variations in income known as what kind of changes?

The utilitarian justification for redistributing income is based on the assumption of diminishing marginal utility.

In 2011, the poverty rate in the United States was 15 percent. This means that 15 percent

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 Income) - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

Comparing the US to other countries ranked by inequality,

Table 20-14 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-14. The trend in income inequality from 1980 to 2010 is .

In 2011, the top 20% of US families had more than times as much income as the bottom 20%.

With which three demographic variables is poverty correlated?

In general, which of the following would libertarians argue is more important than equal outcomes?

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

Filters