Question 1

The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called

Accepted Answer

A)  liberalism. 
B)  libertarianism. 
C)  mobilism. 
D)  utilitarianism. 
A)  liberalism. 
B)  libertarianism. 
C)  mobilism. 
D)  utilitarianism.

Question 2

Which political philosophy concludes that equality of opportunities is more important than equality of outcomes?

Accepted Answer

The answer of Which political philosophy concludes that equality of...

Question 3

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Accepted Answer

A)  The government is effectively taxing every dollar earned up to $25,000 at a rate of 100%. 
B)  This program would reduce the incentive to work to earn any wage up to $25,000. 
C)  If workers are discouraged from working due to this program, they will miss any on-the-job training that would have otherwise occurred, limiting their ability to improve their skills. 
D)  All of the above are correct. 
A)  The government is effectively taxing every dollar earned up to $25,000 at a rate of 100%. 
B)  This program would reduce the incentive to work to earn any wage up to $25,000. 
C)  If workers are discouraged from working due to this program, they will miss any on-the-job training that would have otherwise occurred, limiting their ability to improve their skills. 
D)  All of the above are correct.

Question 4

Liberalism is the political philosophy espoused by

Accepted Answer

A)  Robert Nozick. 
B)  John Stuart Mill. 
C)  John Rawls. 
D)  Jeremy Bentham. 
A)  Robert Nozick. 
B)  John Stuart Mill. 
C)  John Rawls. 
D)  Jeremy Bentham.

Question 5

The goal of utilitarians is to

Accepted Answer

A)  apply the logic of individual decision making to questions concerning morality and public policy. 
B)  measure happiness and satisfaction. 
C)  redistribute income based on the assumption of increasing marginal utility. 
D)  All of the above are correct. 
A)  apply the logic of individual decision making to questions concerning morality and public policy. 
B)  measure happiness and satisfaction. 
C)  redistribute income based on the assumption of increasing marginal utility. 
D)  All of the above are correct.

Question 6

Scenario 20-1
The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income less $20,000.
-Refer to Scenario 20-1. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?

Accepted Answer

A)  Utilitarians, because they want to maximize the utility to the worst-off person in society 
B)  Liberals, because of the maximin criterion 
C)  Libertarians, because they believe in diminishing marginal utility 
D)  All three groups would be equally in favor of the switch. 
A)  Utilitarians, because they want to maximize the utility to the worst-off person in society 
B)  Liberals, because of the maximin criterion 
C)  Libertarians, because they believe in diminishing marginal utility 
D)  All three groups would be equally in favor of the switch.

Question 7

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Accepted Answer

It would d

Question 8

Since the early 1970s, welfare benefits have declined,

Accepted Answer

A)  which is largely due to the success of the negative income tax program. 
B)  which is largely due to the success of private charities. 
C)  yet the percentage of children living with only one parent has increased. 
D)  and the percentage of children living with only one parent has decreased. 
A)  which is largely due to the success of the negative income tax program. 
B)  which is largely due to the success of private charities. 
C)  yet the percentage of children living with only one parent has increased. 
D)  and the percentage of children living with only one parent has decreased.

Question 9

Scenario 20-4
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/5 of income) - $15,000
-Refer to Scenario 20-4. A family earning $50,000 before taxes would have how much after-tax income?

Accepted Answer

A)  -$5,000 
B)  $40,000 
C)  $45,000 
D)  $55,000 
A)  -$5,000 
B)  $40,000 
C)  $45,000 
D)  $55,000

Question 10

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 11

Table 20-8
   Source: U.S. Bureau of Census
-Refer to Table 20-8. In 2011, the bottom 40% of families has

Accepted Answer

A)  about 13% of total income in the U.S. 
B)  about 28% of total income in the U.S. 
C)  about 51% of total income in the U.S. 
D)  about 72% of total income in the U.S. 
A)  about 13% of total income in the U.S. 
B)  about 28% of total income in the U.S. 
C)  about 51% of total income in the U.S. 
D)  about 72% of total income in the U.S.

Question 12

The maximin criterion suggests that social policy should

Accepted Answer

A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers. 
A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers.

Question 13

Figure 20-3  
-Refer to Figure 20-3. In 2011, the percent of elderly aged 65 and over in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D)  lower than the percentage of children under age 18 but is equal to the percentage of adults aged 18 to 64 in poverty. 
A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty. 
D)  lower than the percentage of children under age 18 but is equal to the percentage of adults aged 18 to 64 in poverty.

Question 14

Table 20-5
Distribution of Income in Umakastan
  
-Refer to Table 20-5. Approximately what percentage of families in Umakastan have income levels below $74,000?

Accepted Answer

A)  27% 
B)  28% 
C)  52% 
D)  79% 
A)  27% 
B)  28% 
C)  52% 
D)  79%

Question 15

Which of the following groups has the lowest poverty rate?

Accepted Answer

A)  blacks 
B)  Asians 
C)  children (under age 18) 
D)  female households, no spouse present 
A)  blacks 
B)  Asians 
C)  children (under age 18) 
D)  female households, no spouse present

Question 16

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

Accepted Answer

A)  taking $1 from Mitchell and giving it to Phil would increase society's total utility. 
B)  taking $1 from Mitchell and giving it to Jay would increase society's total utility. 
C)  taking $1 from Phil and giving it to Jay would increase society's total utility. 
D)  None of the above are correct because all three individuals have sufficient income. 
A)  taking $1 from Mitchell and giving it to Phil would increase society's total utility. 
B)  taking $1 from Mitchell and giving it to Jay would increase society's total utility. 
C)  taking $1 from Phil and giving it to Jay would increase society's total utility. 
D)  None of the above are correct because all three individuals have sufficient income.

Question 17

A disadvantage of the Earned Income Tax Credit (EITC) program is that it does not help alleviate poverty due to unemployment, sickness, or other inability to work.

Accepted Answer

A) True 
 B)False

Question 18

Which group would be the least upset by wide variation in the income distribution?

Accepted Answer

A)  utilitarians 
B)  liberals 
C)  libertarians 
D)  Each group would be equally upset. 
A)  utilitarians 
B)  liberals 
C)  libertarians 
D)  Each group would be equally upset.

Question 19

Since the early 1970s, average incomes have

Accepted Answer

A)  increased, which has reduced the poverty rate. 
B)  increased, while the poverty rate increased slightly. 
C)  decreased, while the poverty rate has remained unchanged. 
D)  remained unchanged, while the poverty rate has decreased. 
A)  increased, which has reduced the poverty rate. 
B)  increased, while the poverty rate increased slightly. 
C)  decreased, while the poverty rate has remained unchanged. 
D)  remained unchanged, while the poverty rate has decreased.

Question 20

Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars]
  
-Refer to Table 20-11. What is the poverty line for a family with one 68-year-old adult and one child?

Accepted Answer

A)  $10,788 
B)  $15,446 
C)  $15,504 
D)  $18,106 
A)  $10,788 
B)  $15,446 
C)  $15,504 
D)  $18,106

Exam 20: Income Inequality and Poverty

The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called

Which political philosophy concludes that equality of opportunities is more important than equality of outcomes?

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Liberalism is the political philosophy espoused by

The goal of utilitarians is to

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Since the early 1970s, welfare benefits have declined,

Scenario 20-4 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/5 of income) - $15,000 -Refer to Scenario 20-4. A family earning $50,000 before taxes would have how much after-tax income?

When the government enacts policies to redistribute income,

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. In 2011, the bottom 40% of families has

The maximin criterion suggests that social policy should

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of elderly aged 65 and over in poverty is

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. Approximately what percentage of families in Umakastan have income levels below $74,000?

Which of the following groups has the lowest poverty rate?

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

A disadvantage of the Earned Income Tax Credit (EITC) program is that it does not help alleviate poverty due to unemployment, sickness, or other inability to work.

Which group would be the least upset by wide variation in the income distribution?

Since the early 1970s, average incomes have

Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] -Refer to Table 20-11. What is the poverty line for a family with one 68-year-old adult and one child?

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

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