Question 1

The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

Accepted Answer

A) True 
 B)False

Question 2

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

Accepted Answer

A)  equalize the incomes of John and Jane. 
B)  equalize John's utility and Jane's utility. 
C)  equalize John's marginal utility and Jane's marginal utility. 
D)  maximize the sum of John's utility and Jane's utility. 
A)  equalize the incomes of John and Jane. 
B)  equalize John's utility and Jane's utility. 
C)  equalize John's marginal utility and Jane's marginal utility. 
D)  maximize the sum of John's utility and Jane's utility.

Question 3

Which of the following statements is not correct?

Accepted Answer

A)  Welfare programs may encourage illegitimate births. 
B)  The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C)  Welfare programs may reduce incentives for people to work. 
D)  A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families. 
A)  Welfare programs may encourage illegitimate births. 
B)  The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. 
C)  Welfare programs may reduce incentives for people to work. 
D)  A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.

Question 4

A typical worker's normal or average income is called

Accepted Answer

A)  the life cycle. 
B)  permanent income. 
C)  transitory income. 
D)  in-kind transfers. 
A)  the life cycle. 
B)  permanent income. 
C)  transitory income. 
D)  in-kind transfers.

Question 5

Table 20-13
Distribution of Income in Imagination
  
-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Accepted Answer

The answer of Table 20-13
Distribution of Income in Imagination
 ...

Question 6

The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

Accepted Answer

The answer of The Earned Income Tax Credit (EITC) is...

Question 7

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

Accepted Answer

The answer of Aniella believes that the demand for unskilled...

Question 8

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

A)  tends to follow a seasonal pattern. 
B)  rises as a worker gains maturity and experience. 
C)  rises and falls in conjunction with the business cycle. 
D)  falls during the early years of market activity and peaks at retirement. 
A)  tends to follow a seasonal pattern. 
B)  rises as a worker gains maturity and experience. 
C)  rises and falls in conjunction with the business cycle. 
D)  falls during the early years of market activity and peaks at retirement.

Question 9

Which of the following statements is correct?

Accepted Answer

A)  The poverty line is a relative standard. 
B)  More families are pushed above the poverty line as economic growth pushes the entire income distribution upward. 
C)  Increasing income inequality reduces poverty. 
D)  Economic growth, by definition, affects all families equally. 
A)  The poverty line is a relative standard. 
B)  More families are pushed above the poverty line as economic growth pushes the entire income distribution upward. 
C)  Increasing income inequality reduces poverty. 
D)  Economic growth, by definition, affects all families equally.

Question 10

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Accepted Answer

A)  raises the well-being of the least fortunate. 
B)  does not alter incentives to work and save. 
C)  promotes an equal distribution of income. 
D)  does not lower the welfare of the elderly. 
A)  raises the well-being of the least fortunate. 
B)  does not alter incentives to work and save. 
C)  promotes an equal distribution of income. 
D)  does not lower the welfare of the elderly.

Question 11

Table 20-13
Distribution of Income in Imagination
  
-Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Accepted Answer

between $1

Question 12

Which of the following statements accurately characterizes the effects of minimum-wage laws?

Accepted Answer

A)  Some workers who might have been employed at a lower wage become unemployed. 
B)  Those workers who remain employed benefit from a higher wage. 
C)  The effects of minimum-wage laws depend strongly on the elasticity of demand. 
D)  All of the above accurately characterize the effects of minimum-wage laws. 
A)  Some workers who might have been employed at a lower wage become unemployed. 
B)  Those workers who remain employed benefit from a higher wage. 
C)  The effects of minimum-wage laws depend strongly on the elasticity of demand. 
D)  All of the above accurately characterize the effects of minimum-wage laws.

Question 13

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Accepted Answer

The answer of A system in which anyone collecting antipoverty...

Question 14

Figure 20-5  
-Refer to Figure 20-5. An effective minimum wage would be set at a level

Accepted Answer

A)  above Wo, and employment would rise above Qo. 
B)  above Wo, and employment would fall below Qo. 
C)  below Wo, and employment would rise above Qo. 
D)  below Wo, and employment would fall below Qo. 
A)  above Wo, and employment would rise above Qo. 
B)  above Wo, and employment would fall below Qo. 
C)  below Wo, and employment would rise above Qo. 
D)  below Wo, and employment would fall below Qo.

Question 15

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Accepted Answer

A) True 
 B)False

Question 16

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Accepted Answer

A)  $170,000 and over 
B)  $205,000 and over 
C)  $250,000 and over 
D)  $325,000 and over 
A)  $170,000 and over 
B)  $205,000 and over 
C)  $250,000 and over 
D)  $325,000 and over

Question 17

Economists who study economic mobility have found that the income of a grandfather and his grandson's income are

Accepted Answer

A)  not closely related. 
B)  negatively related. 
C)  directly related. 
D)  equal. 
A)  not closely related. 
B)  negatively related. 
C)  directly related. 
D)  equal.

Question 18

In the US, is it more likely that someone will become a millionaire by making money on his/her own or by inheriting a fortune?

Accepted Answer

Making mon

Question 19

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)  All of the above are correct. 
A)  Poverty is correlated with race. 
B)  Poverty is correlated with age. 
C)  Poverty is correlated with family composition. 
D)  All of the above are correct.

Question 20

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Accepted Answer

Utilitarians reject complete equalizatio

Exam 20: Income Inequality and Poverty

The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

Which of the following statements is not correct?

A typical worker's normal or average income is called

Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

The life cycle effect characterizes a lifetime income profile in which income

Which of the following statements is correct?

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Which of the following statements accurately characterizes the effects of minimum-wage laws?

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Figure 20-5 -Refer to Figure 20-5. An effective minimum wage would be set at a level

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Economists who study economic mobility have found that the income of a grandfather and his grandson's income are

In the US, is it more likely that someone will become a millionaire by making money on his/her own or by inheriting a fortune?

Which of the following is not correct?

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

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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