Question 1

When the government redistributes income to achieve greater equality, it

Accepted Answer

A)  distorts incentives. 
B)  improves efficiency. 
C)  focuses on middle income brackets. 
D)  relies on foreign aid to help balance the budget. 
A)  distorts incentives. 
B)  improves efficiency. 
C)  focuses on middle income brackets. 
D)  relies on foreign aid to help balance the budget.

Question 2

A family's ability to buy goods and services depends largely on its

Accepted Answer

A)  permanent income, which is its normal, or average, income. 
B)  permanent income, which is the lowest annual income the family has received over a 10-year period. 
C)  transitory income, which is the measure of income used by the government to analyze the distribution of income and the poverty rate. 
D)  transitory income, which is its money income plus any in-kind transfers it receives. 
A)  permanent income, which is its normal, or average, income. 
B)  permanent income, which is the lowest annual income the family has received over a 10-year period. 
C)  transitory income, which is the measure of income used by the government to analyze the distribution of income and the poverty rate. 
D)  transitory income, which is its money income plus any in-kind transfers it receives.

Question 3

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 75-year-old individual?

Accepted Answer

A)  $10,788 
B)  $11,702 
C)  $13,596 
D)  $15,446 
A)  $10,788 
B)  $11,702 
C)  $13,596 
D)  $15,446

Question 4

Which of the following statements is correct?

Accepted Answer

A)  A disadvantage of a minimum-wage law is that it may benefit unskilled workers who are not low-income workers. 
B)  A disadvantage of a negative income tax program is that a poor person who chooses not to work many hours would receive a cash benefit. 
C)  A disadvantage of an Earned Income Tax Credit (EIT
C)  is that a person who is unable to work due to a disability does not benefit from the program. 
D)  All of the above are correct. 
A)  A disadvantage of a minimum-wage law is that it may benefit unskilled workers who are not low-income workers. 
B)  A disadvantage of a negative income tax program is that a poor person who chooses not to work many hours would receive a cash benefit. 
C)  A disadvantage of an Earned Income Tax Credit (EIT
C)  is that a person who is unable to work due to a disability does not benefit from the program. 
D)  All of the above are correct.

Question 5

The percentage of the population whose family income falls below an absolute level is call the

Accepted Answer

The answer of The percentage of the population whose family...

Question 6

Which group (or groups) would be the most upset by wide variation in the income distribution?

Accepted Answer

A)  utilitarians 
B)  utilitarians and liberals 
C)  libertarians 
D)  liberals and libertarians 
A)  utilitarians 
B)  utilitarians and liberals 
C)  libertarians 
D)  liberals and libertarians

Question 7

If the U.S. government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is

Accepted Answer

A)  $7,500. 
B)  $15,000. 
C)  $22,500. 
D)  $30,000. 
A)  $7,500. 
B)  $15,000. 
C)  $22,500. 
D)  $30,000.

Question 8

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. Below what level of income would families start to receive a subsidy from this negative income tax?

Accepted Answer

A)  $5,000 
B)  $15,000 
C)  $50,000 
D)  $75,000 
A)  $5,000 
B)  $15,000 
C)  $50,000 
D)  $75,000

Question 9

Diminishing marginal utility suggests that

Accepted Answer

A)  more is always preferred to less. 
B)  the well-being of society is maximized when the distribution of income is equal. 
C)  the poor are less efficient at spending money than the rich. 
D)  the poor receive more satisfaction from the last dollar spent than the rich. 
A)  more is always preferred to less. 
B)  the well-being of society is maximized when the distribution of income is equal. 
C)  the poor are less efficient at spending money than the rich. 
D)  the poor receive more satisfaction from the last dollar spent than the rich.

Question 10

The marketplace allocates resources

Accepted Answer

A)  fairly. 
B)  efficiently. 
C)  to those desiring them least. 
D)  both efficiently and equitably. 
A)  fairly. 
B)  efficiently. 
C)  to those desiring them least. 
D)  both efficiently and equitably.

Question 11

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. In 2010, what percentage of total income in the US did the bottom 20% of families have?

Accepted Answer

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

Question 12

A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that it

Accepted Answer

A)  encourages illegitimate births because single women with children receive higher payments. 
B)  rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C)  does not help the poor who are unemployed. 
D)  creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage. 
A)  encourages illegitimate births because single women with children receive higher payments. 
B)  rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C)  does not help the poor who are unemployed. 
D)  creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage.

Question 13

Utilitarians believe

Accepted Answer

A)  that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  in the assumption of diminishing marginal utility. 
C)  that everyone in society should have equal utility. 
D)  that the government should not redistribute income. 
A)  that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  in the assumption of diminishing marginal utility. 
C)  that everyone in society should have equal utility. 
D)  that the government should not redistribute income.

Question 14

Raising total utility is the prime objective of which political philosophy?

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 15

Table 20-10
   *A Gini coefficient is a commonly used measure of income inequality, with values between 0 and 1 (0 corresponds to perfect equality whereby everyone has exactly the same income, and 1 corresponds to perfect inequality where one person has all the income, while everyone else has zero income).
Source: The World Bank
-Refer to Table 20-10. Which country has the most equal income distribution?

Accepted Answer

A)  Latvia 
B)  Italy 
C)  France 
D)  Sweden 
A)  Latvia 
B)  Italy 
C)  France 
D)  Sweden

Question 16

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Question 17

Libertarianism identifies a redistribution of income role for government when

Accepted Answer

A)  the utility of the worst-off could be improved. 
B)  the income distribution is altered by illegal means (e.g. theft). 
C)  the total utility for society can be improved through redistribution of income. 
D)  a "veil of ignorance" would result in a recommendation of redistribution of income. 
A)  the utility of the worst-off could be improved. 
B)  the income distribution is altered by illegal means (e.g. theft). 
C)  the total utility for society can be improved through redistribution of income. 
D)  a "veil of ignorance" would result in a recommendation of redistribution of income.

Question 18

According to utilitarians, the ultimate objective of public actions should be to

Accepted Answer

A)  ensure the poor can afford an adequate diet. 
B)  distribute income uniformly. 
C)  maximize the sum of individual utility. 
D)  prevent all people from experiencing diminishing marginal utility. 
A)  ensure the poor can afford an adequate diet. 
B)  distribute income uniformly. 
C)  maximize the sum of individual utility. 
D)  prevent all people from experiencing diminishing marginal utility.

Question 19

The distribution of income for Danville is as follows: Number of Families Income
    500 less than $15,000
600 between $15,000 and $20,000
1,000 between $20,000 and $25,000
700 between $25,000 and $30,000
500 over $30,000
  If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?

Accepted Answer

A)  $15,000. 
B)  $20,000. 
C)  $25,000. 
D)  $30,000. 
A)  $15,000. 
B)  $20,000. 
C)  $25,000. 
D)  $30,000.

Question 20

A common criticism of welfare programs is that they

Accepted Answer

A)  create self-reliant individuals. 
B)  encourage strong family values. 
C)  encourage illegitimate births. 
D)  have increasing benefits over time, in real terms. 
A)  create self-reliant individuals. 
B)  encourage strong family values. 
C)  encourage illegitimate births. 
D)  have increasing benefits over time, in real terms.

When the government redistributes income to achieve greater equality, it

A family's ability to buy goods and services depends largely on its

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 75-year-old individual?

Which of the following statements is correct?

The percentage of the population whose family income falls below an absolute level is call the

Which group (or groups) would be the most upset by wide variation in the income distribution?

If the U.S. government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is

Diminishing marginal utility suggests that

The marketplace allocates resources

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. In 2010, what percentage of total income in the US did the bottom 20% of families have?

A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that it

Utilitarians believe

Raising total utility is the prime objective of which political philosophy?

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Libertarianism identifies a redistribution of income role for government when

According to utilitarians, the ultimate objective of public actions should be to

A common criticism of welfare programs is that they

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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Exam 20: Income Inequality and Poverty

When the government redistributes income to achieve greater equality, it

A family's ability to buy goods and services depends largely on its

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 75-year-old individual?

Which of the following statements is correct?

The percentage of the population whose family income falls below an absolute level is call the

Which group (or groups) would be the most upset by wide variation in the income distribution?

If the U.S. government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is

Diminishing marginal utility suggests that

The marketplace allocates resources

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. In 2010, what percentage of total income in the US did the bottom 20% of families have?

A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that it

Utilitarians believe

Raising total utility is the prime objective of which political philosophy?

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Libertarianism identifies a redistribution of income role for government when

According to utilitarians, the ultimate objective of public actions should be to

A common criticism of welfare programs is that they

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