Question 1

Saving and borrowing is indicative of a family that

Accepted Answer

A)  is most likely to be poor. 
B)  has a difficult time balancing its standard of living. 
C)  does not adjust its standard of living to reflect transitory changes in income. 
D)  is most likely millionaires. 
A)  is most likely to be poor. 
B)  has a difficult time balancing its standard of living. 
C)  does not adjust its standard of living to reflect transitory changes in income. 
D)  is most likely millionaires.

Question 2

Table 20-1
The following table shows the distribution of income in Marysville.
  
-Refer to Table 20-1. Fifty percent of all families have incomes below what level?

Accepted Answer

A)  $30,000 
B)  $60,000 
C)  $90,000 
D)  There is insufficient information to answer this question. 
A)  $30,000 
B)  $60,000 
C)  $90,000 
D)  There is insufficient information to answer this question.

Question 3

Which of the following pholitical philosophies would support redistribution of income that makes society fully egalitarian?

Accepted Answer

A)  Liberals, because they believe in the maximin criterion. 
B)  Libertarians, because they believe in evaluating the process by which economic outcomes arise. 
C)  Utilitarians, because they believe in diminishing marginal utility. 
D)  None of the above would support completely egalitarian redistribution of income. 
A)  Liberals, because they believe in the maximin criterion. 
B)  Libertarians, because they believe in evaluating the process by which economic outcomes arise. 
C)  Utilitarians, because they believe in diminishing marginal utility. 
D)  None of the above would support completely egalitarian redistribution of income.

Question 4

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Accepted Answer

A)  increasing income inequality 
B)  a reduction in the poverty line 
C)  rapid economic growth 
D)  a reduction in international trade 
A)  increasing income inequality 
B)  a reduction in the poverty line 
C)  rapid economic growth 
D)  a reduction in international trade

Question 5

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3   Income) - $10,000. 
a. $120,003
b. $90,003
c. $60,003
d. $30,003
e. $0
<sub

Accepted Answer

a. $30,000
b. $20,000
c. $10,0

Question 6

Table 20-4
   Source: U.S. Bureau of Census
-Refer to Table 20-4. Comparing data from 2000 and 2011, which of the following statements is correct?

Accepted Answer

A)  There has been no change in overall income inequality because the share of income held by the fourth fifth is nearly identical. 
B)  Overall income inequality has worsened slightly, as shown by the simultaneous increase in the share of income held by the top fifth and the decrease in the share of income held by the bottom fifth. 
C)  Overall income inequality has improved because the share held by the second fifth has declined by 0.5%. 
D)  None of the above is correct. 
A)  There has been no change in overall income inequality because the share of income held by the fourth fifth is nearly identical. 
B)  Overall income inequality has worsened slightly, as shown by the simultaneous increase in the share of income held by the top fifth and the decrease in the share of income held by the bottom fifth. 
C)  Overall income inequality has improved because the share held by the second fifth has declined by 0.5%. 
D)  None of the above is correct.

Question 7

Scenario 20-7
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-7. Does Zooey owe or receive money from the government? How much?

Accepted Answer

She receiv

Question 8

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

Accepted Answer

A)  75 percent 
B)  70 percent 
C)  67 percent 
D)  50 percent 
A)  75 percent 
B)  70 percent 
C)  67 percent 
D)  50 percent

Question 9

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

Accepted Answer

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

Question 10

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

Accepted Answer

difference

Question 11

A disadvantage associated with a minimum wage law 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)  focuses on children and the disabled while neglecting the working poor. 
D)  may benefit the teenage children of families who are not poor. 
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)  focuses on children and the disabled while neglecting the working poor. 
D)  may benefit the teenage children of families who are not poor.

Question 12

The goal of liberalism is to

Accepted Answer

A)  redistribute income based on the assumption of diminishing marginal utility. 
B)  redistribute income in order to improve the well-being of the worst-off person in society. 
C)  punish crimes and enforce voluntary agreements but not to redistribute income. 
D)  measure happiness and satisfaction. 
A)  redistribute income based on the assumption of diminishing marginal utility. 
B)  redistribute income in order to improve the well-being of the worst-off person in society. 
C)  punish crimes and enforce voluntary agreements but not to redistribute income. 
D)  measure happiness and satisfaction.

Question 13

Table 20-3
The Distribution of Income in Edgerton
  
-Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

Accepted Answer

A)  $28,000 
B)  $44,000 
C)  $76,000 
D)  $88,000 
A)  $28,000 
B)  $44,000 
C)  $76,000 
D)  $88,000

Question 14

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, how many more percentage points of total income did the top fifth of the population earn compared to if the income distribution were completely equal?

Accepted Answer

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

Question 15

People have their highest saving rates when they are

Accepted Answer

A)  retired. 
B)  middle-aged. 
C)  married with young children. 
D)  young and single. 
A)  retired. 
B)  middle-aged. 
C)  married with young children. 
D)  young and single.

Question 16

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 $100,000 before taxes would have how much after-tax income?

Accepted Answer

A)  $50,000 
B)  $65,000 
C)  $80,000 
D)  $95,000 
A)  $50,000 
B)  $65,000 
C)  $80,000 
D)  $95,000

Question 17

Table 20-2
Percentage of Before-Tax Income Received by Families in Hapland
  
-Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income distribution became

Accepted Answer

A)  less equal. 
B)  more equal. 
C)  more equal at the lowest level of income but less equal at highest level of income. 
D)  less equal at the lowest level of income but more equal at highest level of income. 
A)  less equal. 
B)  more equal. 
C)  more equal at the lowest level of income but less equal at highest level of income. 
D)  less equal at the lowest level of income but more equal at highest level of income.

Question 18

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 20-2
The government is proposing switching from a progressive tax system, in which families pay 15% of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000 to a tax system in which every family pays 1/4 of its income regardless of how much they earn and all income redistribution is eliminated. That is, the tax revenue generated is used only for infrastructure, public administration, and national defense.
-Refer to Scenario 20-2. Which philosopher would be most in favor of the proposed change in tax policy?

Accepted Answer

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

Question 20

There is very little economic mobility in the United States, which means that once a family is poor, it is very likely to remain poor for at least a decade.

Accepted Answer

A) True 
 B)False

Saving and borrowing is indicative of a family that

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. Fifty percent of all families have incomes below what level?

Which of the following pholitical philosophies would support redistribution of income that makes society fully egalitarian?

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 Income) - $10,000. a. $120,003 b. $90,003 c. $60,003 d. $30,003 e. $0 <sub

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. Comparing data from 2000 and 2011, which of the following statements is correct?

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

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

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

A disadvantage associated with a minimum wage law to reduce poverty is that it

The goal of liberalism is to

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

People have their highest saving rates when they are

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 $100,000 before taxes would have how much after-tax income?

Table 20-2 Percentage of Before-Tax Income Received by Families in Hapland -Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income distribution became

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

There is very little economic mobility in the United States, which means that once a family is poor, it is very likely to remain poor for at least a decade.

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

Exam 20: Income Inequality and Poverty

Saving and borrowing is indicative of a family that

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. Fifty percent of all families have incomes below what level?

Which of the following pholitical philosophies would support redistribution of income that makes society fully egalitarian?

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 Income) - $10,000. a. $120,003 b. $90,003 c. $60,003 d. $30,003 e. $0 <sub

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. Comparing data from 2000 and 2011, which of the following statements is correct?

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

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

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

A disadvantage associated with a minimum wage law to reduce poverty is that it

The goal of liberalism is to

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

People have their highest saving rates when they are

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 $100,000 before taxes would have how much after-tax income?

Table 20-2 Percentage of Before-Tax Income Received by Families in Hapland -Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income distribution became

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

There is very little economic mobility in the United States, which means that once a family is poor, it is very likely to remain poor for at least a decade.

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