Exam 20: Income Inequality and Poverty

Compare and contrast the "life cycle" hypothesis and the "permanent income" hypothesis. What are their respective implications for inequality in the income distribution?

In the United States from 1935 to 2011 the share of total income earned by the bottom fifth of income earners rose and then fell.

Based on U.S. income data from 2011, the bottom fifth of all families received approximately what percent of all income?

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

Suppose that Jamal is moving to a state where personal incomes are distributed randomly. If Jamal believes in liberalism, he would prefer

A utilitarian government must

In the U.S. economy, labor earnings make up about

Which of the following is an example of a welfare program?

Economists who support minimum-wage legislation are likely to believe that the

Robert Nozick criticizes Rawls's concept of justice by using an example of

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

When we compare the income distribution of the United States to those of other countries, we find that the U.S. has

According to a study by Michael Cox and Richard Alm, consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

Which of the following statements is not correct?

A utilitarian government will pursue policies that redistribute income from the rich to the poor. One problem with these policies is that

Economists who study economic mobility have found that, if a father earns 20 percent above his generation's average income, his son will most likely earn

The top 5 percent of U.S. annual family income in 2011 was $205,200 or more.

The income distribution in the United States shows that the income share of the top fifth of all families is

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. A family earning $110,000 before taxes would have how much after-tax income?

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 group would be most in favor of the proposed change in tax policy?