Question 1

A notion that supports the idea that some items should be distributed equally to all is known as

Accepted Answer

A) Pareto efficiency. 
B) the Hoover Principle. 
C) poverty gap closing. 
D) commodity egalitarianism. 
A) Pareto efficiency. 
B) the Hoover Principle. 
C) poverty gap closing. 
D) commodity egalitarianism. D

Question 2

Poverty is relative and not absolute.

Accepted Answer

A) True 
 B)False  True

Question 3

Giving poor people food instead of cash for food

Accepted Answer

A) is an in-kind transfer. 
B) will benefit some more than others,depending on their utility function. 
C) is politically popular. 
D) is all of the above. 
A) is an in-kind transfer. 
B) will benefit some more than others,depending on their utility function. 
C) is politically popular. 
D) is all of the above. D

Question 4

The scope of the EITC program changed dramatically in

Accepted Answer

A) 1963. 
B) 1983. 
C) 1993. 
D) 1996. 
A) 1963. 
B) 1983. 
C) 1993. 
D) 1996.

Question 5

An in-kind transfer is a

Accepted Answer

A) transfer made by people to be kind to others. 
B) transfer of wealth. 
C) transfer of goods and services instead of cash. 
D) system of clearing checks by local banks. 
A) transfer made by people to be kind to others. 
B) transfer of wealth. 
C) transfer of goods and services instead of cash. 
D) system of clearing checks by local banks.

Question 6

A redistribution is Pareto efficient if no one is made worse off afterward.

Accepted Answer

A) True 
 B)False

Question 7

The poverty line in the United States

Accepted Answer

A) last changed in 1980. 
B) never changes. 
C) changes with the level of inflation and family size. 
D) changes with the minimum wage. 
A) last changed in 1980. 
B) never changes. 
C) changes with the level of inflation and family size. 
D) changes with the minimum wage.

Question 8

If the least wealthy person in a society has millions of dollars,should we still consider that person poor?

Accepted Answer

If we are using a relative measure of po

Question 9

Social welfare functions require that a society has at least three people living in it.

Accepted Answer

A) True 
 B)False

Question 10

Measures of income before intervention are calculated on an annual rather than a lifetime basis.

Accepted Answer

A) True 
 B)False

Question 11

In a public goods context,it is difficult to measure its impact on real income because

Accepted Answer

A) public goods are generally free to the public. 
B) they make up a small percentage of total GDP. 
C) people do not reveal how they value public goods. 
D) inflation decreases the value of the good. 
A) public goods are generally free to the public. 
B) they make up a small percentage of total GDP. 
C) people do not reveal how they value public goods. 
D) inflation decreases the value of the good.

Question 12

For the additive social welfare function to yield results,we must assume

Accepted Answer

A) individuals have identical utility functions. 
B) individuals' utility functions have diminishing marginal utility of income. 
C) the total amount of income available is fixed. 
D) all of the above. 
A) individuals have identical utility functions. 
B) individuals' utility functions have diminishing marginal utility of income. 
C) the total amount of income available is fixed. 
D) all of the above.

Question 13

An additive social welfare function would

Accepted Answer

A) add the incomes of the lowest ten percent of income earners. 
B) subtract out the utility functions of all people who are unemployed. 
C) sum all individual utilities. 
D) maximize the utility of the person with the minimum utility. 
A) add the incomes of the lowest ten percent of income earners. 
B) subtract out the utility functions of all people who are unemployed. 
C) sum all individual utilities. 
D) maximize the utility of the person with the minimum utility.

Question 14

The _________ of whites in poverty in the U.S.is greater than that of blacks and Hispanics.

Accepted Answer

A) percentage 
B) total number 
C) fraction 
D) none of the above 
A) percentage 
B) total number 
C) fraction 
D) none of the above

Question 15

Table 12.1
-Refer to Table 12.1.Relative to their starting position,people in the fourth?fifth of the income distribution have seen the greatest decrease in their share of income.

Accepted Answer

A) True 
 B)False

Question 16

Ignoring taxes when making redistributive decisions has no impact on equity.

Accepted Answer

A) True 
 B)False

Question 17

Ethics play a key role in income redistribution.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that in a certain society $10,000 is the official cut-off of income for the poor.This means that any person making less than $10,000 is considered poor.Suppose further that there are three people in this society: Randy,Marlon,and Tito,with incomes of $9,900,$9,900,and $5,000,respectively.
A)How many people are in poverty?
B)How much income would it take,on average,to lift every poor person out of poverty?
C)What if some policy caused $200 to be taken from Tito and given to Randy.How many people are in poverty now? How much income would it take,on average,to lift every poor person out of poverty?

Accepted Answer

A)Three people are in poverty.

Question 19

Taking into account the utility of all persons in society is referred to as

Accepted Answer

A) a utilitarian social welfare function. 
B) equalizing social welfare function. 
C) an in-kind transfer. 
D) a Pareto equilibrium. 
A) a utilitarian social welfare function. 
B) equalizing social welfare function. 
C) an in-kind transfer. 
D) a Pareto equilibrium.

Question 20

An imaginary situation in which people have no knowledge of what their place in society is to be is?

Accepted Answer

A) first position 
B) start position 
C) original position 
D) pole position 
A) first position 
B) start position 
C) original position 
D) pole position

Exam 12: Income Redistribution: Conceptual Issues

A notion that supports the idea that some items should be distributed equally to all is known as

Poverty is relative and not absolute.

Giving poor people food instead of cash for food

The scope of the EITC program changed dramatically in

An in-kind transfer is a

A redistribution is Pareto efficient if no one is made worse off afterward.

The poverty line in the United States

If the least wealthy person in a society has millions of dollars,should we still consider that person poor?

Social welfare functions require that a society has at least three people living in it.

Measures of income before intervention are calculated on an annual rather than a lifetime basis.

In a public goods context,it is difficult to measure its impact on real income because

For the additive social welfare function to yield results,we must assume

An additive social welfare function would

The _________ of whites in poverty in the U.S.is greater than that of blacks and Hispanics.

Table 12.1 -Refer to Table 12.1.Relative to their starting position,people in the fourth?fifth of the income distribution have seen the greatest decrease in their share of income.

Ignoring taxes when making redistributive decisions has no impact on equity.

Ethics play a key role in income redistribution.

Taking into account the utility of all persons in society is referred to as

An imaginary situation in which people have no knowledge of what their place in society is to be is?

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

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