Question 1

If the Gini coefficient for the United States is 0.47 and that for India is 0.36, which of the following statements is true?

Accepted Answer

A) The U.S.being an industrialized nation has a lower income inequality than India. 
B) The Lorenz curve for the U.S.lies above the Lorenz curve for India. 
C) India in spite of being a developing nation has a lesser income inequality than the U.S. 
D) The Lorenz curve for India would coincide with the line of perfect equality. 
E) The distribution of income in both the economies are equal. 
A) The U.S.being an industrialized nation has a lower income inequality than India. 
B) The Lorenz curve for the U.S.lies above the Lorenz curve for India. 
C) India in spite of being a developing nation has a lesser income inequality than the U.S. 
D) The Lorenz curve for India would coincide with the line of perfect equality. 
E) The distribution of income in both the economies are equal. C

Question 2

Government policies designed to change the distribution of income to one that is more equal involve taking from the rich and giving to the poor.

Accepted Answer

A) True 
 B)False  True

Question 3

If everyone had the same income, then the Lorenz curve would:

Accepted Answer

A) be the line of income equality. 
B) bow down below the line of income equality. 
C) be a parallel line lying below the line of income equality. 
D) bow up above the line of income equality. 
E) be a curve that intersects the line of income equality at its mid-point. 
A) be the line of income equality. 
B) bow down below the line of income equality. 
C) be a parallel line lying below the line of income equality. 
D) bow up above the line of income equality. 
E) be a curve that intersects the line of income equality at its mid-point. A

Question 4

Why does the census data overstate inequality?

Accepted Answer

A) They overestimate the non cash transfers received by the people from the government. 
B) They take into account the after-tax incomes. 
C) They take into account the gifts and transfer receipts from friends and relatives staying abroad. 
D) They do not consider the in-kind transfers received by the people from the government. 
E) They overestimate the medical benefits received by the people from the government. 
A) They overestimate the non cash transfers received by the people from the government. 
B) They take into account the after-tax incomes. 
C) They take into account the gifts and transfer receipts from friends and relatives staying abroad. 
D) They do not consider the in-kind transfers received by the people from the government. 
E) They overestimate the medical benefits received by the people from the government.

Question 5

In a market system, incomes are distributed according to the:

Accepted Answer

A) principle of equality. 
B) directions of a central authority. 
C) needs of the people. 
D) ownership of resources. 
E) objectives of a planning commission. 
A) principle of equality. 
B) directions of a central authority. 
C) needs of the people. 
D) ownership of resources. 
E) objectives of a planning commission.

Question 6

The figure below shows two Lorenz curves, Y and Z. Figure 33.1   According to Figure 33.1, which of the following is true?

Accepted Answer

A) Line OXB is the line of perfect income inequality. 
B) Curve OYB represents a less equal distribution of income than curve OZB. 
C) Line AB represents a society in which wealth is shared equally among individuals. 
D) Line OXB is the line of perfect income equality. 
E) Line AB represents a society in which 50 percent of the population receives all the income. 
A) Line OXB is the line of perfect income inequality. 
B) Curve OYB represents a less equal distribution of income than curve OZB. 
C) Line AB represents a society in which wealth is shared equally among individuals. 
D) Line OXB is the line of perfect income equality. 
E) Line AB represents a society in which 50 percent of the population receives all the income.

Question 7

The income variation across the countries is the result of differential rates of economic growth being experienced by them.

Accepted Answer

A) True 
 B)False

Question 8

The largest in-kind transfer received by the poor households in the U.S.is:

Accepted Answer

A) Old-Age, Survivors, and Disability Insurance. 
B) the Head Start special education program for poor children. 
C) Medicaid, which provides long-term medical care for the poor. 
D) the food stamp program, which distributes food coupons to poor households. 
E) Temporary Assistance for Needy Families 
A) Old-Age, Survivors, and Disability Insurance. 
B) the Head Start special education program for poor children. 
C) Medicaid, which provides long-term medical care for the poor. 
D) the food stamp program, which distributes food coupons to poor households. 
E) Temporary Assistance for Needy Families

Question 9

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 33.2
  Refer to Table 33.2.Which of the tax policies is an example of a proportional tax?

Accepted Answer

A) Alpha 
B) Gamma 
C) Eta 
D) Beta 
E) Delta 
A) Alpha 
B) Gamma 
C) Eta 
D) Beta 
E) Delta

Question 10

For the negative income tax to eradicate poverty:

Accepted Answer

A) the guaranteed level of income has to be equal to the poverty line. 
B) the break-even income has to be equal to the poverty line. 
C) the negative income tax rate has to equal 50 percent. 
D) the guaranteed level of income has to be equal to the break-even income. 
E) the guaranteed level of income has to be equal to the tax paid. 
A) the guaranteed level of income has to be equal to the poverty line. 
B) the break-even income has to be equal to the poverty line. 
C) the negative income tax rate has to equal 50 percent. 
D) the guaranteed level of income has to be equal to the break-even income. 
E) the guaranteed level of income has to be equal to the tax paid.

Question 11

Which of the following statements in the context of poverty in the U.S.is true?

Accepted Answer

A) Families headed by males are likely to be poor. 
B) Caucasian Americans carry a much heavier burden of poverty compared to the native Americans. 
C) Education and technical skills do not affect employment in the United States of America. 
D) Females tend to have a greater literacy rate than males in the United States of America. 
E) Minorities, young and disabled have a higher likelihood to fall into poverty 
A) Families headed by males are likely to be poor. 
B) Caucasian Americans carry a much heavier burden of poverty compared to the native Americans. 
C) Education and technical skills do not affect employment in the United States of America. 
D) Females tend to have a greater literacy rate than males in the United States of America. 
E) Minorities, young and disabled have a higher likelihood to fall into poverty

Question 12

If those who are poor at any one time are poor only temporarily, then their plight is only temporary.This statement is based on which of the following assumptions?

Accepted Answer

A) Many spells of poverty are relatively short-lived. 
B) Government spending in the economy is inadequate. 
C) All phases of the business cycle are temporary. 
D) Education infrastructure in the economy is poor. 
E) Once people fall below the poverty line, it is almost impossible for them to rise above it. 
A) Many spells of poverty are relatively short-lived. 
B) Government spending in the economy is inadequate. 
C) All phases of the business cycle are temporary. 
D) Education infrastructure in the economy is poor. 
E) Once people fall below the poverty line, it is almost impossible for them to rise above it.

Question 13

The programs which transfer income from the richer nations to the poorer nations are referred to as:

Accepted Answer

A) transfer payments. 
B) foreign aid. 
C) foreign portfolio investment. 
D) outsourcing and offshoring. 
E) external borrowing. 
A) transfer payments. 
B) foreign aid. 
C) foreign portfolio investment. 
D) outsourcing and offshoring. 
E) external borrowing.

Question 14

The greater the value of the Gini co-efficient:

Accepted Answer

A) the greater will be the GDP of the economy. 
B) the greater will be the income inequality. 
C) the greater will be the revenue of the government from direct taxes. 
D) the greater will be the equality in the distribution of income and wealth. 
E) the lesser will be the expenditure on the part of the government. 
A) the greater will be the GDP of the economy. 
B) the greater will be the income inequality. 
C) the greater will be the revenue of the government from direct taxes. 
D) the greater will be the equality in the distribution of income and wealth. 
E) the lesser will be the expenditure on the part of the government.

Question 15

The table below shows the monthly income of a family and the fuel assistance received from the government. Table 33.4
  Refer to Table 33.4.If the family's monthly income rises from $300 to $400, the marginal penalty on working (in terms of reduced fuel assistance)is:

Accepted Answer

A) $80 
B) $40 
C) $50 
D) $90 
E) $100 
A) $80 
B) $40 
C) $50 
D) $90 
E) $100

Question 16

Following are the controversies over how poverty should be measured, except:

Accepted Answer

A) government transfers and other programs are not properly taken into account in the measures of poverty. 
B) the poverty measures do not distinguish among the needs of different individuals. 
C) the concept of poverty line does not draw any distinction between income and purchasing power. 
D) the concept of poverty line does not take into account the expenditure on food by each family. 
E) the income generated in the underground economy are not taken into account. 
A) government transfers and other programs are not properly taken into account in the measures of poverty. 
B) the poverty measures do not distinguish among the needs of different individuals. 
C) the concept of poverty line does not draw any distinction between income and purchasing power. 
D) the concept of poverty line does not take into account the expenditure on food by each family. 
E) the income generated in the underground economy are not taken into account.

Question 17

Identify the correct statement.

Accepted Answer

A) The break-even income is directly related to the negative income tax. 
B) The break-even income is inversely related to the income floor. 
C) The break-even income is inversely related to the negative income tax. 
D) The break-even income is less than the guaranteed income. 
E) The break-even income is always equal to the guaranteed income. 
A) The break-even income is directly related to the negative income tax. 
B) The break-even income is inversely related to the income floor. 
C) The break-even income is inversely related to the negative income tax. 
D) The break-even income is less than the guaranteed income. 
E) The break-even income is always equal to the guaranteed income.

Question 18

Which of the following tax structures creates a disincentive to earn more?

Accepted Answer

A) Proportional tax structure 
B) Regressive tax structure 
C) Digressive tax structure 
D) Progressive tax structure 
E) A combination of proportional and regressive tax structure 
A) Proportional tax structure 
B) Regressive tax structure 
C) Digressive tax structure 
D) Progressive tax structure 
E) A combination of proportional and regressive tax structure

Question 19

Which of the following statements concerning income distribution among nations is true?

Accepted Answer

A) A country with unequal distribution of income has a high standard of living. 
B) The richest countries have only 10 percent of the world's population but receive 80 percent of total world income. 
C) The distribution of total world income among nations is equal. 
D) One-quarter of the world's population lives in the developing countries. 
E) Per capita income between countries is generally the same. 
A) A country with unequal distribution of income has a high standard of living. 
B) The richest countries have only 10 percent of the world's population but receive 80 percent of total world income. 
C) The distribution of total world income among nations is equal. 
D) One-quarter of the world's population lives in the developing countries. 
E) Per capita income between countries is generally the same.

Question 20

The table below shows the distribution of income in the U.S.in the year 1978. Table 33.1
  According to Table 33.1, what percentage of income is received by the top 40% of the population?

Accepted Answer

A) 41.6% 
B) 51.9% 
C) 60.8% 
D) 56.2% 
E) 68.6% 
A) 41.6% 
B) 51.9% 
C) 60.8% 
D) 56.2% 
E) 68.6%

Exam 54: Income Distribution, Poverty and Government Policy

If the Gini coefficient for the United States is 0.47 and that for India is 0.36, which of the following statements is true?

Government policies designed to change the distribution of income to one that is more equal involve taking from the rich and giving to the poor.

If everyone had the same income, then the Lorenz curve would:

Why does the census data overstate inequality?

In a market system, incomes are distributed according to the:

The figure below shows two Lorenz curves, Y and Z. Figure 33.1 According to Figure 33.1, which of the following is true?

The income variation across the countries is the result of differential rates of economic growth being experienced by them.

The largest in-kind transfer received by the poor households in the U.S.is:

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 33.2 Refer to Table 33.2.Which of the tax policies is an example of a proportional tax?

For the negative income tax to eradicate poverty:

Which of the following statements in the context of poverty in the U.S.is true?

If those who are poor at any one time are poor only temporarily, then their plight is only temporary.This statement is based on which of the following assumptions?

The programs which transfer income from the richer nations to the poorer nations are referred to as:

The greater the value of the Gini co-efficient:

The table below shows the monthly income of a family and the fuel assistance received from the government. Table 33.4 Refer to Table 33.4.If the family's monthly income rises from $300 to $400, the marginal penalty on working (in terms of reduced fuel assistance)is:

Following are the controversies over how poverty should be measured, except:

Identify the correct statement.

Which of the following tax structures creates a disincentive to earn more?

Which of the following statements concerning income distribution among nations is true?

The table below shows the distribution of income in the U.S.in the year 1978. Table 33.1 According to Table 33.1, what percentage of income is received by the top 40% of the population?

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

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World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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