Question 1

Foreign aid at times actually hinders economic growth by creating wrong incentives.

Accepted Answer

A) True 
 B)False  True

Question 2

The negative income tax had not gained political acceptability because:

Accepted Answer

A) the politicians favor transfer of dollars rather than in-kind benefits. 
B) it increases the opportunity cost of leisure. 
C) the break-even income level is high. 
D) it raises the labor cost borne by the producers. 
E) it redistributes income from the poor to the rich. 
A) the politicians favor transfer of dollars rather than in-kind benefits. 
B) it increases the opportunity cost of leisure. 
C) the break-even income level is high. 
D) it raises the labor cost borne by the producers. 
E) it redistributes income from the poor to the rich. C

Question 3

The table given below shows the annual incomes of a family of four and the corresponding transfer incomes. Table 19.3
  Refer to Table 19.3.What is the guaranteed income floor?

Accepted Answer

A) $20, 000 
B) $7, 000 
C) $1, 000 
D) $5, 000 
E) $8, 750 
A) $20, 000 
B) $7, 000 
C) $1, 000 
D) $5, 000 
E) $8, 750 D

Question 4

Transfer programs are so named because they transfer:

Accepted Answer

A) the burden of poverty alleviation from the church to the state. 
B) the poverty from the country side to the city. 
C) the responsibility for maintaining minimum standards of living from the federal government to state governments. 
D) income from the relatively high-income people to relatively low-income people. 
E) the incidence of poverty from predominantly ethnic groups to the majority white population. 
A) the burden of poverty alleviation from the church to the state. 
B) the poverty from the country side to the city. 
C) the responsibility for maintaining minimum standards of living from the federal government to state governments. 
D) income from the relatively high-income people to relatively low-income people. 
E) the incidence of poverty from predominantly ethnic groups to the majority white population.

Question 5

The farther the Lorenz curve from the line of perfect equality the lower is the income inequality.

Accepted Answer

A) True 
 B)False

Question 6

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 7

One of the major causes of economic backwardness in the poor countries is:

Accepted Answer

A) the absence of public goods. 
B) the absence of private property rights. 
C) a lack of government intervention in the market. 
D) the absence of commonly owned resources. 
E) a lack of foreign aid. 
A) the absence of public goods. 
B) the absence of private property rights. 
C) a lack of government intervention in the market. 
D) the absence of commonly owned resources. 
E) a lack of foreign aid.

Question 8

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 9

The figure below shows two Lorenz curves, Y and Z. Figure 19.1   According to Figure 19.1, 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 10

The "Robin Hood" tax policy, which taxes the rich to give to the poor, is best described by economists as:

Accepted Answer

A) a proportional tax policy. 
B) a regressive tax policy. 
C) a poll tax policy. 
D) a progressive tax policy. 
E) a capital tax policy. 
A) a proportional tax policy. 
B) a regressive tax policy. 
C) a poll tax policy. 
D) a progressive tax policy. 
E) a capital tax policy.

Question 11

The figure given below shows the Lorenz curves of two countries (Country A and Country B). Figure 19.2
Total income (cumulative percentage)   Total population (cumuative percentage)
Refer to Figure 19.2.The richest 20 percent of the population in Country A receive:

Accepted Answer

A) 10 percent of the national income. 
B) 20 percent of the national income. 
C) 30 percent of the national income. 
D) 40 percent of the national income. 
E) 50 percent of the national income. 
A) 10 percent of the national income. 
B) 20 percent of the national income. 
C) 30 percent of the national income. 
D) 40 percent of the national income. 
E) 50 percent of the national income.

Question 12

The rule which is used to compare economic growth among the nations is:

Accepted Answer

A) the per se rule. 
B) the rule of 72. 
C) the rule of thumb. 
D) the rule of thirds. 
E) the rule of 70. 
A) the per se rule. 
B) the rule of 72. 
C) the rule of thumb. 
D) the rule of thirds. 
E) the rule of 70.

Question 13

If 50 percent of the population receives 20 percent of the total income it can be represented by:

Accepted Answer

A) a point below the line of equality. 
B) a line below the line of equality. 
C) a point on the line of equality. 
D) a line intersecting the line of equality from below. 
E) a point above the line of equality. 
A) a point below the line of equality. 
B) a line below the line of equality. 
C) a point on the line of equality. 
D) a line intersecting the line of equality from below. 
E) a point above the line of equality.

Question 14

If the income floor is set at $6, 000 and the negative income tax rate is 20 percent, a family which earns nothing will have a total income (including the income tax transfer)of _____.

Accepted Answer

A) $1, 500 
B) $7, 500 
C) $4, 500 
D) $6, 000 
E) $1, 200 
A) $1, 500 
B) $7, 500 
C) $4, 500 
D) $6, 000 
E) $1, 200

Question 15

The size of a family or household does not affect the data used to measure income inequality.

Accepted Answer

A) True 
 B)False

Question 16

A Gini of 0 implies:

Accepted Answer

A) every family has equal amount of income. 
B) top 10% of the families appropriate almost 100% of the total income. 
C) bottom 90% of the families have only 10% of the total income. 
D) bottom 20% of the families have 80% of the total income. 
E) only 1 family appropriates the entire national income. 
A) every family has equal amount of income. 
B) top 10% of the families appropriate almost 100% of the total income. 
C) bottom 90% of the families have only 10% of the total income. 
D) bottom 20% of the families have 80% of the total income. 
E) only 1 family appropriates the entire national income.

Question 17

Which of the following results from the market system of resource allocation?

Accepted Answer

A) Equitable distribution of resources 
B) High opportunity cost of production 
C) Excess supply of goods and services resulting in decreased profits 
D) Unequal distribution of income and wealth 
E) Allocation of the goods and services to them who need them the most 
A) Equitable distribution of resources 
B) High opportunity cost of production 
C) Excess supply of goods and services resulting in decreased profits 
D) Unequal distribution of income and wealth 
E) Allocation of the goods and services to them who need them the most

Question 18

Markets can function efficiently only when the private property rights are completely suspended and every resource in the economy is a commonly owned resource.

Accepted Answer

A) True 
 B)False

Question 19

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1
  Refer to Table 19.1.What percentage of income is received by the bottom 20% of the households?

Accepted Answer

A) 10.3% 
B) 43.9% 
C) 24.7% 
D) 4.3% 
E) 16.9% 
A) 10.3% 
B) 43.9% 
C) 24.7% 
D) 4.3% 
E) 16.9%

Question 20

If for each dollar earned, $0.50 is taken out of the transfer received by a family of four, the negative income tax rate is 50 percent.

Accepted Answer

A) True 
 B)False

Exam 34: Income Distribution, Poverty and Government Policy

Foreign aid at times actually hinders economic growth by creating wrong incentives.

The negative income tax had not gained political acceptability because:

The table given below shows the annual incomes of a family of four and the corresponding transfer incomes. Table 19.3 Refer to Table 19.3.What is the guaranteed income floor?

Transfer programs are so named because they transfer:

The farther the Lorenz curve from the line of perfect equality the lower is the income inequality.

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

One of the major causes of economic backwardness in the poor countries is:

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

The figure below shows two Lorenz curves, Y and Z. Figure 19.1 According to Figure 19.1, which of the following is true?

The "Robin Hood" tax policy, which taxes the rich to give to the poor, is best described by economists as:

The figure given below shows the Lorenz curves of two countries (Country A and Country B). Figure 19.2 Total income (cumulative percentage) Total population (cumuative percentage) Refer to Figure 19.2.The richest 20 percent of the population in Country A receive:

The rule which is used to compare economic growth among the nations is:

If 50 percent of the population receives 20 percent of the total income it can be represented by:

If the income floor is set at $6, 000 and the negative income tax rate is 20 percent, a family which earns nothing will have a total income (including the income tax transfer)of _____.

The size of a family or household does not affect the data used to measure income inequality.

A Gini of 0 implies:

Which of the following results from the market system of resource allocation?

Markets can function efficiently only when the private property rights are completely suspended and every resource in the economy is a commonly owned resource.

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1 Refer to Table 19.1.What percentage of income is received by the bottom 20% of the households?

If for each dollar earned, $0.50 is taken out of the transfer received by a family of four, the negative income tax rate is 50 percent.

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

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

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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