Question 1

Individuals have a tradeoff between leisure and work.When income from working is taxed, the cost of leisure is reduced in relative terms.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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.

Question 4

If the income floor for a family of four is $25, 000 and the negative income tax rate is 20 percent, the break-even income should be:

Accepted Answer

A) $125, 000. 
B) $250, 000. 
C) $100, 000. 
D) $200, 000. 
E) $225, 000. 
A) $125, 000. 
B) $250, 000. 
C) $100, 000. 
D) $200, 000. 
E) $225, 000.

Question 5

The main transfer programs of the U.S.government include each of the following, except:

Accepted Answer

A) social insurance. 
B) cash welfare or public assistance. 
C) in-kind transfers. 
D) veterans' benefits. 
E) employment programs. 
A) social insurance. 
B) cash welfare or public assistance. 
C) in-kind transfers. 
D) veterans' benefits. 
E) employment programs.

Question 6

A proportional tax tends to:

Accepted Answer

A) reduce income inequality. 
B) increase overall income inequality. 
C) leave the income distribution essentially unchanged. 
D) increase income inequality among the rich. 
E) generate additional tax revenues for the government. 
A) reduce income inequality. 
B) increase overall income inequality. 
C) leave the income distribution essentially unchanged. 
D) increase income inequality among the rich. 
E) generate additional tax revenues for the government.

Question 7

Consumer expenditures do not reflect the standard of people as efficiently as income inequality does.

Accepted Answer

A) True 
 B)False

Question 8

The official poverty-line income is adjusted annually for _____.

Accepted Answer

A) income taxes 
B) unemployment compensation benefits 
C) house rents 
D) inflation 
E) increases in health-care costs 
A) income taxes 
B) unemployment compensation benefits 
C) house rents 
D) inflation 
E) increases in health-care costs

Question 9

The higher the HiLo ratio, the more the top income quintile earns relative to the bottom quintile.

Accepted Answer

A) True 
 B)False

Question 10

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2
  Refer to Table 19.2.The example of a progressive tax is the:

Accepted Answer

A) tax policy Eta. 
B) tax policy Delta. 
C) tax policy Alpha. 
D) tax policy Beta. 
E) tax policy Gamma. 
A) tax policy Eta. 
B) tax policy Delta. 
C) tax policy Alpha. 
D) tax policy Beta. 
E) tax policy Gamma.

Question 11

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1
  If a Lorenz curve is drawn using the data in Table 19.1, it will:

Accepted Answer

A) coincide with the line of perfect equality. 
B) be a L-shaped curve. 
C) bow above the line of perfect equality. 
D) bow down below the line of perfect equality. 
E) be a rectangular shaped curve. 
A) coincide with the line of perfect equality. 
B) be a L-shaped curve. 
C) bow above the line of perfect equality. 
D) bow down below the line of perfect equality. 
E) be a rectangular shaped curve.

Question 12

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1
  According to Table 19.1, 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%

Question 13

Unemployment insurance provided by the U.S.government is usually funded by:

Accepted Answer

A) the excise duties imposed on the import of foreign goods. 
B) the national tax on payrolls levied on firms. 
C) external borrowing by the U.S.government. 
D) printing new money. 
E) selling off government bonds. 
A) the excise duties imposed on the import of foreign goods. 
B) the national tax on payrolls levied on firms. 
C) external borrowing by the U.S.government. 
D) printing new money. 
E) selling off government bonds.

Question 14

When a low-income individual receives a transfer payment, that individual has less of an incentive to forgo leisure time for work time.

Accepted Answer

A) True 
 B)False

Question 15

The 45-degree line splitting the distance between the axes in a Lorenz Curve is the:

Accepted Answer

A) line of equal share of expenditure. 
B) line of equivalent income. 
C) line of income equality. 
D) line of average income. 
E) line of absolute inequality. 
A) line of equal share of expenditure. 
B) line of equivalent income. 
C) line of income equality. 
D) line of average income. 
E) line of absolute inequality.

Question 16

The table below shows the monthly income of a family and the fuel assistance received from the government. Table 19.4
  Refer to Table 19.4.What is the marginal penalty on working (in terms of reduced fuel assistance)borne by the family when its income rises from $200 to $300?

Accepted Answer

A) $40 
B) $50 
C) $80 
D) $60 
E) $100 
A) $40 
B) $50 
C) $80 
D) $60 
E) $100

Question 17

Empirical observations validate that the Gini co-efficient for the U.S.economy was between 0.35 and 0.37 until the 1990s, after which it has increased and reached 0.469.Which of the following can be inferred from this?

Accepted Answer

A) The distribution of national income in the U.S.has become slightly more equal since the 1990s. 
B) The government spending on poverty alleviation has increased since 1990. 
C) More jobs have been created in the U.S.since 1990. 
D) The distribution of national income in the U.S.has become slightly more unequal since the 1990s. 
E) The government has replaced the existing regressive tax structure with a progressive tax structure. 
A) The distribution of national income in the U.S.has become slightly more equal since the 1990s. 
B) The government spending on poverty alleviation has increased since 1990. 
C) More jobs have been created in the U.S.since 1990. 
D) The distribution of national income in the U.S.has become slightly more unequal since the 1990s. 
E) The government has replaced the existing regressive tax structure with a progressive tax structure.

Question 18

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.Suppose the government changes the guaranteed income floor to $3, 000.What is the new break-even level of income if the negative income tax rate is changed to 20 percent?

Accepted Answer

A) $3, 000 
B) $15, 000 
C) $6, 000 
D) $5, 000 
E) $30, 000 
A) $3, 000 
B) $15, 000 
C) $6, 000 
D) $5, 000 
E) $30, 000

Question 19

It is often found that there is a sufficient mobility within the income distribution such that a person in the lowest quintile of income can move to the higher ones and vice versa.

Accepted Answer

A) True 
 B)False

Question 20

According to the Bureau of Labor Statistics, the distribution of consumption expenditures had a HiLo ratio of 3.8 in 2008 in contrast to the income ratio of 14.1.What can be inferred from the above statement?

Accepted Answer

A) The distribution of consumption expenditures across the households are unequal but the incomes are relatively equal. 
B) Low income households have substantially less consumption expenditures. 
C) The distribution of consumption expenditures is quite a bit more equal than is the distribution of income. 
D) Poorest lot of the households consume much less than their before-tax incomes. 
E) The rich people earn more and consequently consume much more than their poorer counterparts. 
A) The distribution of consumption expenditures across the households are unequal but the incomes are relatively equal. 
B) Low income households have substantially less consumption expenditures. 
C) The distribution of consumption expenditures is quite a bit more equal than is the distribution of income. 
D) Poorest lot of the households consume much less than their before-tax incomes. 
E) The rich people earn more and consequently consume much more than their poorer counterparts.

Exam 34: Income Distribution, Poverty and Government Policy

Individuals have a tradeoff between leisure and work.When income from working is taxed, the cost of leisure is reduced in relative terms.

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

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?

If the income floor for a family of four is $25, 000 and the negative income tax rate is 20 percent, the break-even income should be:

The main transfer programs of the U.S.government include each of the following, except:

A proportional tax tends to:

Consumer expenditures do not reflect the standard of people as efficiently as income inequality does.

The official poverty-line income is adjusted annually for _____.

The higher the HiLo ratio, the more the top income quintile earns relative to the bottom quintile.

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2 Refer to Table 19.2.The example of a progressive tax is the:

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1 If a Lorenz curve is drawn using the data in Table 19.1, it will:

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1 According to Table 19.1, what percentage of income is received by the top 40% of the population?

Unemployment insurance provided by the U.S.government is usually funded by:

When a low-income individual receives a transfer payment, that individual has less of an incentive to forgo leisure time for work time.

The 45-degree line splitting the distance between the axes in a Lorenz Curve is the:

The table below shows the monthly income of a family and the fuel assistance received from the government. Table 19.4 Refer to Table 19.4.What is the marginal penalty on working (in terms of reduced fuel assistance)borne by the family when its income rises from $200 to $300?

Empirical observations validate that the Gini co-efficient for the U.S.economy was between 0.35 and 0.37 until the 1990s, after which it has increased and reached 0.469.Which of the following can be inferred from this?

It is often found that there is a sufficient mobility within the income distribution such that a person in the lowest quintile of income can move to the higher ones and vice versa.

According to the Bureau of Labor Statistics, the distribution of consumption expenditures had a HiLo ratio of 3.8 in 2008 in contrast to the income ratio of 14.1.What can be inferred from the above statement?

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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