Question 1

In the United States, a typical worker's income peaks around age

Accepted Answer

A)  70. 
B)  60. 
C)  50. 
D)  40. 
A)  70. 
B)  60. 
C)  50. 
D)  40.

Question 2

Table 20-10   *A Gini coefficient is a commonly used measure of income inequality, with values between 0 and 1 (0 corresponds to perfect equality whereby everyone has exactly the same income, and 1 corresponds to perfect inequality where one person has all the income, while everyone else has zero income).
Source: The World Bank
-Refer to Table 20-10. Which country has the most unequal income distribution?

Accepted Answer

A)  Latvia 
B)  Italy 
C)  France 
D)  Sweden 
A)  Latvia 
B)  Italy 
C)  France 
D)  Sweden

Question 3

The maximin criterion suggests that social policy should

Accepted Answer

A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers. 
A)  expropriate the factors of production from the capitalist class. 
B)  ensure an equal distribution of income. 
C)  elevate the well-being of those at the bottom of the income distribution. 
D)  elevate the well-being of all workers.

Question 4

Table 20-9
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.   Source: US Census Bureau
-Refer to Table 20-9. Which of the following statements best describes the trends in the table?

Accepted Answer

A)  From 1980 to 2010, the distribution of income has become less equal. 
B)  From 1980 to 2010, the distribution of income has remained the same. 
C)  From 1980 to 2010, the distribution of income has become more equal. 
D)  None of the above is correct. 
A)  From 1980 to 2010, the distribution of income has become less equal. 
B)  From 1980 to 2010, the distribution of income has remained the same. 
C)  From 1980 to 2010, the distribution of income has become more equal. 
D)  None of the above is correct.

Question 5

Which of the following represents a problem in measuring inequality?

Accepted Answer

A)  Measurements of income distributions typically include in-kind transfers, which distort the measure of inequality. 
B)  A normal life-cycle pattern causes inequality in the income distribution but may not reflect inequality in living standards. 
C)  Transitory income is a better measure of inequality than permanent income. 
D)  Both a and b are correct. 
A)  Measurements of income distributions typically include in-kind transfers, which distort the measure of inequality. 
B)  A normal life-cycle pattern causes inequality in the income distribution but may not reflect inequality in living standards. 
C)  Transitory income is a better measure of inequality than permanent income. 
D)  Both a and b are correct.

Question 6

Which of the following is not correct?

Accepted Answer

A)  Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. 
B)  Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. 
C)  Critics argue that in-kind transfers are inefficient and disrespectful. 
D)  For a program to qualify as an in-kind transfer, it must have government approval. 
A)  Toys for Tots, a program that collects new toys to distribute to poor children at Christmas, is an example of an in-kind transfer. 
B)  Supporters advocate the use of in-kind transfers because they restrict the ability of recipients to purchase alcohol and drugs. 
C)  Critics argue that in-kind transfers are inefficient and disrespectful. 
D)  For a program to qualify as an in-kind transfer, it must have government approval.

Question 7

In the United States, labor earnings are about what percent of total income?

Accepted Answer

A)  75 percent 
B)  70 percent 
C)  67 percent 
D)  50 percent 
A)  75 percent 
B)  70 percent 
C)  67 percent 
D)  50 percent

Question 8

The U.S. welfare system was revised by a 1996 law that

Accepted Answer

A)  consolidated all of the previous assistance programs into a single program. 
B)  limited the amount of time that people could receive assistance. 
C)  said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance. 
D)  turned all federally-run welfare programs over to the states. 
A)  consolidated all of the previous assistance programs into a single program. 
B)  limited the amount of time that people could receive assistance. 
C)  said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance. 
D)  turned all federally-run welfare programs over to the states.

Question 9

Which two of the Ten Principles of Economics are illustrated in this chapter?

Accepted Answer

A)  A country's standard of living depends on its ability to produce goods & People face tradeoffs. 
B)  Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. 
C)  Governments can sometimes improve market outcomes & People face tradeoffs. 
D)  People face tradeoffs & Prices rise when the government prints too much money . 
A)  A country's standard of living depends on its ability to produce goods & People face tradeoffs. 
B)  Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. 
C)  Governments can sometimes improve market outcomes & People face tradeoffs. 
D)  People face tradeoffs & Prices rise when the government prints too much money .

Question 10

Table 20-9
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.   Source: US Census Bureau
-Refer to Table 20-9. In 2010, the top fifth of the US population had

Accepted Answer

A)  50.2% more income than the remainder of the population. 
B)  a lower share of income than the top fifth in 1980. 
C)  about 15 times as much income as the bottom fifth. 
D)  about 6 times as much income as the middle fifth. 
A)  50.2% more income than the remainder of the population. 
B)  a lower share of income than the top fifth in 1980. 
C)  about 15 times as much income as the bottom fifth. 
D)  about 6 times as much income as the middle fifth.

Question 11

Liberalism is the political philosophy espoused by

Accepted Answer

A)  Robert Nozick. 
B)  John Stuart Mill. 
C)  John Rawls. 
D)  Jeremy Bentham. 
A)  Robert Nozick. 
B)  John Stuart Mill. 
C)  John Rawls. 
D)  Jeremy Bentham.

Question 12

Which of the following statements is not correct?

Accepted Answer

A)  Two key elements of welfare reform are work requirements and limiting the time that recipients can receive benefits. 
B)  The Earned Income Tax Credit (EIT
C)  is very similar to a negative income tax. 
C)  Minimum wage laws will likely increase unemployment. 
D)  The elderly are more likely to be poor than single mothers. 
A)  Two key elements of welfare reform are work requirements and limiting the time that recipients can receive benefits. 
B)  The Earned Income Tax Credit (EIT
C)  is very similar to a negative income tax. 
C)  Minimum wage laws will likely increase unemployment. 
D)  The elderly are more likely to be poor than single mothers.

Question 13

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Accepted Answer

A)  trickle-down effects. 
B)  enhancing market efficiency. 
C)  redistributing income. 
D)  maintaining the status quo income distribution. 
A)  trickle-down effects. 
B)  enhancing market efficiency. 
C)  redistributing income. 
D)  maintaining the status quo income distribution.

Question 14

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their

Accepted Answer

A)  transitory income for the year of the recession likely exceeds their permanent income. 
B)  permanent income likely exceeds their transitory income for the year of the recession. 
C)  permanent income will be more affected by the recession than their transitory income. 
D)  Both a and c are correct. 
A)  transitory income for the year of the recession likely exceeds their permanent income. 
B)  permanent income likely exceeds their transitory income for the year of the recession. 
C)  permanent income will be more affected by the recession than their transitory income. 
D)  Both a and c are correct.

Question 15

Would the maximin criterion achieve perfect income equality?

Accepted Answer

A)  Yes. There would be no way to reallocate resources to raise the utility of the poor. 
B)  Yes. The maximin criterion would eliminate poverty. 
C)  No. It is impossible for complete equality to benefit the worst-off people in society. 
D)  No. Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society. 
A)  Yes. There would be no way to reallocate resources to raise the utility of the poor. 
B)  Yes. The maximin criterion would eliminate poverty. 
C)  No. It is impossible for complete equality to benefit the worst-off people in society. 
D)  No. Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society.

Question 16

Which of the following statements is not correct?

Accepted Answer

A)  The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B)  Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C)  The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D)  Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income. 
A)  The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States. 
B)  Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income. 
C)  The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old. 
D)  Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income.

Question 17

Figure 20-1 Number of Poor  
-Refer to Figure 20-1. The absolute number of people in poverty

Accepted Answer

A)  is higher in 2011 than in 1959. 
B)  is lower in 2011 than in 1959. 
C)  has not changed between 1959 and 2011. 
D)  has steadily decreased between 1959 and 2011. 
A)  is higher in 2011 than in 1959. 
B)  is lower in 2011 than in 1959. 
C)  has not changed between 1959 and 2011. 
D)  has steadily decreased between 1959 and 2011.

Question 18

Suppose the government used the following formula to compute a family's tax liability:
Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 19

Raising the welfare of the worst-off person in society is an important goal of which political philosophy?

Accepted Answer

A)  utilitarianism 
B)  liberalism 
C)  libertarianism 
D)  secularism 
A)  utilitarianism 
B)  liberalism 
C)  libertarianism 
D)  secularism

Question 20

According to utilitarians, the ultimate objective of public actions should be to

Accepted Answer

A)  ensure the poor can afford an adequate diet. 
B)  distribute income uniformly. 
C)  maximize the sum of individual utility. 
D)  prevent all people from experiencing diminishing marginal utility. 
A)  ensure the poor can afford an adequate diet. 
B)  distribute income uniformly. 
C)  maximize the sum of individual utility. 
D)  prevent all people from experiencing diminishing marginal utility.

Exam 20: Income Inequality and Poverty

In the United States, a typical worker's income peaks around age

The maximin criterion suggests that social policy should

Table 20-9 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-9. Which of the following statements best describes the trends in the table?

Which of the following represents a problem in measuring inequality?

Which of the following is not correct?

In the United States, labor earnings are about what percent of total income?

The U.S. welfare system was revised by a 1996 law that

Which two of the Ten Principles of Economics are illustrated in this chapter?

Table 20-9 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-9. In 2010, the top fifth of the US population had

Liberalism is the political philosophy espoused by

Which of the following statements is not correct?

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their

Would the maximin criterion achieve perfect income equality?

Which of the following statements is not correct?

Figure 20-1 Number of Poor -Refer to Figure 20-1. The absolute number of people in poverty

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

Raising the welfare of the worst-off person in society is an important goal of which political philosophy?

According to utilitarians, the ultimate objective of public actions should be to

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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