Question 1

Anti-poverty programs

Accepted Answer

A)  encourage saving among recipient groups. 
B)  impose a very low marginal tax rate on income. 
C)  are only made available to those with no other source of income. 
D)  may discourage the poor from escaping poverty on their own. 
A)  encourage saving among recipient groups. 
B)  impose a very low marginal tax rate on income. 
C)  are only made available to those with no other source of income. 
D)  may discourage the poor from escaping poverty on their own.

Question 2

An example of an in-kind transfer to the poor is

Accepted Answer

A)  the negative income tax. 
B)  the Earned Income Tax Credit (EIT
C) . 
C)  Medicaid. 
D)  Temporary Assistance for Needy Families (TANF). 
A)  the negative income tax. 
B)  the Earned Income Tax Credit (EIT
C) . 
C)  Medicaid. 
D)  Temporary Assistance for Needy Families (TANF).

Question 3

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following lists correctly ranks countries from most equal to least equal distribution of income?

Accepted Answer

A)  Nigeria, India, Mexico, Germany 
B)  Brazil, United States, India, Japan 
C)  United States, Ethiopia, Japan, South Africa 
D)  Japan, India, United States, Brazil 
A)  Nigeria, India, Mexico, Germany 
B)  Brazil, United States, India, Japan 
C)  United States, Ethiopia, Japan, South Africa 
D)  Japan, India, United States, Brazil

Question 5

With which three demographic variables is poverty correlated?

Accepted Answer

race, age,

Question 6

Figure 20-1 Number of Poor  
-Refer to Figure 20-1. Between 1959 and 2011 the poverty rate has

Accepted Answer

A)  increased overall. 
B)  decreased overall. 
C)  stayed the same overall. 
D)  moved in the opposite direction of the number of people in poverty. 
A)  increased overall. 
B)  decreased overall. 
C)  stayed the same overall. 
D)  moved in the opposite direction of the number of people in poverty.

Question 7

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Accepted Answer

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

Question 8

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Accepted Answer

A)  increasing income inequality 
B)  a reduction in the poverty line 
C)  rapid economic growth 
D)  a reduction in international trade 
A)  increasing income inequality 
B)  a reduction in the poverty line 
C)  rapid economic growth 
D)  a reduction in international trade

Question 9

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Accepted Answer

It would d

Question 10

When the government enacts policies to redistribute income,

Accepted Answer

A)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C)  the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D)  the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient. 
A)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal. 
B)  the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal. 
C)  the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient. 
D)  the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.

Question 11

Binding minimum-wage laws

Accepted Answer

A)  are costly for the government to impose. 
B)  force a market imbalance between the supply and demand for labor. 
C)  have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people. 
D)  do not affect segments of the population who are not poor. 
A)  are costly for the government to impose. 
B)  force a market imbalance between the supply and demand for labor. 
C)  have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people. 
D)  do not affect segments of the population who are not poor.

Question 12

Of the four countries below, which has the highest degree of income inequality?

Accepted Answer

A)  Germany 
B)  Turkey 
C)  South Africa 
D)  Mexico 
A)  Germany 
B)  Turkey 
C)  South Africa 
D)  Mexico

Question 13

Table 20-5
Distribution of Income in Umakastan  
-Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Accepted Answer

A)  $18,750 
B)  $20,000 
C)  $34,690 
D)  $38,000 
A)  $18,750 
B)  $20,000 
C)  $34,690 
D)  $38,000

Question 14

Most economists believe that a family bases its spending decisions on its transitory income.

Accepted Answer

A) True 
 B)False

Question 15

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Accepted Answer

A)  lifetime income rather than annual income. 
B)  aggregate income rather than annual personal income. 
C)  annual extended-family income rather than annual personal income. 
D)  income averaged across seasons rather than across years. 
A)  lifetime income rather than annual income. 
B)  aggregate income rather than annual personal income. 
C)  annual extended-family income rather than annual personal income. 
D)  income averaged across seasons rather than across years.

Question 16

Scenario 20-2
The government is proposing switching from a progressive tax system, in which families pay 15% of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000 to a tax system in which every family pays 1/4 of its income regardless of how much they earn and all income redistribution is eliminated. That is, the tax revenue generated is used only for infrastructure, public administration, and national defense.
-Refer to Scenario 20-2. Which philosopher would be most in favor of the proposed change in tax policy?

Accepted Answer

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

Question 17

Of the four countries below, the country that has the most income equality is

Accepted Answer

A)  Ethiopia. 
B)  France. 
C)  Russia. 
D)  Thailand. 
A)  Ethiopia. 
B)  France. 
C)  Russia. 
D)  Thailand.

Question 18

Scenario 20-7
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-7. One of Zooey's friends tells her she would have more money for the year if she quit her job and filed her tax return with $0 in income. Is her friend correct? Why or why not?

Accepted Answer

No, she would have $

Question 19

Income mobility studies suggest that poverty

Accepted Answer

A)  cannot be alleviated by privately sponsored anti-poverty programs. 
B)  cannot be alleviated by government sponsored anti-poverty programs. 
C)  is a long-term problem for a relatively large number of families. 
D)  is not a long-term problem for most families. 
A)  cannot be alleviated by privately sponsored anti-poverty programs. 
B)  cannot be alleviated by government sponsored anti-poverty programs. 
C)  is a long-term problem for a relatively large number of families. 
D)  is not a long-term problem for most families.

Question 20

Economic mobility in the United States is so great that fewer than

Accepted Answer

A)  3 percent of families are poor for 8 or more years. 
B)  5 percent of families are poor for 8 or more years. 
C)  8 percent of families are poor for 8 or more years. 
D)  10 percent of families are poor for 8 or more years. 
A)  3 percent of families are poor for 8 or more years. 
B)  5 percent of families are poor for 8 or more years. 
C)  8 percent of families are poor for 8 or more years. 
D)  10 percent of families are poor for 8 or more years.

Exam 20: Income Inequality and Poverty

Anti-poverty programs

An example of an in-kind transfer to the poor is

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Which of the following lists correctly ranks countries from most equal to least equal distribution of income?

With which three demographic variables is poverty correlated?

Figure 20-1 Number of Poor -Refer to Figure 20-1. Between 1959 and 2011 the poverty rate has

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

When the government enacts policies to redistribute income,

Binding minimum-wage laws

Of the four countries below, which has the highest degree of income inequality?

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Most economists believe that a family bases its spending decisions on its transitory income.

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Of the four countries below, the country that has the most income equality is

Income mobility studies suggest that poverty

Economic mobility in the United States is so great that fewer than

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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