Question 1

Susan won $2,000 at the blackjack tables on her birthday. Her winnings are an example of

Accepted Answer

A)  permanent income. 
B)  life-cycle income. 
C)  transitory income. 
D)  an in-kind transfer. 
A)  permanent income. 
B)  life-cycle income. 
C)  transitory income. 
D)  an in-kind transfer.

Question 2

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Accepted Answer

A)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on transitory income. 
B)  Angelo's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Sonia's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income. 
C)  Angelo's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Sonia's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income. 
D)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on permanent income. 
A)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on transitory income. 
B)  Angelo's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Sonia's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income. 
C)  Angelo's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Sonia's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income. 
D)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on permanent income.

Question 3

The goal of utilitarians is to

Accepted Answer

A)  punish crimes and enforce voluntary agreements but not to redistribute income. 
B)  redistribute income until each person has equal earnings. 
C)  redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. 
D)  redistribute income based on the assumption of diminishing marginal utility. 
A)  punish crimes and enforce voluntary agreements but not to redistribute income. 
B)  redistribute income until each person has equal earnings. 
C)  redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. 
D)  redistribute income based on the assumption of diminishing marginal utility.

Question 4

Table 20-3
The Distribution of Income in Edgerton  
-Refer to Table 20-3. According to the table, what percent of families in Edgerton have income levels at or above $76,000?

Accepted Answer

A)  80 percent 
B)  60 percent 
C)  50 percent 
D)  40 percent 
A)  80 percent 
B)  60 percent 
C)  50 percent 
D)  40 percent

Question 5

Liberals believe

Accepted Answer

A)  that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  in the assumption of diminishing marginal utility. 
C)  that everyone in society should have equal utility. 
D)  that the government should not redistribute income. 
A)  that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  in the assumption of diminishing marginal utility. 
C)  that everyone in society should have equal utility. 
D)  that the government should not redistribute income.

Question 6

Which of the following is an example of a welfare program?

Accepted Answer

A)  Temporary Assistance for Needy Families (TANF). 
B)  Capital Gains Tax (CGT). 
C)  Life Cycle Transfers (LCT). 
D)  North American Free Trade Agreement (NAFT
A) . 
A)  Temporary Assistance for Needy Families (TANF). 
B)  Capital Gains Tax (CGT). 
C)  Life Cycle Transfers (LCT). 
D)  North American Free Trade Agreement (NAFT
A) .

Question 7

Pietro is 40 years old and is laid off from his job at the paper plant and borrows from his savings for 8 months until he finds a new job. Pietro's

Accepted Answer

A)  transitory income likely exceeds his permanent income for that year. 
B)  borrowing is representative of a normal economic life cycle. 
C)  permanent income is largely unaffected by this one time change to his income. 
D)  economic mobility during this year is highly unusual, as US workers tend to stay in a particular income class. 
A)  transitory income likely exceeds his permanent income for that year. 
B)  borrowing is representative of a normal economic life cycle. 
C)  permanent income is largely unaffected by this one time change to his income. 
D)  economic mobility during this year is highly unusual, as US workers tend to stay in a particular income class.

Question 8

The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

Accepted Answer

The answer of The Earned Income Tax Credit (EITC) is...

Question 9

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

Accepted Answer

According to utilitarianism, the governm

Question 10

Scenario 20-6
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 20-6. If Zooey decides to quit her job and earns $0 in income annually, how much more or less money will she have compared to continuing to work as a cashier?

Accepted Answer

A)  If she quits her job, she will have $10,000 less per year. 
B)  If she quits her job, she will have $15,000 less per year. 
C)  If she quits her job, she will have $10,000 more per year. 
D)  If she quits her job, she will have $15,000 more per year. 
A)  If she quits her job, she will have $10,000 less per year. 
B)  If she quits her job, she will have $15,000 less per year. 
C)  If she quits her job, she will have $10,000 more per year. 
D)  If she quits her job, she will have $15,000 more per year.

Question 11

Which of the following groups has the highest poverty rate?

Accepted Answer

A)  blacks 
B)  Asians 
C)  children (under age 18) 
D)  female households, no spouse present 
A)  blacks 
B)  Asians 
C)  children (under age 18) 
D)  female households, no spouse present

Question 12

The poverty line in the country of Inequalia is $10,000. The distribution of income for Inequalia is as follows: Number of Families Income     200 less than $5,000
300 between $5,000 and $10,000
500 between $10,000 and $15,000
700 between $15,000 and $20,000
100 over $20,000   The poverty rate in Inequalia is

Accepted Answer

A)  11.1 percent. 
B)  16.7 percent. 
C)  27.8 percent. 
D)  55.5 percent. 
A)  11.1 percent. 
B)  16.7 percent. 
C)  27.8 percent. 
D)  55.5 percent.

Question 13

Medicaid and food stamps are

Accepted Answer

A)  available only to the elderly. 
B)  forms of in-kind assistance. 
C)  forms of cash assistance. 
D)  transfer payments. 
A)  available only to the elderly. 
B)  forms of in-kind assistance. 
C)  forms of cash assistance. 
D)  transfer payments.

Question 14

The philosopher John Rawls argued that

Accepted Answer

A)  people would choose a more equal distribution of income if they had to determine an economic distribution system before knowing their place in it. 
B)  people would choose income inequality to allow the maximum use of their individual talents. 
C)  government has a role to ensure income equality to prevent social unrest. 
D)  people would choose equal opportunity because it is morally right. 
A)  people would choose a more equal distribution of income if they had to determine an economic distribution system before knowing their place in it. 
B)  people would choose income inequality to allow the maximum use of their individual talents. 
C)  government has a role to ensure income equality to prevent social unrest. 
D)  people would choose equal opportunity because it is morally right.

Question 15

A family's ability to buy goods and services depends largely on the family's

Accepted Answer

A)  economic mobility. 
B)  place in the economic life cycle. 
C)  transitory income. 
D)  permanent income. 
A)  economic mobility. 
B)  place in the economic life cycle. 
C)  transitory income. 
D)  permanent income.

Question 16

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A)  improve economic efficiency by reducing poverty. 
B)  reduce economic efficiency because they distort incentives. 
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D)  sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency. 
A)  improve economic efficiency by reducing poverty. 
B)  reduce economic efficiency because they distort incentives. 
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives. 
D)  sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.

Question 17

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Accepted Answer

A) True 
 B)False

Question 18

What measure does the federal government use when setting the official poverty line in the US?

Accepted Answer

three times the cost

Question 19

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

Accepted Answer

A)  pay $6,000 in taxes. 
B)  receive an income subsidy of $6,000. 
C)  receive an income subsidy of $12,000. 
D)  have an after-tax income of $48,000. 
A)  pay $6,000 in taxes. 
B)  receive an income subsidy of $6,000. 
C)  receive an income subsidy of $12,000. 
D)  have an after-tax income of $48,000.

Question 20

Table 20-14
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 20-14. If the distribution of income were completely equal, what percentage of income would the bottom fifth of the population earn?

Accepted Answer

The answer of Table 20-14
Income Inequality in the United States
The...

Exam 20: Income Inequality and Poverty

Susan won $2,000 at the blackjack tables on her birthday. Her winnings are an example of

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

The goal of utilitarians is to

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. According to the table, what percent of families in Edgerton have income levels at or above $76,000?

Liberals believe

Which of the following is an example of a welfare program?

Pietro is 40 years old and is laid off from his job at the paper plant and borrows from his savings for 8 months until he finds a new job. Pietro's

The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

Which of the following groups has the highest poverty rate?

Medicaid and food stamps are

The philosopher John Rawls argued that

A family's ability to buy goods and services depends largely on the family's

Government programs that take money from high-income people and give it to low-income people typically

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

What measure does the federal government use when setting the official poverty line in the US?

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

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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