Question 1

Which of the following statements is correct?

Accepted Answer

A)  The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B)  The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C)  The economic life cycle explains why people base spending decisions on transitory income. 
D)  The United States has more income inequality than developing countries, including Mexico and Brazil. 
A)  The United States has a more equal distribution of income than other developed countries such as Japan and Germany. 
B)  The statement "a rising tide lifts all boats" illustrates how economic growth reduces the number of people with income levels below the poverty line. 
C)  The economic life cycle explains why people base spending decisions on transitory income. 
D)  The United States has more income inequality than developing countries, including Mexico and Brazil.

Question 2

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Accepted Answer

A)  The government is effectively taxing every dollar earned up to $25,000 at a rate of 100%. 
B)  This program would reduce the incentive to work to earn any wage up to $25,000. 
C)  If workers are discouraged from working due to this program, they will miss any on-the-job training that would have otherwise occurred, limiting their ability to improve their skills. 
D)  All of the above are correct. 
A)  The government is effectively taxing every dollar earned up to $25,000 at a rate of 100%. 
B)  This program would reduce the incentive to work to earn any wage up to $25,000. 
C)  If workers are discouraged from working due to this program, they will miss any on-the-job training that would have otherwise occurred, limiting their ability to improve their skills. 
D)  All of the above are correct.

Question 3

Table 20-1
The following table shows the distribution of income in Marysville.  
-Refer to Table 20-1. Seventy-five percent of all families have incomes above what level?

Accepted Answer

A)  $30,000 
B)  $60,000 
C)  $90,000 
D)  There is insufficient information to answer this question. 
A)  $30,000 
B)  $60,000 
C)  $90,000 
D)  There is insufficient information to answer this question.

Question 4

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Accepted Answer

A) True 
 B)False

Question 5

Table 20-15
Income Inequality in 2010 in the United States by Race
The values in the table reflect the percentages of pre-tax-and-transfer income.   Source: US Census Bureau
-Refer to Table 20-15. In percentage point terms, how much more did the top 5% of the Asian population earn than it would have if income were distributed equally?

Accepted Answer

The answer of Table 20-15
Income Inequality in 2010 in the...

Question 6

Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars]   Source: U. S. Bureau of the Census, Current Population Survey.
-Refer to Table 20-11. What is the poverty line for a family with one 35-year-old adult and one child?

Accepted Answer

A)  $11,702 
B)  $15,446 
C)  $15,504 
D)  $18,106 
A)  $11,702 
B)  $15,446 
C)  $15,504 
D)  $18,106

Question 7

The United States has more income inequality than Brazil and South Africa.

Accepted Answer

A) True 
 B)False

Question 8

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

Accepted Answer

An in-kind transfer program distributes

Question 9

The poverty line in the country of Dismal is $20,000. The distribution of income for Dismal is as follows: Number of Families Income     1,000 less than $10,000
2,000 between $10,000 and $20,000
2,000 between $20,000 and $30,000
800 between $30,000 and $40,000
200 over $40,000   The poverty rate in Dismal is

Accepted Answer

A)  16.7 percent. 
B)  33.3 percent. 
C)  50 percent. 
D)  83.3 percent. 
A)  16.7 percent. 
B)  33.3 percent. 
C)  50 percent. 
D)  83.3 percent.

Question 10

The income level below which families are said to be poor is known as the

Accepted Answer

A)  income maintenance threshold. 
B)  poverty line. 
C)  bottom quintile of the income distribution. 
D)  minimum wage. 
A)  income maintenance threshold. 
B)  poverty line. 
C)  bottom quintile of the income distribution. 
D)  minimum wage.

Question 11

In the United States from 1935 to 2011 the share of total income earned by the bottom fifth of income earners rose and then fell.

Accepted Answer

A) True 
 B)False

Question 12

A tax provision that works much like a negative income tax is the

Accepted Answer

A)  Earned Income Tax Credit (EIT
C) . 
B)  Temporary Assistance for Needy Families (TANF). 
C)  deduction for charitable contributions. 
D)  mortgage interest rate deduction. 
A)  Earned Income Tax Credit (EIT
C) . 
B)  Temporary Assistance for Needy Families (TANF). 
C)  deduction for charitable contributions. 
D)  mortgage interest rate deduction.

Question 13

Table 20-13
Distribution of Income in Imagination  
-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Accepted Answer

The answer of Table 20-13
Distribution of Income in Imagination ...

Question 14

Figure 20-5  
-Refer to Figure 20-5. If the government imposes a minimum wage above Wo, it is likely to

Accepted Answer

A)  increase employment to a level above Qo. 
B)  reduce employment to a level below Qo. 
C)  provide more income to the working poor than they collectively received before the minimum wage was set. 
D)  have no effect on employment. 
A)  increase employment to a level above Qo. 
B)  reduce employment to a level below Qo. 
C)  provide more income to the working poor than they collectively received before the minimum wage was set. 
D)  have no effect on employment.

Question 15

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

Accepted Answer

A)  increase by about 1 percent. 
B)  decrease by about 1 percent. 
C)  decrease by about 5 percent. 
D)  decrease by about 10 percent. 
A)  increase by about 1 percent. 
B)  decrease by about 1 percent. 
C)  decrease by about 5 percent. 
D)  decrease by about 10 percent.

Question 16

Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars]   Source: U. S. Bureau of the Census, Current Population Survey.
-Refer to Table 20-11. What is the poverty line for a family of eight with two children?

Accepted Answer

A)  $18,123 
B)  $36,463 
C)  $41,027 
D)  $43,487 
A)  $18,123 
B)  $36,463 
C)  $41,027 
D)  $43,487

Question 17

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Accepted Answer

A)  $170,000 and over 
B)  $205,000 and over 
C)  $250,000 and over 
D)  $325,000 and over 
A)  $170,000 and over 
B)  $205,000 and over 
C)  $250,000 and over 
D)  $325,000 and over

Question 18

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Accepted Answer

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

Question 19

Figure 20-3  
-Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

Accepted Answer

A)  higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  is lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty. 
D)  is lower than the percentage of children under age 18 and is equal to the percentage of elderly aged 65 and over in poverty. 
A)  higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  is lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty. 
D)  is lower than the percentage of children under age 18 and is equal to the percentage of elderly aged 65 and over in poverty.

Question 20

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Accepted Answer

Utilitarians reject complete equalizatio

Exam 20: Income Inequality and Poverty

Which of the following statements is correct?

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. Seventy-five percent of all families have incomes above what level?

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-11. What is the poverty line for a family with one 35-year-old adult and one child?

The United States has more income inequality than Brazil and South Africa.

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

The income level below which families are said to be poor is known as the

In the United States from 1935 to 2011 the share of total income earned by the bottom fifth of income earners rose and then fell.

A tax provision that works much like a negative income tax is the

Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Figure 20-5 -Refer to Figure 20-5. If the government imposes a minimum wage above Wo, it is likely to

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-11. What is the poverty line for a family of eight with two children?

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

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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