Question 1

Income) - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

Accepted Answer

A)  It will receive an income subsidy of $1,000. 
B)  It will receive an income subsidy of $3,000. 
C)  It will receive an income subsidy of $10,000. 
D)  It will not be affected at all, since the negative income tax requires a family to earn income. 
A)  It will receive an income subsidy of $1,000. 
B)  It will receive an income subsidy of $3,000. 
C)  It will receive an income subsidy of $10,000. 
D)  It will not be affected at all, since the negative income tax requires a family to earn income.

Question 2

The poverty line is adjusted each year to reflect changes in the

Accepted Answer

A)  number of people currently on public assistance. 
B)  level of prices. 
C)  nutritional content of an "adequate" diet. 
D)  size of a family. 
A)  number of people currently on public assistance. 
B)  level of prices. 
C)  nutritional content of an "adequate" diet. 
D)  size of a family.

Question 3

Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits. What is the foundation of your critique?

Accepted Answer

The critique is based on the premise tha

Question 4

Comparing the United States household income distribution to other countries is

Accepted Answer

A)  easy, because data is available for all countries in the world. 
B)  easy, because some countries collect data on expenditures instead of incomes. 
C)  problematic, because international agreements require countries to standardize their income accounting procedures. 
D)  problematic, because countries collect data in different ways. 
A)  easy, because data is available for all countries in the world. 
B)  easy, because some countries collect data on expenditures instead of incomes. 
C)  problematic, because international agreements require countries to standardize their income accounting procedures. 
D)  problematic, because countries collect data in different ways.

Question 5

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

Accepted Answer

The answer of Of the following groups, which group is...

Question 6

Which of the three political philosophies discussed in the textbook, if any, view the total income of society as a shared resource that a social planner can freely redistribute to achieve some social goal?

Accepted Answer

utilitaria

Question 7

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

Accepted Answer

The answer of If greater equality is the benefit of...

Question 8

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Accepted Answer

A)  Changes in technology. 
B)  An increase in minimum wages. 
C)  A reduction in the demand for unskilled labor. 
D)  Increased international trade with low-wage countries. 
A)  Changes in technology. 
B)  An increase in minimum wages. 
C)  A reduction in the demand for unskilled labor. 
D)  Increased international trade with low-wage countries.

Question 9

According to a study by Michael Cox and Richard Alm, consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

Accepted Answer

A) True 
 B)False

Question 10

On what type of income do many economists believe that people base their consumption?

Accepted Answer

The answer of On what type of income do many...

Question 11

If society chose to maximize total utility rather than minimum utility,

Accepted Answer

A)  society would achieve perfect income equality. 
B)  society would achieve the maximin objective. 
C)  its justice would be more utilitarian than Rawlsian. 
D)  its justice would be more Rawlsian than utilitarian. 
A)  society would achieve perfect income equality. 
B)  society would achieve the maximin objective. 
C)  its justice would be more utilitarian than Rawlsian. 
D)  its justice would be more Rawlsian than utilitarian.

Question 12

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

Accepted Answer

A)  taking $1 from Mitchell and giving it to Phil would increase society's total utility. 
B)  taking $1 from Mitchell and giving it to Jay would increase society's total utility. 
C)  taking $1 from Phil and giving it to Jay would increase society's total utility. 
D)  None of the above are correct because all three individuals have sufficient income. 
A)  taking $1 from Mitchell and giving it to Phil would increase society's total utility. 
B)  taking $1 from Mitchell and giving it to Jay would increase society's total utility. 
C)  taking $1 from Phil and giving it to Jay would increase society's total utility. 
D)  None of the above are correct because all three individuals have sufficient income.

Question 13

In comparison to the average poverty rate,

Accepted Answer

A)  children and the elderly are more likely to be poor. 
B)  children and the elderly are less likely to be poor. 
C)  children are more likely to be poor, but the elderly are less likely to be poor. 
D)  children are less likely to be poor, but the elderly are more likely to be poor. 
A)  children and the elderly are more likely to be poor. 
B)  children and the elderly are less likely to be poor. 
C)  children are more likely to be poor, but the elderly are less likely to be poor. 
D)  children are less likely to be poor, but the elderly are more likely to be poor.

Question 14

Measures of poverty that fail to account for the value of in-kind transfers

Accepted Answer

A)  understate the actual poverty rate. 
B)  have little effect on the validity of reported poverty rates. 
C)  are generally more reliable measures of actual poverty rates. 
D)  overstate the actual poverty rate. 
A)  understate the actual poverty rate. 
B)  have little effect on the validity of reported poverty rates. 
C)  are generally more reliable measures of actual poverty rates. 
D)  overstate the actual poverty rate.

Question 15

The poverty rate is a measure of the percentage of people whose incomes fall below

Accepted Answer

A)  a relative level of income. 
B)  an absolute level of income. 
C)  the median income for a family of three. 
D)  the bottom 20 percent of the income distribution. 
A)  a relative level of income. 
B)  an absolute level of income. 
C)  the median income for a family of three. 
D)  the bottom 20 percent of the income distribution.

Question 16

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Accepted Answer

inequality

Question 17

Relative to direct cash payments, in-kind transfers have the advantage of being

Accepted Answer

A)  more politically popular. 
B)  more efficient. 
C)  more respectful of the poor. 
D)  of a higher dollar value than cash payments. 
A)  more politically popular. 
B)  more efficient. 
C)  more respectful of the poor. 
D)  of a higher dollar value than cash payments.

Question 18

Scenario 20-5
Suppose the government implemented a negative income tax and used the following formula to compute a family's
tax liability:
Taxes owed = (1/4 of income) - $10,000
-Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)  $5,000 
B)  $10,000 
C)  $15,000 
D)  $25,000 
A)  $5,000 
B)  $10,000 
C)  $15,000 
D)  $25,000

Question 19

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is correct?

Accepted Answer

A)  A minimum wage law will result in less additional unemployment if labor demand is elastic rather than inelastic. 
B)  An in-kind transfer allows a person to use the benefit to purchase whatever they think they need most. 
C)  If a tax policy states that taxes owed equal 1/3 of income less $15,000, a person earning $25,000 per year would owe $6,666.67 in taxes. 
D)  Welfare reform enacted in 1996 limited the amount of time recipients could stay on welfare. 
A)  A minimum wage law will result in less additional unemployment if labor demand is elastic rather than inelastic. 
B)  An in-kind transfer allows a person to use the benefit to purchase whatever they think they need most. 
C)  If a tax policy states that taxes owed equal 1/3 of income less $15,000, a person earning $25,000 per year would owe $6,666.67 in taxes. 
D)  Welfare reform enacted in 1996 limited the amount of time recipients could stay on welfare.

Exam 20: Income Inequality and Poverty

Income) - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

The poverty line is adjusted each year to reflect changes in the

Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits. What is the foundation of your critique?

Comparing the United States household income distribution to other countries is

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

Which of the three political philosophies discussed in the textbook, if any, view the total income of society as a shared resource that a social planner can freely redistribute to achieve some social goal?

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

According to a study by Michael Cox and Richard Alm, consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

On what type of income do many economists believe that people base their consumption?

If society chose to maximize total utility rather than minimum utility,

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

In comparison to the average poverty rate,

Measures of poverty that fail to account for the value of in-kind transfers

The poverty rate is a measure of the percentage of people whose incomes fall below

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Relative to direct cash payments, in-kind transfers have the advantage of being

Scenario 20-5 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $10,000 -Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

Which of the following statements is correct?

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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