Question 1

Figure 20-3  
-Refer to Figure 20-3. Which of the following best describes the poverty rates by age from 1965 to 2011?

Accepted Answer

A)  The poverty rates by age have declined for all age groups. 
B)  The percentage of people living in poverty has consistently been highest for the elderly aged 65 and over and lowest for adults aged 18 to 64. 
C)  The percentage of children under age 18 and the percentage of adults aged 18 to 64 have maintained a similar trend while the percentage of elderly aged 65 and over has decreased significantly. 
D)  The poverty rates by age have increased for all age groups. 
A)  The poverty rates by age have declined for all age groups. 
B)  The percentage of people living in poverty has consistently been highest for the elderly aged 65 and over and lowest for adults aged 18 to 64. 
C)  The percentage of children under age 18 and the percentage of adults aged 18 to 64 have maintained a similar trend while the percentage of elderly aged 65 and over has decreased significantly. 
D)  The poverty rates by age have increased for all age groups.

Question 2

In-kind transfers

Accepted Answer

A)  are cash payments given to the poor from the government. 
B)  are available to citizens of all income levels, but usually only sought by the poor. 
C)  are non-monetary items given to the poor. 
D)  include food stamps, but not housing vouchers or medical services. 
A)  are cash payments given to the poor from the government. 
B)  are available to citizens of all income levels, but usually only sought by the poor. 
C)  are non-monetary items given to the poor. 
D)  include food stamps, but not housing vouchers or medical services.

Question 3

Figure 20-4  
-Refer to Figure 20-4. The ratio of female-to-male earnings has increased steadily from about 1980 to 2008 because the earnings of men

Accepted Answer

A)  increased steadily but by approximately half of the increase in the earnings of women. 
B)  decreased while the earnings of women increased. 
C)  stayed relatively constant while the earnings of women increased. 
D)  decreased by substantially more than the decrease in the earnings of women. 
A)  increased steadily but by approximately half of the increase in the earnings of women. 
B)  decreased while the earnings of women increased. 
C)  stayed relatively constant while the earnings of women increased. 
D)  decreased by substantially more than the decrease in the earnings of women.

Question 4

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 below 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 5

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

Accepted Answer

difference

Question 6

An example of a transitory change in income is the

Accepted Answer

A)  annual cost of living adjustment to your salary. 
B)  increase in income that results from a job promotion linked to your education. 
C)  increase in income of California orange growers that results from an orange-killing frost in Florida. 
D)  All of the above are correct. 
A)  annual cost of living adjustment to your salary. 
B)  increase in income that results from a job promotion linked to your education. 
C)  increase in income of California orange growers that results from an orange-killing frost in Florida. 
D)  All of the above are correct.

Question 7

The poverty rate is

Accepted Answer

A)  a measure of income inequality across families. 
B)  the percentage of the population whose family income falls below a specified level. 
C)  an absolute level of income set by the federal government for each family size. 
D)  measured by the number of in-kind transfers that a family receives. 
A)  a measure of income inequality across families. 
B)  the percentage of the population whose family income falls below a specified level. 
C)  an absolute level of income set by the federal government for each family size. 
D)  measured by the number of in-kind transfers that a family receives.

Question 8

The founders of utilitarianism include

Accepted Answer

A)  A. C. Pigou and John Maynard Keynes. 
B)  Jeremy Bentham and John Stuart Mill. 
C)  Augustin Cournot and Jean B. Say. 
D)  A. Kondratieff and Thomas Malthus. 
A)  A. C. Pigou and John Maynard Keynes. 
B)  Jeremy Bentham and John Stuart Mill. 
C)  Augustin Cournot and Jean B. Say. 
D)  A. Kondratieff and Thomas Malthus.

Question 9

In general, which of the following would libertarians argue is more important than equal outcomes?

Accepted Answer

A)  equal opportunities 
B)  equal incomes 
C)  providing a social safety net 
D)  offering the opportunity to purchase social insurance 
A)  equal opportunities 
B)  equal incomes 
C)  providing a social safety net 
D)  offering the opportunity to purchase social insurance

Question 10

Given the table shown, which country has a more equal income distribution? Explain your answer.

Accepted Answer

Country A has a more equal income distri

Question 11

Libertarians believe that

Accepted Answer

A)  the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  the government should aim to maximize the well-being of the worst-off person in society. 
C)  everyone in society should have equal utility. 
D)  the government should not redistribute income. 
A)  the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." 
B)  the government should aim to maximize the well-being of the worst-off person in society. 
C)  everyone in society should have equal utility. 
D)  the government should not redistribute income.

Question 12

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Accepted Answer

A)  raises the well-being of the least fortunate. 
B)  does not alter incentives to work and save. 
C)  promotes an equal distribution of income. 
D)  does not lower the welfare of the elderly. 
A)  raises the well-being of the least fortunate. 
B)  does not alter incentives to work and save. 
C)  promotes an equal distribution of income. 
D)  does not lower the welfare of the elderly.

Question 13

A utilitarian government must

Accepted Answer

A)  calculate the utility of each individual in society. 
B)  avoid enacting any policies that redistribute income from the rich to the poor. 
C)  balance the gains from greater equality against the losses from distorted incentives. 
D)  pursue policies that do not affect the middle class. 
A)  calculate the utility of each individual in society. 
B)  avoid enacting any policies that redistribute income from the rich to the poor. 
C)  balance the gains from greater equality against the losses from distorted incentives. 
D)  pursue policies that do not affect the middle class.

Question 14

Government vouchers to purchase food, also known as food stamps, are an example of

Accepted Answer

A)  an in-kind transfer. 
B)  life-cycle income. 
C)  a negative income tax. 
D)  permanent income. 
A)  an in-kind transfer. 
B)  life-cycle income. 
C)  a negative income tax. 
D)  permanent income.

Question 15

Libertarians believe that in considering economic fairness, one should primarily consider the

Accepted Answer

A)  outcome of the system. 
B)  process by which outcomes arise. 
C)  maximin criterion. 
D)  maximization total social utility. 
A)  outcome of the system. 
B)  process by which outcomes arise. 
C)  maximin criterion. 
D)  maximization total social utility.

Question 16

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. Zooey's brother Zander owes $10,000 in taxes. How much does he earn?

Accepted Answer

The answer of Scenario 20-7
Zooey is a single mother of...

Question 17

Measuring poverty using an absolute income scale like the poverty line can be misleading because

Accepted Answer

A)  income measures do not include the value of in-kind transfers. 
B)  money is more highly valued by the rich than by the poor. 
C)  the poor are not likely to participate in the labor market. 
D)  income measures are not adjusted for the effects of labor-market discrimination. 
A)  income measures do not include the value of in-kind transfers. 
B)  money is more highly valued by the rich than by the poor. 
C)  the poor are not likely to participate in the labor market. 
D)  income measures are not adjusted for the effects of labor-market discrimination.

Question 18

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. In 2010, how many more percentage points of total income did the top fifth of the population earn compared to if the income distribution were completely equal?

Accepted Answer

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

Question 19

Which of the following is not correct?

Accepted Answer

A)  Welfare is a broad term that includes a variety of government programs designed to help poor people. 
B)  Since the early 1970s, welfare benefits adjusted for inflation have increased, as has the percentage of children living with only one parent. 
C)  Critics of welfare programs argue that they can create incentives for unmarried women to have children. 
D)  Supporters argue that welfare doesn't cause the decline of two­parent families. 
A)  Welfare is a broad term that includes a variety of government programs designed to help poor people. 
B)  Since the early 1970s, welfare benefits adjusted for inflation have increased, as has the percentage of children living with only one parent. 
C)  Critics of welfare programs argue that they can create incentives for unmarried women to have children. 
D)  Supporters argue that welfare doesn't cause the decline of two­parent families.

Question 20

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 below $44,000?

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

Exam 20: Income Inequality and Poverty

Figure 20-3 -Refer to Figure 20-3. Which of the following best describes the poverty rates by age from 1965 to 2011?

In-kind transfers

Figure 20-4 -Refer to Figure 20-4. The ratio of female-to-male earnings has increased steadily from about 1980 to 2008 because the earnings of men

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 below what level?

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

An example of a transitory change in income is the

The poverty rate is

The founders of utilitarianism include

In general, which of the following would libertarians argue is more important than equal outcomes?

Given the table shown, which country has a more equal income distribution? Explain your answer.

Libertarians believe that

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

A utilitarian government must

Government vouchers to purchase food, also known as food stamps, are an example of

Libertarians believe that in considering economic fairness, one should primarily consider the

Measuring poverty using an absolute income scale like the poverty line can be misleading because

Which of the following is not correct?

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 below $44,000?

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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