Question 1

The theory of distributional justice was developed by

Accepted Answer

A)   John Stuart Mill.
B)   John Rawls.
C)   Karl Marx.
D)   Jeremy Bentham. B

Question 2

Recent data suggests that the percentage of the population in poverty for African-American persons is significantly lower than that of Hispanic persons.

Accepted Answer

A) True 
 B)False  False

Question 3

A ________ income tax means that those with a higher income pay the same percentage of their income in taxes as low-income people.

Accepted Answer

A)   regressive
B)   progressive
C)   proportional
D)   consumption-based C

Question 4

Recall the Economics in Practice on page 371: According to a study discussed in the Economics in Practice, when students were moved from a class taught by a below-average teacher to one at the 75th percentile, the move

Accepted Answer

A)   made no difference on the students' future annual earnings.
B)   increased the students' future earnings by 3.5% per year.
C)   increased the students' future earnings by more than 50% per year.
D)   actually decreased the students' future annual earnings.

Question 5

In the Social Security system, the tax receipts from today's workers are

Accepted Answer

A)   paid into the federal government's general revenue to be used for any government expenditure.
B)   paid into an account in the employee's name and saved and invested for that individual until he or she retires.
C)   used to pay benefits to retired and disabled workers and their dependents today.
D)   all paid into Medicare.

Question 6

From 1989 to 2013, the share of wealth for the top 3% of wealth holders in the United States

Accepted Answer

A)   decreased by about 8 percentage points.
B)   remained roughly the same.
C)   increased by almost 10 percentage points.
D)   increased by more than 45 percentage points.

Question 7

Upon graduation, Ellie had two job offers. The jobs were identical in every way with two exceptions. One job was located in San Diego, CA and offered an annual salary of $50,000. The other job was located in Omaha, NE and offered an annual salary of $60,000. The salary difference is due to

Accepted Answer

A)   compensating differentials.
B)   discrimination.
C)   transfer payments.
D)   the firm in California had a higher demand for workers than the firm in Nebraska.

Question 8

Refer to the information provided in Figure 18.1 below to answer the question(s) that follow.  Figure 18.1
-Refer to Figure 18.1. Suppose that the Lorenz curve were the same as the 45-degree line OB. This would mean that

Accepted Answer

A)   the distribution of income is perfectly equitable.
B)   the distribution of income is completely inequitable.
C)   only one family earned all the income.
D)   the distribution of income is equal.

Question 9

The overall poverty rate in 2013 was just slightly less than it was in 1966.

Accepted Answer

A) True 
 B)False

Question 10

Unemployment compensation is a ________ government transfer program.

Accepted Answer

A)   state
B)   federal
C)   local
D)   municipal

Question 11

A perfectly equal distribution of income would result in a Gini coefficient of 1.

Accepted Answer

A) True 
 B)False

Question 12

As income becomes more equally distributed, the Lorenz curve ________ and ________.

Accepted Answer

A)   moves further down to the right; the shaded area increases
B)   moves further up to the left; the shaded area decreases
C)   moves further up to the left rising above the 45 degree line; the shaded area increases
D)   moves further down to the right; the shaded area decreases

Question 13

When measuring income for the purpose of classifying people as poor, the measurement of income used is

Accepted Answer

A)   economic income.
B)   comprehensive income.
C)   cash income and noncash transfer payments.
D)   money income.

Question 14

Evidence suggests that in the last several decades, technology has played a role in driving inequality. Thus, ________ may be key to reducing inequality in the future.

Accepted Answer

A)   education
B)   savings
C)   research and development
D)   investment

Question 15

The Earned Income Tax Credit is available to all taxpayers, regardless of income level.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Figure 18.1 below to answer the question(s) that follow.  Figure 18.1
-Refer to Figure 18.1. Suppose that the Lorenz curve ran along the horizontal axis to 100% of families, then became vertical to 100% of income. This would mean that

Accepted Answer

A)   the distribution of income is perfectly equitable.
B)   the distribution of income is completely inequitable.
C)   only one family earned all the income.
D)   the distribution of income is equal.

Question 17

States pay for 50 percent of the administrative costs of the Supplemental Nutrition Assistance Program.

Accepted Answer

A) True 
 B)False

Question 18

In the United States, most people's ________ comes from saving.

Accepted Answer

A)   income
B)   profit
C)   wealth
D)   capital

Question 19

The first minimum wage law was adopted

Accepted Answer

A)   in the United States in 1938.
B)   in New Zealand in 1894.
C)   in England in 1876.
D)   in Germany in 1922.

Question 20

In theory, a minimum wage should lead to unemployment, but there is no evidence of such an effect.

Accepted Answer

A) True 
 B)False

Exam 18: Income Distribution and Poverty

The theory of distributional justice was developed by

Recent data suggests that the percentage of the population in poverty for African-American persons is significantly lower than that of Hispanic persons.

A ________ income tax means that those with a higher income pay the same percentage of their income in taxes as low-income people.

Recall the Economics in Practice on page 371: According to a study discussed in the Economics in Practice, when students were moved from a class taught by a below-average teacher to one at the 75th percentile, the move

In the Social Security system, the tax receipts from today's workers are

From 1989 to 2013, the share of wealth for the top 3% of wealth holders in the United States

Upon graduation, Ellie had two job offers. The jobs were identical in every way with two exceptions. One job was located in San Diego, CA and offered an annual salary of $50,000. The other job was located in Omaha, NE and offered an annual salary of $60,000. The salary difference is due to

Refer to the information provided in Figure 18.1 below to answer the question(s) that follow. Figure 18.1 -Refer to Figure 18.1. Suppose that the Lorenz curve were the same as the 45-degree line OB. This would mean that

The overall poverty rate in 2013 was just slightly less than it was in 1966.

Unemployment compensation is a ________ government transfer program.

A perfectly equal distribution of income would result in a Gini coefficient of 1.

As income becomes more equally distributed, the Lorenz curve and .

When measuring income for the purpose of classifying people as poor, the measurement of income used is

Evidence suggests that in the last several decades, technology has played a role in driving inequality. Thus, ________ may be key to reducing inequality in the future.

The Earned Income Tax Credit is available to all taxpayers, regardless of income level.

Refer to the information provided in Figure 18.1 below to answer the question(s) that follow. Figure 18.1 -Refer to Figure 18.1. Suppose that the Lorenz curve ran along the horizontal axis to 100% of families, then became vertical to 100% of income. This would mean that

States pay for 50 percent of the administrative costs of the Supplemental Nutrition Assistance Program.

In the United States, most people's ________ comes from saving.

The first minimum wage law was adopted

In theory, a minimum wage should lead to unemployment, but there is no evidence of such an effect.