Question 1

In 2005,the poverty line for a family of four in the U.S.was

Accepted Answer

A)  $56,194. 
B)  $28,097. 
C)  $19,971. 
D)  $12,603.

Question 2

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 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 answer of Assume you are a critic of welfare...

Question 4

Economist Tyler Cowen attributes increased income inequality to

Accepted Answer

A)  lower income inequality among older populations than younder populations. 
B)  lower in-kind transfers made by governments. 
C)  a larger number of educated people in the U.S.population. 
D)  the development of the internet.

Question 5

Which of the following does not explain the rise in income inequality from 1970 to 2005?

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.

Question 6

John Rawls,who developed the way of thinking called liberalism,argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Accepted Answer

A) True 
 B)False

Question 7

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 *Income)- 10,000.If a family doesn't earn any income,how does the negative income tax affect them?

Accepted Answer

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

Question 8

The poverty rate is the percentage of the population that have a family income level below the

Accepted Answer

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

Question 9

The measured poverty rate may not reflect the true extent of economic deprivation because it does not include some forms of government assistance.

Accepted Answer

A) True 
 B)False

Question 10

A binding minimum wage

Accepted Answer

A)  affects employees but not employers. 
B)  lowers the productivity of workers. 
C)  raises the cost of labor to firms. 
D)  All of the above are correct.

Question 11

Which of the following explains the rise in income inequality from 1970 to 2005?

Accepted Answer

A)  An increase in minimum wages. 
B)  An increase in the demand for skilled labor. 
C)  An increase in the demand for unskilled labor. 
D)  Reduced international trade with low-wage countries.

Question 12

The study by economists Cox and Alm found that the 2006 pre-tax income of the richest fifth of U.S.households is

Accepted Answer

A)  5 times the pre-tax income of the poorest fifth. 
B)  10 times the pre-tax income of the poorest fifth. 
C)  15 times the pre-tax income of the poorest fifth. 
D)  20 times the pre-tax income of the poorest fifth.

Question 13

What percent of families are poor for eight or more years?

Accepted Answer

A)  More than 20 percent. 
B)  Between 15 and 20 percent. 
C)  Approximately 10 percent. 
D)  Less than 3 percent.

Question 14

An income distribution may not give an accurate picture of families' standards of living because it does not include in-kind transfers.

Accepted Answer

A) True 
 B)False

Question 15

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.

Question 16

Which of the following is not an example of in-kind transfers?

Accepted Answer

A)  Food stamps. 
B)  Medicare. 
C)  The Earned Income Tax Credit. 
D)  Housing vouchers.

Question 17

Saving and borrowing is indicative of a family that

Accepted Answer

A)  is most likely to be poor. 
B)  has a difficult time balancing its standard of living. 
C)  adjusts its standard of living to reflect transitory changes in income. 
D)  is most likely millionaires.

Question 18

Ms.Spring currently earns $100,000 a year,while her junior partner,Mr.Fall,earns $55,000 a year.From the perspective of a utilitarian,if both of their incomes are subject to diminishing marginal utility,taking a dollar from Ms.Spring and giving it to Mr.Fall will

Accepted Answer

A)  increase society's total utility. 
B)  lower Ms.Spring's marginal utility of income. 
C)  increase Mr.Fall's marginal utility of income. 
D)  lower society's total utlity.

Question 19

Table 20-4
Poverty Thresholds in 2002,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 20-4.What is the poverty line for a family with one 35-year-old adult and one child?

Accepted Answer

A)  $8,628 
B)  $9,359 
C)  $12,353 
D)  $12,400

Question 20

Which group (or groups)would be the most upset by wide variation in the income distribution?

Accepted Answer

A)  Utilitarians 
B)  Utilitarians and liberals. 
C)  Libertarians. 
D)  Liberals and Libertarians.

Exam 20: Income Inequality and Poverty

In 2005,the poverty line for a family of four in the U.S.was

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

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?

Economist Tyler Cowen attributes increased income inequality to

Which of the following does not explain the rise in income inequality from 1970 to 2005?

John Rawls,who developed the way of thinking called liberalism,argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 *Income) - 10,000.If a family doesn't earn any income,how does the negative income tax affect them?

The poverty rate is the percentage of the population that have a family income level below the

The measured poverty rate may not reflect the true extent of economic deprivation because it does not include some forms of government assistance.

A binding minimum wage

Which of the following explains the rise in income inequality from 1970 to 2005?

The study by economists Cox and Alm found that the 2006 pre-tax income of the richest fifth of U.S.households is

What percent of families are poor for eight or more years?

An income distribution may not give an accurate picture of families' standards of living because it does not include in-kind transfers.

Comparing the United States household income distribution to other countries is

Which of the following is not an example of in-kind transfers?

Saving and borrowing is indicative of a family that

Ms.Spring currently earns $100,000 a year,while her junior partner,Mr.Fall,earns $55,000 a year.From the perspective of a utilitarian,if both of their incomes are subject to diminishing marginal utility,taking a dollar from Ms.Spring and giving it to Mr.Fall will

Table 20-4 Poverty Thresholds in 2002,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 20-4.What is the poverty line for a family with one 35-year-old adult and one child?

Which group (or groups) would be the most upset by wide variation in the income distribution?