Question 1

Economic stagnation and recession result in unemployment and poverty.

Accepted Answer

A) True 
 B)False

Question 2

Transfer programs are so named because they transfer:

Accepted Answer

A) the burden of poverty alleviation from the church to the state. 
B) the poverty from the country side to the city. 
C) the responsibility for maintaining minimum standards of living from the federal government to state governments. 
D) income from the relatively high-income people to relatively low-income people. 
E) the incidence of poverty from predominantly ethnic groups to the majority white population.

Question 3

A proportional tax tends to:

Accepted Answer

A) reduce income inequality. 
B) increase overall income inequality. 
C) leave the income distribution essentially unchanged. 
D) increase income inequality among the rich. 
E) generate additional tax revenues for the government.

Question 4

It has been observed that the most prosperous nations are those which have enjoyed stable democratic governments.This implies there is a link between a history of stable democracy and national well-being.

Accepted Answer

A) True 
 B)False

Question 5

Taxes are one method of funding the poverty alleviation programs by the government.Which of the following is an important impact of taxes?

Accepted Answer

A) Taxes increase workers' incentives to work for longer hours. 
B) Taxes raise the disposable income of the workers. 
C) Imposition of taxes make the government popular among the people. 
D) Taxes reduce the opportunity cost of leisure. 
E) Taxes reduce the demand for labor.

Question 6

Unemployment insurance provided by the U.S.government is usually funded by:

Accepted Answer

A) the excise duties imposed on the import of foreign goods. 
B) the national tax on payrolls levied on firms. 
C) external borrowing by the U.S.government. 
D) printing new money. 
E) selling off government bonds.

Question 7

When a low-income individual receives a transfer payment, that individual has less of an incentive to forgo leisure time for work time.

Accepted Answer

A) True 
 B)False

Question 8

Assume that any given percentage of the population earns an equal percentage of real GDP.This percentage of population will be represented by:

Accepted Answer

A) a point below the line of income equality. 
B) a line lying below the line of income equality. 
C) a point on the line of income equality. 
D) a line lying above the line of income equality. 
E) a point above the line of income equality.

Question 9

If 50 percent of the population receives 20 percent of the total income it can be represented by:

Accepted Answer

A) a point below the line of equality. 
B) a line below the line of equality. 
C) a point on the line of equality. 
D) a line intersecting the line of equality from below. 
E) a point above the line of equality.

Question 10

The diagram that represents how income is distributed among members of a population is known as a(n):

Accepted Answer

A) Indifference curve. 
B) Laffer curve. 
C) Edgeworth box. 
D) Lorenz curve. 
E) Phillips curve

Question 11

Consumer expenditures do not reflect the standard of people as efficiently as income inequality does.

Accepted Answer

A) True 
 B)False

Question 12

The figure below shows two Lorenz curves, Y and Z. Figure 33.1  In Figure 33.1, which of the following could occur in the short run given the introduction of a regressive income tax?

Accepted Answer

A) The Lorenz curve OZB would shift to OYB. 
B) The Lorenz curve OYB would coincide with the line OXB. 
C) The Lorenz curve OZB would coincide with the line OXB. 
D) The Lorenz curve OYB would coincide with the horizontal axis. 
E) The Lorenz curve would shift from OYB to OZB.

Question 13

Which of the following is a cash transfer received from the government?

Accepted Answer

A) Medicaid 
B) Earned Income Tax Credit 
C) Food stamps 
D) Housing assistance 
E) Free education

Question 14

The welfare programs undertaken by the U.S.government has been universally successful in reducing poverty and fostering economic growth.

Accepted Answer

A) True 
 B)False

Question 15

The negative income tax had not gained political acceptability because:

Accepted Answer

A) the politicians favor transfer of dollars rather than in-kind benefits. 
B) it increases the opportunity cost of leisure. 
C) the break-even income level is high. 
D) it raises the labor cost borne by the producers. 
E) it redistributes income from the poor to the rich.

Question 16

In order to ensure that the poor countries experience higher levels of economic growth, private property rights and title to property have to be created.

Accepted Answer

A) True 
 B)False

Question 17

Income distribution across the world is highly uneven, hence the corresponding Gini coefficient is very small.

Accepted Answer

A) True 
 B)False

Question 18

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 33.2
 Refer to Table 33.2.The example of a progressive tax is the:

Accepted Answer

A) tax policy Eta. 
B) tax policy Delta. 
C) tax policy Alpha. 
D) tax policy Beta. 
E) tax policy Gamma.

Question 19

Markets can function efficiently only when the private property rights are completely suspended and every resource in the economy is a commonly owned resource.

Accepted Answer

A) True 
 B)False

Question 20

The incentives created by foreign aid are analogous to the incentives created by the welfare systems and so might not be conducive to economic growth.

Accepted Answer

A) True 
 B)False

Exam 54: Income Distribution, Poverty and Government Policy

Economic stagnation and recession result in unemployment and poverty.

Transfer programs are so named because they transfer:

A proportional tax tends to:

It has been observed that the most prosperous nations are those which have enjoyed stable democratic governments.This implies there is a link between a history of stable democracy and national well-being.

Taxes are one method of funding the poverty alleviation programs by the government.Which of the following is an important impact of taxes?

Unemployment insurance provided by the U.S.government is usually funded by:

When a low-income individual receives a transfer payment, that individual has less of an incentive to forgo leisure time for work time.

Assume that any given percentage of the population earns an equal percentage of real GDP.This percentage of population will be represented by:

If 50 percent of the population receives 20 percent of the total income it can be represented by:

The diagram that represents how income is distributed among members of a population is known as a(n) :

Consumer expenditures do not reflect the standard of people as efficiently as income inequality does.

The figure below shows two Lorenz curves, Y and Z. Figure 33.1 In Figure 33.1, which of the following could occur in the short run given the introduction of a regressive income tax?

Which of the following is a cash transfer received from the government?

The welfare programs undertaken by the U.S.government has been universally successful in reducing poverty and fostering economic growth.

The negative income tax had not gained political acceptability because:

In order to ensure that the poor countries experience higher levels of economic growth, private property rights and title to property have to be created.

Income distribution across the world is highly uneven, hence the corresponding Gini coefficient is very small.

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 33.2 Refer to Table 33.2.The example of a progressive tax is the:

Markets can function efficiently only when the private property rights are completely suspended and every resource in the economy is a commonly owned resource.

The incentives created by foreign aid are analogous to the incentives created by the welfare systems and so might not be conducive to economic growth.