Question 1

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1
 Refer to Table 19.1.What percentage of households earn 31.5% of the income?

Accepted Answer

A) Bottom 20% 
B) Top 20% 
C) Bottom 60% 
D) Top 40% 
E) Top 10%

Question 2

The income tax structure in the United States is regressive in nature.

Accepted Answer

A) True 
 B)False

Question 3

The allocations of goods and services from one group in a society to another are called:

Accepted Answer

A) mutually voluntary exchanges. 
B) in-kind transfers. 
C) grants. 
D) economic rents. 
E) transfer earnings.

Question 4

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2
 Refer to Table 19.2.The tax structure which leads to maximum income inequality is:

Accepted Answer

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

Question 5

The horizontal and vertical axes of the Lorenz curve respectively measure:

Accepted Answer

A) total income and total expenditure as cumulative percentages. 
B) total income and total population as cumulative percentages. 
C) total population and total expenditure as cumulative percentages. 
D) total expenditure and total income as cumulative percentages. 
E) total population and total income as cumulative percentages.

Question 6

Economic stagnation and recession result in unemployment and poverty.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following transfer programs in the U.S.is funded by a national tax but administered by state governments?

Accepted Answer

A) Social security 
B) Veterans' Administration Benefit program 
C) Unemployment insurance 
D) Food stamps 
E) National Guard activities

Question 8

Supplementary Security Incomes are provided to those by the U.S.government who:

Accepted Answer

A) regularly pay a social security tax. 
B) are below 65 years of age. 
C) lack the required education to be absorbed in the job market. 
D) earn less than $4, 500 per year. 
E) are temporarily unemployed.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The extent to which people move from one income quintile to another over time is called _____.

Accepted Answer

A) migrancy 
B) moveability 
C) mobility 
D) exchangeability 
E) transferability

Question 11

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

Question 12

Following are the controversies over how poverty should be measured, except:

Accepted Answer

A) government transfers and other programs are not properly taken into account in the measures of poverty. 
B) the poverty measures do not distinguish among the needs of different individuals. 
C) the concept of poverty line does not draw any distinction between income and purchasing power. 
D) the concept of poverty line does not take into account the expenditure on food by each family. 
E) the income generated in the underground economy are not taken into account.

Question 13

A negative income tax system transfers increasing amounts of income to households earning incomes below some specified level as their income declines.

Accepted Answer

A) True 
 B)False

Question 14

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2
 Refer to Table 19.2.Which of the following tax policies is regressive by nature?

Accepted Answer

A) Alpha 
B) Beta 
C) Gamma 
D) Delta 
E) Eta

Question 15

An imposition of tax by the government for funding welfare programs raises the cost of labor to firms as:

Accepted Answer

A) the demand for labor increases. 
B) the demand for labor decreases. 
C) the supply of labor decreases. 
D) the supply of labor increases. 
E) the opportunity cost of leisure increases.

Question 16

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 17

The figure given below shows the Lorenz curves of two countries (Country A and Country B). Figure 19.2
Total income (cumulative percentage)  Total population (cumuative percentage)
In Figure 19.2, the poorest 60 percent of the population in Country B receive:

Accepted Answer

A) 30 percent of the national income. 
B) 40 percent of the national income. 
C) 60 percent of the national income. 
D) 20 percent of the national income. 
E) 10 percent of the national income.

Question 18

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 19

Which of the following refers to per capita income?

Accepted Answer

A) National income divided by number of households 
B) National income divided by number of people 
C) Number of households divided by national income 
D) Number of people divided by national income 
E) Number of people divided by domestic income

Question 20

Which of the following is an example of in-kind transfer?

Accepted Answer

A) Social security benefits 
B) Food stamps 
C) Disability pensions 
D) Unemployment compensations 
E) Earned income tax credit

Exam 34: Income Distribution, Poverty and Government Policy

The table below shows the distribution of income in the U.S.in the year 1978. Table 19.1 Refer to Table 19.1.What percentage of households earn 31.5% of the income?

The income tax structure in the United States is regressive in nature.

The allocations of goods and services from one group in a society to another are called:

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2 Refer to Table 19.2.The tax structure which leads to maximum income inequality is:

The horizontal and vertical axes of the Lorenz curve respectively measure:

Economic stagnation and recession result in unemployment and poverty.

Which of the following transfer programs in the U.S.is funded by a national tax but administered by state governments?

Supplementary Security Incomes are provided to those by the U.S.government who:

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

The extent to which people move from one income quintile to another over time is called _____.

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.

Following are the controversies over how poverty should be measured, except:

A negative income tax system transfers increasing amounts of income to households earning incomes below some specified level as their income declines.

The table given below shows the absolute tax amounts under five different tax policies for respective income levels. Table 19.2 Refer to Table 19.2.Which of the following tax policies is regressive by nature?

An imposition of tax by the government for funding welfare programs raises the cost of labor to firms as:

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.

The figure given below shows the Lorenz curves of two countries (Country A and Country B) . Figure 19.2 Total income (cumulative percentage) Total population (cumuative percentage) In Figure 19.2, the poorest 60 percent of the population in Country B receive:

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

Which of the following refers to per capita income?

Which of the following is an example of in-kind transfer?