Question 1

Suppose that Jake and Abby each win $1,000 in a state lottery.Jake spends his winnings on a new television.Abby saves her winnings for a "rainy day." Which of the following is correct?

Accepted Answer

A)   Both Jake's and Abby's behavior suggest that they base their purchasing decisions on transitory income.
B)   Jake's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income.Abby's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income.
C)   Jake's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income.Abby's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income.
D)   Both Jake's and Abby's behavior suggest that they base their purchasing decisions on permanent income.E) B) and C)
F) C) and D)

Question 2

The maximin criterion for government policies is associated with

Accepted Answer

A)   the school of thought called utilitarianism.
B)   the school of thought called liberalism.
C)   the school of thought called libertarianism.
D)   the school of thought called stoicism.E) A) and B)
F) B) and D)

Question 3

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Accepted Answer

A high marginal tax rate exists on welfa...

Question 4

Which of the following explains the rise in income inequality in the United States from 1970 to 2008?

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.E) A) and B)
F) A) and C)

Question 5

Which political philosophy focuses on the process of determining the distribution of income rather than on the outcome?

Accepted Answer

A)   utilitarianism
B)   liberalism
C)   libertarianism
D)   welfarismE) A) and B)
F) A) and C)

Question 6

A tax provision that works much like a negative income tax is the

Accepted Answer

A)   Earned Income Tax Credit (EIT
C)  .
B)   Temporary Assistance for Needy Families (TANF) .
C)   deduction for charitable contributions.
D)   mortgage interest rate deduction.E) None of the above
F) A) and D)

Question 7

The income distribution in the United States shows that the income share of the top fifth of all families is

Accepted Answer

A)   over 50 percent.
B)   around 25 percent.
C)   more than 10 times the income of the bottom fifth.
D)   not much different from the income of the top 5 percent.E) B) and D)
F) A) and B)

Question 8

The best government policy to reduce poverty is

Accepted Answer

A)   a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps.
B)   an expanded welfare program because people must have an additional "need" such as small children or a disability.
C)   an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter.
D)   not obvious.Government programs to reduce poverty have many advantages but also many disadvantages.E) B) and D)
F) A) and B)

Question 9

A U.S.family earning $80,000 would be in the top 20 percent of income distribution in 2008.

Accepted Answer

A) True 
 B)False

Question 10

Table 20-7
 
-Refer to Table 20-7.Which of the following is the best overall conclusion to draw from the data?

Accepted Answer

A)   The most alarming statistic is the lowering of the top income level that defines the bottom fifth of the income distribution because this indicates that the income distribution is becoming more unequal.
B)   The greatest cause for concern is the increase in the minimum income level that defines the top fifth of the income distribution because this indicates that the rich have become richer.
C)   The income distribution is has been relatively unchanged from 1998 to 2008.
D)   Both a and b are correct.E) None of the above
F) All of the above

Question 11

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

Accepted Answer

A)   in-kind transfers
B)   economic life cycle
C)   transitory versus permanent income
D)   economic mobilityE) A) and D)
F) All of the above

Question 12

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.E) B) and C)
F) C) and D)

Question 13

Which of the following statements is correct?

Accepted Answer

A)   The poverty line is a relative standard.
B)   More families are pushed above the poverty line as economic growth pushes the entire income distribution upward.
C)   Increasing income inequality reduces poverty.
D)   Economic growth,by definition,affects all families equally.E) C) and D)
F) A) and B)

Question 14

What is one argument made by proponents of in-kind transfers over cash payments to the needy?

Accepted Answer

In-kind payments ens...

Question 15

Medicaid and food stamps are

Accepted Answer

A)   available only to the elderly.
B)   forms of in-kind assistance.
C)   forms of cash assistance.
D)   transfer payments.E) All of the above
F) A) and C)

Question 16

On average,the distribution of income tends to be

Accepted Answer

A)   random across richer and poorer countries.
B)   similar between richer and poorer countries.
C)   less equal in richer countries than in poorer countries.
D)   more equal in richer countries than in poorer countries.E) A) and B)
F) A) and C)

Question 17

Figure 20-4
Poverty Rates by Age 
-Refer to Figure 20-4.In 2001,the percent of elderly aged 65 and over in poverty is

Accepted Answer

A)   higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.
B)   higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty.
C)   lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.
D)   lower than the percentage of children under age 18 but is equal to the percentage of adults aged 18 to 64 in poverty.E) A) and B)
F) C) and D)

Question 18

If the U.S.government determines that the cost of feeding an urban family of four is $5,200 per year,then the official poverty line for a family of that type is

Accepted Answer

A)   $10,400.
B)   $15,600.
C)   $20,800.
D)   $26,000.E) A) and B)
F) A) and D)

Question 19

Table 20-3
The Distribution of Income in Hapland
 
-Refer to Table 20-3.If the poverty rate is 23%,where is the poverty line in Hapland?

Accepted Answer

A)   under $45,000
B)   between $45,000 and $59,999
C)   between $60,000 and $89,999
D)   between $90,000 and $119,999E) A) and B)
F) All of the above

Question 20

Explain what information is contained in the poverty rate statistic.Are there problems in using an absolute scale to measure poverty? If so,explain them.

Accepted Answer

The poverty rate is the percentage of th...

Exam 20: Income Inequality and Poverty

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.In 2001,the percent of elderly aged 65 and over in poverty is

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Table 20-3 The Distribution of Income in Hapland -Refer to Table 20-3.If the poverty rate is 23%,where is the poverty line in Hapland?

Correct AnswerverifiedShow Answer

On average,the distribution of income tends to be

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Which of the following explains the rise in income inequality in the United States from 1970 to 2008?

Correct AnswerverifiedShow Answer

Suppose that Jake and Abby each win $1,000 in a state lottery.Jake spends his winnings on a new television.Abby saves her winnings for a "rainy day." Which of the following is correct?

Correct AnswerverifiedShow Answer

Medicaid and food stamps are

Correct AnswerverifiedShow Answer

Table 20-7 -Refer to Table 20-7.Which of the following is the best overall conclusion to draw from the data?

Correct AnswerverifiedShow Answer

Which political philosophy focuses on the process of determining the distribution of income rather than on the outcome?

Correct AnswerverifiedShow Answer

The maximin criterion for government policies is associated with

Correct AnswerverifiedShow Answer

The income distribution in the United States shows that the income share of the top fifth of all families is

Correct AnswerverifiedShow Answer

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Correct AnswerverifiedA high marginal tax rate exists on welfa...View AnswerShow Answer

If the U.S.government determines that the cost of feeding an urban family of four is $5,200 per year,then the official poverty line for a family of that type is

Correct AnswerverifiedShow Answer

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

Correct AnswerverifiedShow Answer

A U.S.family earning $80,000 would be in the top 20 percent of income distribution in 2008.

Correct AnswerverifiedShow Answer

A utilitarian government must

Correct AnswerverifiedShow Answer

What is one argument made by proponents of in-kind transfers over cash payments to the needy?

Correct AnswerverifiedIn-kind payments ens...View AnswerShow Answer

A tax provision that works much like a negative income tax is the

Correct AnswerverifiedShow Answer

Explain what information is contained in the poverty rate statistic.Are there problems in using an absolute scale to measure poverty? If so,explain them.

Correct AnswerverifiedThe poverty rate is the percentage of th...View AnswerShow Answer

The best government policy to reduce poverty is

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Which of the following statements is correct?

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A high marginal tax rate exists on welfa...
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Correct Answer
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In-kind payments ens...
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The poverty rate is the percentage of th...
View Answer

Correct Answer
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Correct Answer
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