Question 1

The poverty line in the country of Inequalia is $10,000.The distribution of income for Inequalia is as follows:  The poverty rate in Inequalia is

Accepted Answer

A)   11.1 percent.
B)   16.7 percent.
C)   27.8 percent.
D)   55.5 percent.E) B) and C)
F) All of the above

Question 2

An example of an in-kind transfer to the poor is

Accepted Answer

A)   the negative income tax.
B)   the Earned Income Tax Credit (EIT
C)  .
C)   Medicaid.
D)   Temporary Assistance for Needy Families (TANF) .E) A) and B)
F) None of the above

Question 3

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula,
Taxes Owed = (1/3 X 
Income)- $10,000.
Compute the tax that would be owed given each level of income. 
a.$120,000
b.$90,000
c.$60,000
d.$30,000
e.$0

Accepted Answer

a.$30,000
b.$20,000
c.$10,000
...

Question 4

Liberalism suggests that public policies should aim to

Accepted Answer

A)   maximize the sum of utility of everyone in society.
B)   maximize the well-being of the average person in society.
C)   maximize the well-being of the worst-off person in society.
D)   minimize the difference between the utility of the best-off person in the society and the utility of the worst-off person in society.E) A) and B)
F) B) and C)

Question 5

The 2008 U.S.distribution of income shows that the top 20 percent of families have approximately what share of income?

Accepted Answer

A)   20 percent
B)   35 percent
C)   50 percent
D)   80 percentE) B) and C)
F) A) and B)

Question 6

If the U.S.government determines that the cost of feeding an urban family of six is $6,000 per year,then the official poverty line for a family of that type is

Accepted Answer

A)   $6,000.
B)   $12,000.
C)   $18,000.
D)   $36,000.E) B) and C)
F) A) and C)

Question 7

The philosopher John Rawls argued that

Accepted Answer

A)   people would choose a more equal distribution of income if they had to determine an economic distribution system before knowing their place in it.
B)   people would choose income inequality to allow the maximum use of their individual talents.
C)   government has a role to ensure income equality to prevent social unrest.
D)   people would choose equal opportunity because it is morally right.E) A) and D)
F) A) and C)

Question 8

The invisible hand of the marketplace acts to allocate resources efficiently,but it does not necessarily ensure that resources are allocated fairly.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is not correct?

Accepted Answer

A)   Welfare programs may encourage illegitimate births.
B)   The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent.
C)   Welfare programs may reduce incentives for people to work.
D)   A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.E) All of the above
F) A) and B)

Question 10

In the parable of the leaky bucket,a fundamental problem with government redistribution programs is identified.As long as the government only has "leaky buckets" at its disposal,

Accepted Answer

A)   the costs of welfare programs will exceed the benefits.
B)   it should not try to reach complete equality in income.
C)   income equality will be the best policy option.
D)   equality of economic opportunity will reduce society's utility.E) B) and C)
F) B) and D)

Question 11

Utilitarians believe

Accepted Answer

A)   that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance."
B)   in the assumption of diminishing marginal utility.
C)   that everyone in society should have equal utility.
D)   that the government should not redistribute income.E) B) and D)
F) None of the above

Question 12

Table 20-3
The Distribution of Income in Hapland
 
-Refer to Table 20-3.Where would the government in Hapland set the poverty line to have a poverty rate of 40 percent?

Accepted Answer

A)   $45,000
B)   $60,000
C)   $90,000
D)   $120,000E) C) and D)
F) All of the above

Question 13

Economists who support minimum-wage legislation are likely to believe that the

Accepted Answer

A)   demand for unskilled labor is relatively inelastic.
B)   demand for unskilled labor is relatively elastic.
C)   supply of unskilled labor is relatively elastic.
D)   supply of unskilled labor is relatively inelastic.E) A) and B)
F) C) and D)

Question 14

Measuring poverty using an absolute income scale like the poverty line can be misleading because

Accepted Answer

A)   income measures do not include the value of in-kind transfers.
B)   money is more highly valued by the rich than by the poor.
C)   the poor are not likely to participate in the labor market.
D)   income measures are not adjusted for the effects of labor-market discrimination.E) All of the above
F) A) and B)

Question 15

When considering a person's standard of living,data on the income distribution and the poverty rate may provide an incomplete picture because the poor may

Accepted Answer

A)   receive in-kind transfers.
B)   be lending in order to smooth their income over their life cycle.
C)   be saving in order to smooth their income due to a drop in transitory income.
D)   under-report their income.E) A) and D)
F) B) and C)

Question 16

The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called

Accepted Answer

A)   liberalism.
B)   libertarianism.
C)   mobilism.
D)   utilitarianism.E) A) and D)
F) B) and C)

Question 17

There is very little economic mobility in the United States,which means that once a family is poor,it is very likely to remain poor for at least a decade.

Accepted Answer

A) True 
 B)False

Question 18

The goal of utilitarians is to

Accepted Answer

A)   apply the logic of individual decision making to questions concerning morality and public policy.
B)   measure happiness and satisfaction.
C)   redistribute income based on the assumption of increasing marginal utility.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 19

Suppose the government used the following formula to compute a family's tax liability:
Taxes owed = 28% of income - $8,000.How much would a family that earned $18,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 20

Suppose that a family saves and borrows to buffer itself against changes in income.These actions relate to which problem in measuring inequality?

Accepted Answer

A)   in-kind transfers
B)   negative income tax
C)   transitory versus permanent income
D)   economic mobilityE) None of the above
F) A) and B)

Exam 20: Income Inequality and Poverty

The invisible hand of the marketplace acts to allocate resources efficiently,but it does not necessarily ensure that resources are allocated fairly.

Correct AnswerverifiedShow Answer

If the U.S.government determines that the cost of feeding an urban family of six is $6,000 per year,then the official poverty line for a family of that type is

Correct AnswerverifiedShow Answer

Measuring poverty using an absolute income scale like the poverty line can be misleading because

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Table 20-3 The Distribution of Income in Hapland -Refer to Table 20-3.Where would the government in Hapland set the poverty line to have a poverty rate of 40 percent?

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Utilitarians believe

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Suppose that a family saves and borrows to buffer itself against changes in income.These actions relate to which problem in measuring inequality?

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The philosopher John Rawls argued that

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The 2008 U.S.distribution of income shows that the top 20 percent of families have approximately what share of income?

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Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 X Income)- $10,000. Compute the tax that would be owed given each level of income. a.$120,000 b.$90,000 c.$60,000 d.$30,000 e.$0

Correct Answerverifieda.$30,000b.$20,000c.$10,000...View AnswerShow Answer

Liberalism suggests that public policies should aim to

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The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called

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An example of an in-kind transfer to the poor is

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The poverty line in the country of Inequalia is $10,000.The distribution of income for Inequalia is as follows: The poverty rate in Inequalia is

Correct AnswerverifiedShow Answer

There is very little economic mobility in the United States,which means that once a family is poor,it is very likely to remain poor for at least a decade.

Correct AnswerverifiedShow Answer

When considering a person's standard of living,data on the income distribution and the poverty rate may provide an incomplete picture because the poor may

Correct AnswerverifiedShow Answer

Economists who support minimum-wage legislation are likely to believe that the

Correct AnswerverifiedShow Answer

The goal of utilitarians is to

Correct AnswerverifiedShow Answer

In the parable of the leaky bucket,a fundamental problem with government redistribution programs is identified.As long as the government only has "leaky buckets" at its disposal,

Correct AnswerverifiedShow Answer

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000.How much would a family that earned $18,000 owe?

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Which of the following statements is not correct?

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a.$30,000
b.$20,000
c.$10,000
...
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