Question 1

Figure 20-4
Poverty Rates by Age
 
-Refer to Figure 20-4.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Accepted Answer

A)   declined, while the percentage of children under age 18 in poverty has also declined.
B)   declined, while the percentage of children under age 18 in poverty has increased.
C)   increased, while the percentage of children under age 18 in poverty has declined.
D)   increased, while the percentage of children under age 18 in poverty has also increased.E) B) and D)
F) B) and C)

Question 2

Table 20-4
  
Source: U.S. Bureau of Census
-Refer to Table 20-4.In 2007,the bottom 60% of families have

Accepted Answer

A)   only 12% of total income in the U.S.
B)   only 27% of total income in the U.S.
C)   50% of total income in the U.S.
D)   73% of total income in the U.S.E) None of the above
F) A) and B)

Question 3

Which of the following is not correct?

Accepted Answer

A)   Critics argue that minimum-wage laws hurt the very people they are intended to help.
B)   Minimum-wage laws may increase unemployment among the groups of workers affected by the minimum wage.
C)   If the demand for unskilled labor is relatively inelastic, the higher wage will produce more unemployment than if the demand for unskilled labor is relatively elastic.
D)   Minimum-wage laws may benefit teenagers from middle-class families, so the policy is not a precise way to help the poor.E) A) and B)
F) A) and C)

Question 4

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

Accepted Answer

A)   People will alter their behaviors.
B)   Incentives will be distorted.
C)   Total utility will likely remain constant.
D)   The allocation of resources will be less efficient .E) A) and C)
F) All of the above

Question 5

Which of the following is not correct?

Accepted Answer

A)   Poverty is long-term problem for relatively few families.
B)   Measurements of income inequality usually do not include in-kind transfers.
C)   Measurements of income inequality use lifetime incomes rather than annual incomes.
D)   Measurements of income inequality would be more meaningful if they reflected permanent rather than current income.E) C) and D)
F) B) and C)

Question 6

The United States has more income inequality than Brazil and South Africa.

Accepted Answer

A) True 
 B)False

Question 7

The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Smith family,their

Accepted Answer

A)   transitory income for the year of the frost likely exceeds their permanent income.
B)   permanent income likely exceeds their transitory income for the year of the frost.
C)   permanent income will be more affected by the frost than their transitory income.
D)   Both a and c are correct.E) B) and D)
F) None of the above

Question 8

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Accepted Answer

A)   Trade can make everyone better off.
B)   The cost of something is what you give up to get it.
C)   People face trade-offs.
D)   Markets are usually a good way to organize economic activity.E) C) and D)
F) B) and D)

Question 9

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 10

The poverty rate is based on a family's

Accepted Answer

A)   income, in-kind transfers, and other government aid.
B)   income and in-kind transfers.
C)   in-kind transfers only.
D)   income only.E) A) and B)
F) A) and C)

Question 11

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

Accepted Answer

A)   food stamps
B)   Medicaid
C)   the Earned Income Tax Credit
D)   housing vouchersE) B) and D)
F) A) and C)

Question 12

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 13

"The government should choose policies deemed to be just,as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Accepted Answer

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

Question 14

Utilitarianism is

Accepted Answer

A)   a liberal religion that focuses on individual rights.
B)   a political philosophy that believes the government should choose policies deemed to be just by an impartial observer.
C)   a political philosophy that believes the government should not redistribute income.
D)   a political philosophy that believes the government should choose policies to maximize the total utility of society.E) All of the above
F) C) and D)

Question 15

In the United States approximately 80 percent of millionaires did not inherit their wealth.This illustrates the

Accepted Answer

A)   amount of transitory income in the United States.
B)   effectiveness of government anti-poverty programs in the United States.
C)   great economic mobility in the United States.
D)   level of permanent income in the United States.E) B) and D)
F) None of the above

Question 16

In 2008,the poverty rate in the United States was 13.2 percent.This means that 13.2 percent

Accepted Answer

A)   of the population had a total family income that fell below the poverty line.
B)   of the population had a total family income that was above the poverty line.
C)   of the population had a total family income below $10,000.
D)   of the population had a total family income above $50,000.E) B) and C)
F) B) and D)

Question 17

The poverty line is

Accepted Answer

A)   established by the federal government.
B)   approximately equivalent to three times the cost of providing an adequate diet.
C)   an absolute level of income below which a family is deemed to be in poverty.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 18

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.E) All of the above
F) C) and D)

Question 19

Scenario 20-2
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income)  - $20,000
-Refer to Scenario 20-2.A family earning $90,000 before taxes would have how much after-tax income?

Accepted Answer

A)   $12,500
B)   $17,500
C)   $87,500
D)   $92,500E) A) and B)
F) None of the above

Question 20

Liberals 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) A) and D)
F) B) and D)

Exam 20: Income Inequality and Poverty.

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

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Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4.In 2007,the bottom 60% of families have

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The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Smith family,their

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Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

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In the United States approximately 80 percent of millionaires did not inherit their wealth.This illustrates the

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Scenario 20-2 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $20,000 -Refer to Scenario 20-2.A family earning $90,000 before taxes would have how much after-tax income?

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"The government should choose policies deemed to be just,as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

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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.

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

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Utilitarianism is

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In 2008,the poverty rate in the United States was 13.2 percent.This means that 13.2 percent

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The poverty rate is based on a family's

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Which of the following is not correct?

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The poverty line is

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

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Which of the following is not correct?

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Which of the following will not occur when government policies are enacted to make the distribution of income more equitable?

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Liberals believe

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Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

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The United States has more income inequality than Brazil and South Africa.

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