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Exam 20: Income Inequality and Poverty

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Question 211

Multiple Choice

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Which of the following pholitical philosophies would support redistribution of income that makes society fully egalitarian?

A) Liberals, because they believe in the maximin criterion.
B) Libertarians, because they believe in evaluating the process by which economic outcomes arise.
C) Utilitarians, because they believe in diminishing marginal utility.
D) None of the above would support completely egalitarian redistribution of income.

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

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Question 212

Multiple Choice

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Table 20-2 Percentage of Before-Tax Income Received by Families in Hapland -Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income distribution became

A) less equal.
B) more equal.
C) more equal at the lowest level of income but less equal at highest level of income.
D) less equal at the lowest level of income but more equal at highest level of income.

E) A) and D)
F) A) and B)

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Question 213

Multiple Choice

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What percentage of millionaires in the United States are self-made?

In the United States, labor earnings are about what percent of total income?

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

Scenario 20-7 Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which Taxes owed = (1/4 of income) - $15,000. -Refer to Scenario 20-7. Does Zooey owe or receive money from the government? How much?

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.

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. Fifty percent of all families have incomes below what level?

A disadvantage associated with a minimum wage law to reduce poverty is that it

People have their highest saving rates when they are

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Table 20-4 Source: U.S. Bureau of Census -Refer to Table 20-4. Comparing data from 2000 and 2011, which of the following statements is correct?

Scenario 20-4 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/5 of income) - $15,000 -Refer to Scenario 20-4. A family earning $100,000 before taxes would have how much after-tax income?

Scenario 20-2 The government is proposing switching from a progressive tax system, in which families pay 15% of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000 to a tax system in which every family pays 1/4 of its income regardless of how much they earn and all income redistribution is eliminated. That is, the tax revenue generated is used only for infrastructure, public administration, and national defense. -Refer to Scenario 20-2. Which philosopher would be most in favor of the proposed change in tax policy?

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 Income) - $10,000. a. $120,003 b. $90,003 c. $60,003 d. $30,003 e. $0 <sub

The goal of liberalism is to

Saving and borrowing is indicative of a family that

Table 20-14 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-14. In 2010, how many more percentage points of total income did the top fifth of the population earn compared to if the income distribution were completely equal?

What is the primary problem in comparing income inequality in the US with income inequality in other countries?