Question 1

Which of the following is not correct?

Accepted Answer

A)   A negative income tax only applies to working people,so it encourages people to get full-time work.
B)   Supporters advocate the use of the Earned Income Tax Credit as a way to help the working poor.
C)   A negative income tax subsidizes the incomes of poor people.
D)   An advantage of a negative income tax is that it is not based on the number of children,so it does not provide incentives for unmarried women to have children.E) B) and C)
F) None of the above

Question 2

Table 20-1
Distribution of Income in Imagination
 
-Refer to Table 20-1.If the poverty rate in Imagination is 10%,what is the poverty line?

Accepted Answer

The answer of Table 20-1
Distribution of Income in Imagination
 
-Refer...

Question 3

Suppose that Jamal is moving to a state where personal incomes are distributed randomly.If Jamal believes in liberalism,he would prefer

Accepted Answer

A)   an income distribution that is relatively equal.
B)   that everyone has the same work opportunities and market-determined wage rates.
C)   that private property be transformed to government property to safeguard people's incomes.
D)   less economic assistance to the poor because it distorts the price system.E) B) and D)
F) B) and C)

Question 4

Which of the following is not correct?

Accepted Answer

A)   Welfare is a broad term that includes a variety of government programs designed to help poor people.
B)   Since the early 1970s,welfare benefits adjusted for inflation have increased,as has the percentage of children living with only one parent.
C)   Critics of welfare programs argue that they can create incentives for unmarried women to have children.
D)   Supporters argue that welfare doesn't cause the decline of two-parent families.E) None of the above
F) A) and B)

Question 5

Table 20-9
Poverty Thresholds in 2002,by Size of Family and Number of Related Children Under 18 Years
[Dollars]
  Source: U.S.Bureau of the Census,Current Population Survey.
-Refer to Table 20-9.What is the poverty line for a family of eight with two children?

Accepted Answer

A)   $14,494
B)   $32,812
C)   $33,121
D)   $34,780E) B) and C)
F) All of the above

Question 6

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) All of the above
F) A) and B)

Question 7

Which of the following groups has the highest poverty rate?

Accepted Answer

A)   blacks
B)   Asians
C)   children (under age 18) 
D)   female households,no spouse presentE) All of the above
F) A) and B)

Question 8

Liberalism is founded on a premise that behind a "veil of ignorance,"

Accepted Answer

A)   justice cannot be agreed upon.
B)   everyone's income should be equal.
C)   everyone would agree to "just" rules to reallocate income.
D)   society should maximize the sum of individual utilities.E) B) and C)
F) A) and B)

Question 9

Which political philosophy concludes that equality of opportunities is more important than equality of outcomes?

Accepted Answer

The answer of Which political philosophy concludes that equality of...

Question 10

Critics of the minimum wage argue that

Accepted Answer

A)   labor demand is inelastic so firms can adjust production.
B)   too many older employees benefit at the expense of teenage workers.
C)   many minimum-wage earners are teenagers from middle-class families.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 11

Whether or not policymakers should try to make our society more egalitarian is largely a matter of

Accepted Answer

A)   economic efficiency.
B)   political philosophy.
C)   egalitarian principles.
D)   enhanced opportunity.E) A) and D)
F) None of the above

Question 12

People have their highest saving rates when they are

Accepted Answer

A)   retired.
B)   middle-aged.
C)   married with young children.
D)   young and single.E) None of the above
F) A) and B)

Question 13

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

Accepted Answer

A)   equal to the after-tax income of the poorest fifth.
B)   7 times the after-tax income of the poorest fifth.
C)   14 times the after-tax income of the poorest fifth.
D)   21 times the after-tax income of the poorest fifth.E) All of the above
F) B) and C)

Question 14

Which of the following is not correct?

Accepted Answer

A)   Many measures of inequality are based on income,which may not reflect a person's standard of living.
B)   Because many of the poorest families receive in-kind transfers,more families have lower standards of living when compared to poverty rates based on income.
C)   Because people can borrow and save to smooth out life cycle changes in income,equality measures based only on income may not reflect a person's standard of living.
D)   A person's standard of living depends more on her permanent income than her transitory income,so inequality measures based on current income may be misleading.E) B) and D)
F) All of the above

Question 15

The poverty rate is the percentage of the population whose family income falls below the poverty line..

Accepted Answer

A) True 
 B)False

Question 16

Comparing the US to other countries ranked by inequality,

Accepted Answer

A)   the US has a less equal distribution of income than some countries,but a more equal distribution of income than others.
B)   the US has one of the most equal distributions of income.
C)   the US has one of the least equal distributions of income.
D)   the US has a more equal distribution of income than other economically advanced countries such as Japan,Germany,and Canada.E) B) and C)
F) A) and C)

Question 17

In the United States in 2008,the bottom fifth of the income distribution had incomes below $19,250.

Accepted Answer

A) True 
 B)False

Question 18

Refer to Scenario 20-1.What would the libertarians think of the proposed policy change?

Accepted Answer

A)   They would favor the current policy over the proposed progressive tax policy because it aids the poorest families the most.
B)   They would favor the proposed progressive tax policy over the current policy because it maximizes the total utility of everyone in society.
C)   They would favor the proposed progressive tax policy over the current policy because it rewards those who work the hardest.
D)   They would oppose both tax policies because both redistribute income.E) A) and B)
F) C) and D)

Question 19

The normal life cycle pattern of income

Accepted Answer

A)   contributes to more inequality in the distribution of annual income and to more inequality in living standards.
B)   contributes to more inequality in the distribution of annual income,but it does not necessarily contribute to more inequality in living standards.
C)   contributes to less inequality in the distribution of annual income and to less inequality in living standards.
D)   has no effect on either the distribution of annual income or on living standards.E) C) and D)
F) B) and D)

Question 20

When comparing the percentage of income (or expenditure) of the lowest and highest 10 percent of the population,

Accepted Answer

A)   South Africa has a more equal income distribution than the United States.
B)   South Africa has a more equal income distribution than Japan.
C)   Japan has a more equal income distribution than the United States.
D)   Mexico has a more equal income distribution than Canada.E) B) and C)
F) None of the above

Exam 20: Income Inequality and Poverty

The poverty rate is the percentage of the population whose family income falls below the poverty line..

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In the United States in 2008,the bottom fifth of the income distribution had incomes below $19,250.

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Liberals believe

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Whether or not policymakers should try to make our society more egalitarian is largely a matter of

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Table 20-1 Distribution of Income in Imagination -Refer to Table 20-1.If the poverty rate in Imagination is 10%,what is the poverty line?

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Critics of the minimum wage argue that

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Table 20-9 Poverty Thresholds in 2002,by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U.S.Bureau of the Census,Current Population Survey. -Refer to Table 20-9.What is the poverty line for a family of eight with two children?

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Which of the following groups has the highest poverty rate?

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Which of the following is not correct?

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People have their highest saving rates when they are

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Comparing the US to other countries ranked by inequality,

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Which of the following is not correct?

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Refer to Scenario 20-1.What would the libertarians think of the proposed policy change?

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The normal life cycle pattern of income

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Which of the following is not correct?

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When comparing the percentage of income (or expenditure) of the lowest and highest 10 percent of the population,

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Suppose that Jamal is moving to a state where personal incomes are distributed randomly.If Jamal believes in liberalism,he would prefer

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Liberalism is founded on a premise that behind a "veil of ignorance,"

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

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Which political philosophy concludes that equality of opportunities is more important than equality of outcomes?

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