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Exam 20: Income Inequality and Poverty

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Question 221

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Table 20-14 James, Luke, Peter, Micah, and Sarah are the only five inhabits of Marketsville. The following table shows their income. ​ ​ -Refer to Table 20-14. Where would the government of Marketsville set the poverty line to have a poverty rate of 20 percent?

A) $23,000
B) $35,000
C) $44,000
D) $55,000

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

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Question 222

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Which two of the Ten Principles of Economics are illustrated in this chapter?

A) A country's standard of living depends on its ability to produce goods & People face tradeoffs.
B) Prices rise when the government prints too much money & Governments can sometimes improve market outcomes.
C) Governments can sometimes improve market outcomes & People face tradeoffs.
D) People face tradeoffs & Prices rise when the government prints too much money .

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

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Question 223

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When the government enacts policies to make the distribution of income more equitable, it distorts incentives, alters behavior, and makes the allocation of resources less efficient.

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

The distribution of income for Dismal is as follows: If the poverty rate in Dismal is about 17 percent, what is the poverty line in Dismal?

If society chose to maximize total utility rather than minimum utility,

A disadvantage associated with in-kind transfers to reduce poverty is that they

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. Comparing data from 2000 and 2011, which of the following statements is correct?

Scenario 20-3 Suppose that a society is made up of five families whose incomes are as follows: $120,000; $90,000; $30,000; $30,000; and $18,000. The federal government is considering two potential income tax plans: Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000. Plan B is a two-tiered plan where families earning less than $35,000 pay no income tax and families earning more than $35,000 pay 10% of their income in taxes. The income tax revenue collected from those families earning over $35,000 is then redistributed equally to those families earning less than $35,000. -Refer to Scenario 20-3. Assuming that utility is directly proportional to the cash value of after-tax income, which government policy would an advocate of utilitarianism prefer?

If the value of in-kind transfers are taken into account, the number of families living in poverty in the United States would

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. Below what level of income would families start to receive a subsidy from this negative income tax?

Scenario 20-6 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 20-6. How much does Zooey owe or receive from the government?

The poverty rate is based on a family's

The utilitarian case for redistributing income is based on the assumption of

The distribution of income for Danville is as follows: If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?

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

The percentage of the population whose family income falls below an absolute level is call the

In 2011, the top 20% of US families had more than times as much income as the bottom 20%.

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?