Question 1

In general, which of the following would libertarians argue is more important than equal outcomes?

Accepted Answer

A)  equal opportunities
B)  equal incomes
C)  providing a social safety net
D)  offering the opportunity to purchase social insuranceE) B) and C)
F) B) and D)

Question 2

When the government redistributes income to achieve greater equality, it

Accepted Answer

A)  distorts incentives.
B)  improves efficiency.
C)  focuses on middle income brackets.
D)  relies on foreign aid to help balance the budget.E) B) and C)
F) A) and B)

Question 3

What measure does the federal government use when setting the official poverty line in the US?

Accepted Answer

three times the cost...

Question 4

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Accepted Answer

A)  liberalism
B)  utilitarianism
C)  libertarianism
D)  welfarismE) None of the above
F) A) and D)

Question 5

Which group (or groups)  would be the most upset by wide variation in the income distribution?

Accepted Answer

A)  utilitarians
B)  utilitarians and liberals
C)  libertarians
D)  liberals and libertariansE) A) and D)
F) A) and C)

Question 6

Scenario 20-8
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) - $14,000
​
​
-Refer to Scenario 20-8. The government does not receive any tax revenue through this negative income tax if the family with the highest income earns $56,000.

Accepted Answer

A) True 
 B)False

Question 7

A binding minimum wage

Accepted Answer

A)  affects employees but not employers.
B)  lowers the productivity of workers.
C)  raises the cost of labor to firms.
D)  All of the above are correct.E) A) and C)
F) A) and B)

Question 8

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 $50,000 before taxes would have how much after-tax income?

Accepted Answer

A)  -$5,000
B)  $40,000
C)  $45,000
D)  $55,000E) A) and D)
F) C) and D)

Question 9

Explain the concept of diminishing marginal utility, and describe the role that it plays in the utilitarian argument for the redistribution of income.

Accepted Answer

Diminishing marginal utility refers to t...

Question 10

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

Question 11

Table 20-9
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 20-9. Which of the following statements best describes the trends in the table?

Accepted Answer

A)  From 1980 to 2010, the distribution of income has become less equal.
B)  From 1980 to 2010, the distribution of income has remained the same.
C)  From 1980 to 2010, the distribution of income has become more equal.
D)  None of the above is correct.E) C) and D)
F) B) and D)

Question 12

Caroline earns more than John. Under a new tax system, some of the taxes paid by Caroline would go to John. A libertarian would

Accepted Answer

A)  support the system because an extra dollar earned by Caroline would be worth less to her than an extra dollar given to John.
B)  oppose the system if it redistributed income in the presence of equal opportunity.
C)  oppose the system because an extra dollar earned by Caroline would be worth more to her than an extra dollar given to John.
D)  support the system if it maximized the well-being of the poorest member of society.E) None of the above
F) B) and C)

Question 13

The goal of liberalism is to

Accepted Answer

A)  redistribute income based on the assumption of diminishing marginal utility.
B)  redistribute income in order to improve the well-being of the worst-off person in society.
C)  punish crimes and enforce voluntary agreements but not to redistribute income.
D)  measure happiness and satisfaction.E) A) and B)
F) B) and C)

Question 14

A negative income tax system would

Accepted Answer

A)  make taxes more regressive.
B)  sever the link between tax policy and income distribution.
C)  collect from high-income households and give transfers to low-income households.
D)  eliminate progressive tax rates.E) A) and C)
F) None of the above

Question 15

Table 20-13
The following table shows the distribution of income in Widgetapolis.  ​
-Refer to Table 20-13. If the poverty rate is 33%, where is the poverty line in Widgetapolis?

Accepted Answer

A)  under $39,000
B)  between $39,000 and $59,999
C)  between $60,000 and $81,999
D)  between $82,000 and $109,999E) None of the above
F) A) and B)

Question 16

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

Question 17

Table 20-13
The following table shows the distribution of income in Widgetapolis.  ​
-Refer to Table 20-13. If the poverty line were $45,141, what would be the poverty rate?

Accepted Answer

A)  less than 20%
B)  between 20% and 40%
C)  between 40% and 60%
D)  between 60% and 80%E) A) and D)
F) A) and C)

Question 18

Table 20-5
Distribution of Income in Umakastan 
-Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Accepted Answer

A)  $18,750
B)  $20,000
C)  $34,690
D)  $38,000E) B) and C)
F) None of the above

Question 19

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Accepted Answer

A)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on transitory income.
B)  Angelo's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Sonia's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income.
C)  Angelo's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Sonia's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income.
D)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on permanent income.E) B) and D)
F) B) and C)

Question 20

Which of the following statements is not correct?

Accepted Answer

A)  Libertarians are opposed to redistributing income.
B)  Critics of the welfare system argue that it breaks up families.
C)  One of the problems with measuring income inequality is valuing in-kind transfers.
D)  Utilitarians believe that the government should punish crimes but should not redistribute income.E) A) and C)
F) A) and D)

Exam 20: Income Inequality and Poverty

A binding minimum wage

Correct Answer
verified

In general, which of the following would libertarians argue is more important than equal outcomes?

Correct Answer
verified

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Correct Answer
verified

Table 20-9 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 20-9. Which of the following statements best describes the trends in the table?

Correct Answer
verified

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 $50,000 before taxes would have how much after-tax income?

Correct Answer
verified

Caroline earns more than John. Under a new tax system, some of the taxes paid by Caroline would go to John. A libertarian would

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Correct Answer
verified

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Correct Answer
verified

Which group (or groups) would be the most upset by wide variation in the income distribution?

Correct Answer
verified

What measure does the federal government use when setting the official poverty line in the US?

Correct Answer
verified
three times the cost...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Table 20-13 The following table shows the distribution of income in Widgetapolis. -Refer to Table 20-13. If the poverty rate is 33%, where is the poverty line in Widgetapolis?

Correct Answer
verified

Table 20-13 The following table shows the distribution of income in Widgetapolis. -Refer to Table 20-13. If the poverty line were $45,141, what would be the poverty rate?

Correct Answer
verified

The goal of liberalism is to

Correct Answer
verified

A negative income tax system would

Correct Answer
verified

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 Answer
verified

When the government redistributes income to achieve greater equality, it

Correct Answer
verified

Explain the concept of diminishing marginal utility, and describe the role that it plays in the utilitarian argument for the redistribution of income.

Correct Answer
verified
Diminishing marginal utility refers to t...
View Answer

Exam 20: Income Inequality and Poverty

A binding minimum wage

Correct AnswerverifiedShow Answer

In general, which of the following would libertarians argue is more important than equal outcomes?

Correct AnswerverifiedShow Answer

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Correct AnswerverifiedShow Answer

Table 20-9 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 20-9. Which of the following statements best describes the trends in the table?

Correct AnswerverifiedShow Answer

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 $50,000 before taxes would have how much after-tax income?

Correct AnswerverifiedShow Answer

Caroline earns more than John. Under a new tax system, some of the taxes paid by Caroline would go to John. A libertarian would

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Correct AnswerverifiedShow Answer

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Correct AnswerverifiedShow Answer

Which group (or groups) would be the most upset by wide variation in the income distribution?

Correct AnswerverifiedShow Answer

What measure does the federal government use when setting the official poverty line in the US?

Correct Answerverifiedthree times the cost...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 20-13 The following table shows the distribution of income in Widgetapolis. ​ -Refer to Table 20-13. If the poverty rate is 33%, where is the poverty line in Widgetapolis?

Correct AnswerverifiedShow Answer

Table 20-13 The following table shows the distribution of income in Widgetapolis. ​ -Refer to Table 20-13. If the poverty line were $45,141, what would be the poverty rate?

Correct AnswerverifiedShow Answer

The goal of liberalism is to

Correct AnswerverifiedShow Answer

A negative income tax system would

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

When the government redistributes income to achieve greater equality, it

Correct AnswerverifiedShow Answer

Explain the concept of diminishing marginal utility, and describe the role that it plays in the utilitarian argument for the redistribution of income.

Correct AnswerverifiedDiminishing marginal utility refers to t...View AnswerShow Answer

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three times the cost...
View Answer

Correct Answer
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Correct Answer
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Table 20-13 The following table shows the distribution of income in Widgetapolis. -Refer to Table 20-13. If the poverty rate is 33%, where is the poverty line in Widgetapolis?

Correct Answer
verified

Table 20-13 The following table shows the distribution of income in Widgetapolis. -Refer to Table 20-13. If the poverty line were $45,141, what would be the poverty rate?

Correct Answer
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Diminishing marginal utility refers to t...
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