FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 20: Income Inequality and Poverty

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

True/False

Review LaterAdd Note

Review Later

Despite continued growth in average income since the early 1970s, the poverty rate has not declined below the level reached in 1973.

A) True
B) False

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their

A) transitory income for the year of the recession likely exceeds their permanent income.
B) permanent income likely exceeds their transitory income for the year of the recession.
C) permanent income will be more affected by the recession than their transitory income.
D) transitory income is unaffected by this situation.

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

Correct Answer

verified

Show Answer

Question 23

Essay

Review LaterAdd Note

Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

Economists Cox and Alm compared the gap between rich and poor and found that the richest 20% was about 15 times better off than the poorest 20% when they compared what data?

Since 1970 the United States' income distribution has become more equal.

Who said "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries"?

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

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

Which of the following statements is correct?

Scenario 20-3 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) − $16,000 -Refer to Scenario 20-3. This negative income tax would guarantee what minimum level of income to every family?

Scenario 20-5 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 20-5. Zooey's brother Zander owes $10,000 in taxes. How much does he earn?

According to a study by Michael Cox and Richard Alm, consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

Many economists believe that a family bases its spending decisions on its permanent, or average, income rather than on transitory income.

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

Outline the possible work disincentives created by anti-poverty programs. Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Temporary Assistance for Needy Families (TANF) and Supplemental Security Income (SSI) are examples of .

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 = (1/4 of income) - $14,000 -Refer to Scenario 20-4. A family earning $56,000 before taxes will have $56,000 after tax.

Supporters of raising the minimum wage argue that minimum-wage laws are