Question 1

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 Libertarians.E) A) and D)
F) A) and C)

Question 2

Table 20-4
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 20-4.What is the poverty line for a family with one 35-year-old adult and one child?

Accepted Answer

A)   $8,628
B)   $9,359
C)   $12,353
D)   $12,400E) A) and D)
F) B) and C)

Question 3

John Rawls,who developed the way of thinking called liberalism,argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Accepted Answer

A) True 
 B)False

Question 4

What percent of families are poor for eight or more years?

Accepted Answer

A)   More than 20 percent.
B)   Between 15 and 20 percent.
C)   Approximately 10 percent.
D)   Less than 3 percent.E) None of the above
F) B) and C)

Question 5

If a government could successfully achieve the maximin criterion,each member of society would have an equal income.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following does not explain the rise in income inequality from 1970 to 2005?

Accepted Answer

A)   Changes in technology.
B)   An increase in minimum wages.
C)   A reduction in the demand for unskilled labor.
D)   Increased international trade with low-wage countries.E) All of the above
F) None of the above

Question 7

In 2005,the poverty line for a family of four in the U.S.was

Accepted Answer

A)   $56,194.
B)   $28,097.
C)   $19,971.
D)   $12,603.E) C) and D)
F) None of the above

Question 8

Which of the following is not an example of in-kind transfers?

Accepted Answer

A)   Food stamps.
B)   Medicare.
C)   The Earned Income Tax Credit.
D)   Housing vouchers.E) B) and C)
F) C) and D)

Question 9

Saving and borrowing is indicative of a family that

Accepted Answer

A)   is most likely to be poor.
B)   has a difficult time balancing its standard of living.
C)   adjusts its standard of living to reflect transitory changes in income.
D)   is most likely millionaires.E) A) and C)
F) A) and D)

Question 10

Comparing the United States household income distribution to other countries is

Accepted Answer

A)   easy,because data is available for all countries in the world.
B)   easy,because some countries collect data on expenditures instead of incomes.
C)   problematic,because international agreements require countries to standardize their income accounting procedures.
D)   problematic,because countries collect data in different ways.E) B) and C)
F) A) and B)

Question 11

Economist Tyler Cowen attributes increased income inequality to

Accepted Answer

A)   lower income inequality among older populations than younder populations.
B)   lower in-kind transfers made by governments.
C)   a larger number of educated people in the U.S.population.
D)   the development of the internet.E) C) and D)
F) A) and D)

Question 12

Which of the following explains the rise in income inequality from 1970 to 2005?

Accepted Answer

A)   An increase in minimum wages.
B)   An increase in the demand for skilled labor.
C)   An increase in the demand for unskilled labor.
D)   Reduced international trade with low-wage countries.E) All of the above
F) B) and D)

Question 13

An income distribution may not give an accurate picture of families' standards of living because it does not include in-kind transfers.

Accepted Answer

A) True 
 B)False

Question 14

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 *Income) - 10,000.If a family doesn't earn any income,how does the negative income tax affect them?

Accepted Answer

A)   They will receive an income subsidy of $1,000.
B)   They will receive an income subsidy of $3,000.
C)   They will receive an income subsidy of $10,000.
D)   They will not be affected at all,since the negative income tax requires a family to earn income.E) B) and C)
F) A) and D)

Question 15

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 B)
F) None of the above

Question 16

Ms.Spring currently earns $100,000 a year,while her junior partner,Mr.Fall,earns $55,000 a year.From the perspective of a utilitarian,if both of their incomes are subject to diminishing marginal utility,taking a dollar from Ms.Spring and giving it to Mr.Fall will

Accepted Answer

A)   increase society's total utility.
B)   lower Ms.Spring's marginal utility of income.
C)   increase Mr.Fall's marginal utility of income.
D)   lower society's total utlity.E) None of the above
F) All of the above

Question 17

The measured poverty rate may not reflect the true extent of economic deprivation because it does not include some forms of government assistance.

Accepted Answer

A) True 
 B)False

Question 18

The poverty rate is the percentage of the population that have a family income level below the

Accepted Answer

A)   income maintenance threshold.
B)   poverty line.
C)   bottom quintile of the income distribution.
D)   minimum wage.E) A) and D)
F) A) and C)

Question 19

Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits.What is the foundation of your critique?

Accepted Answer

The critique is based on the premise tha...

Question 20

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

Accepted Answer

A)   5 times the pre-tax income of the poorest fifth.
B)   10 times the pre-tax income of the poorest fifth.
C)   15 times the pre-tax income of the poorest fifth.
D)   20 times the pre-tax income of the poorest fifth.E) B) and C)
F) A) and C)

Exam 20: Income Inequality and Poverty

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 *Income) - 10,000.If a family doesn't earn any income,how does the negative income tax affect them?

Correct AnswerverifiedShow Answer

An income distribution may not give an accurate picture of families' standards of living because it does not include in-kind transfers.

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Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits.What is the foundation of your critique?

Correct AnswerverifiedThe critique is based on the premise tha...View AnswerShow Answer

Which of the following does not explain the rise in income inequality from 1970 to 2005?

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A binding minimum wage

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What percent of families are poor for eight or more years?

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Ms.Spring currently earns $100,000 a year,while her junior partner,Mr.Fall,earns $55,000 a year.From the perspective of a utilitarian,if both of their incomes are subject to diminishing marginal utility,taking a dollar from Ms.Spring and giving it to Mr.Fall will

Correct AnswerverifiedShow Answer

Economist Tyler Cowen attributes increased income inequality to

Correct AnswerverifiedShow Answer

Table 20-4 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 20-4.What is the poverty line for a family with one 35-year-old adult and one child?

Correct AnswerverifiedShow Answer

The measured poverty rate may not reflect the true extent of economic deprivation because it does not include some forms of government assistance.

Correct AnswerverifiedShow Answer

Which of the following is not an example of in-kind transfers?

Correct AnswerverifiedShow Answer

John Rawls,who developed the way of thinking called liberalism,argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Correct AnswerverifiedShow Answer

The poverty rate is the percentage of the population that have a family income level below the

Correct AnswerverifiedShow Answer

Which of the following explains the rise in income inequality from 1970 to 2005?

Correct AnswerverifiedShow Answer

Comparing the United States household income distribution to other countries is

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In 2005,the poverty line for a family of four in the U.S.was

Correct AnswerverifiedShow Answer

Saving and borrowing is indicative of a family that

Correct AnswerverifiedShow Answer

If a government could successfully achieve the maximin criterion,each member of society would have an equal income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The critique is based on the premise tha...
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