Question 1

Since 1970, has the distribution of income in the US become more equal, less equal, or remained unchanged?

Accepted Answer

The answer of Since 1970, has the distribution of income...

Question 2

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

Accepted Answer

A)   The gap shrinks if taxes are taken into account.
B)   The gap shrinks if consumption, rather than income, is compared.
C)   The gap shrinks if the number of people in the household is taken into account.
D)   The gap shrinks if the state of residence is taken into account.E) A) and B)
F) A) and C)

Question 3

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

Question 4

The only qualification to receive government assistance under a negative income tax is

Accepted Answer

A)   pre-school children.
B)   to be enrolled in job training.
C)   a working head-of-household.
D)   a low income.E) All of the above
F) B) and C)

Question 5

The poverty rate is the percentage of the population whose family income falls below an absolute level called the .

Accepted Answer

The answer of The poverty rate is the percentage of...

Question 6

Over the past 50 years, the U.S. poverty rate was at its lowest level in

Accepted Answer

A)   1973.
B)   1980.
C)   1990.
D)   2008.E) A) and B)
F) B) and D)

Question 7

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

Question 8

Based on U.S. data for 2011, the poverty rate is the highest for which group of people?

Accepted Answer

A)   children
B)   married couples
C)   female-headed households, no spouse present
D)   the elderlyE) B) and C)
F) A) and B)

Question 9

Figure 20-3 
-Refer to Figure 20-3. In 2011, the percent of children under age 18 in poverty is

Accepted Answer

A)   higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 years and over in poverty.
B)   higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 years and over in poverty.
C)   lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 years and over in poverty.
D)   lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 years and over in poverty.E) B) and C)
F) A) and B)

Question 10

A commonly-used gauge of poverty is the

Accepted Answer

A)   income inequality rate.
B)   average income rate.
C)   poverty rate.
D)   social inequality rate.E) C) and D)
F) B) and C)

Question 11

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 $18,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 12

In 2011, the poverty rate in the United States was

Accepted Answer

A)   5.9 percent.
B)   11.1 percent.
C)   15.0 percent.
D)   22.4 percent.E) A) and C)
F) All of the above

Question 13

The poverty rate is based on a family's

Accepted Answer

A)   income, in-kind transfers, and other government aid.
B)   income and in-kind transfers.
C)   in-kind transfers only.
D)   income only.E) All of the above
F) A) and D)

Question 14

Would the maximin criterion achieve perfect income equality?

Accepted Answer

A)   Yes. There would be no way to reallocate resources to raise the utility of the poor.
B)   Yes. The maximin criterion would eliminate poverty.
C)   No. It is impossible for complete equality to benefit the worst-off people in society.
D)   No. Complete equality would reduce incentives to work, which would reduce total income, which would reduce the incomes of the worst-off people in society.E) A) and C)
F) B) and D)

Question 15

About four out of five millionaires in the United States earned their money rather than inherited it.

Accepted Answer

A) True 
 B)False

Question 16

Table 20-5
Distribution of Income in Umakastan
 
-Refer to Table 20-5. Where would the government of Umakastan have to set the poverty line to have a poverty rate of about 28%?

Accepted Answer

A)   $20,000
B)   $34,690
C)   $38,000
D)   $56,000E) None of the above
F) A) and D)

Question 17

Which of the following is not a question that economists try to answer when measuring the distribution of income?

Accepted Answer

A)   How many people live in poverty?
B)   How often do people receive a raise at work?
C)   How often do people move among income classes?
D)   What problems arise in measuring the amount of inequality?E) A) and D)
F) B) and D)

Question 18

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Accepted Answer

A) True 
 B)False

Question 19

When incentives to earn income are distorted by income redistribution programs,

Accepted Answer

A)   losses can exceed potential gains from greater equality of income.
B)   total income in an economy can fall.
C)   total utility in society can fall.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 20

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...

Exam 20: Income Inequality and Poverty

A commonly-used gauge of poverty is the

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

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Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

Correct AnswerverifiedShow Answer

Which of the following is not a question that economists try to answer when measuring the distribution of income?

Correct AnswerverifiedShow Answer

Based on U.S. data for 2011, the poverty rate is the highest for which group of people?

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Since 1970, has the distribution of income in the US become more equal, less equal, or remained unchanged?

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Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of children under age 18 in poverty is

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About four out of five millionaires in the United States earned their money rather than inherited it.

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The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Correct AnswerverifiedShow Answer

Would the maximin criterion achieve perfect income equality?

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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 $18,000 owe?

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Over the past 50 years, the U.S. poverty rate was at its lowest level in

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The only qualification to receive government assistance under a negative income tax is

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Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. Where would the government of Umakastan have to set the poverty line to have a poverty rate of about 28%?

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In 2011, the poverty rate in the United States was

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The poverty rate is based on a family's

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When incentives to earn income are distorted by income redistribution programs,

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

Correct AnswerverifiedShow Answer

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

The poverty rate is the percentage of the population whose family income falls below an absolute level called the .

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The critique is based on the premise tha...
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