Question 1

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 D)

Question 2

Measures of poverty that fail to account for the value of in-kind transfers

Accepted Answer

A)  understate the actual poverty rate.
B)  have little effect on the validity of reported poverty rates.
C)  are generally more reliable measures of actual poverty rates.
D)  overstate the actual poverty rate.E) None of the above
F) All of the above

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

People have their highest saving rates when they are

Accepted Answer

A)  retired.
B)  middle-aged.
C)  married with young children.
D)  young and single.E) C) and D)
F) A) and C)

Question 5

Which of the following is not correct?

Accepted Answer

A)  Poverty is long-term problem for relatively few families.
B)  Measurements of income inequality usually do not include in-kind transfers.
C)  Measurements of income inequality use lifetime incomes rather than annual incomes.
D)  Measurements of income inequality would be more meaningful if they reflected permanent rather than current income.E) None of the above
F) A) and D)

Question 6

The poverty line is adjusted each year to reflect changes in the

Accepted Answer

A)  number of people currently on public assistance.
B)  level of prices.
C)  nutritional content of an "adequate" diet.
D)  size of a family.E) B) and C)
F) All of the above

Question 7

Which of the following is an advantage of an in-kind transfer in comparison to a cash payment?

Accepted Answer

A)  In-kind transfers cost less to administer than cash transfers.
B)  In-kind transfers restrict the use of the benefit; thus,recipients receive necessities such as food and health care.
C)  In-kind transfers are more efficient than cash transfers.
D)  In-kind transfers give the recipient more utility than cash transfers.E) None of the above
F) A) and D)

Question 8

Which of the following is not correct?

Accepted Answer

A)  Poverty is correlated with race.
B)  Poverty is correlated with age.
C)  Poverty is correlated with family composition.
D)  All of the above are correct.E) All of the above
F) A) and D)

Question 9

Diminishing marginal utility suggests that

Accepted Answer

A)  more is always preferred to less.
B)  the well-being of society is maximized when the distribution of income is equal.
C)  the poor are less efficient at spending money than the rich.
D)  the poor receive more satisfaction from the last dollar spent than the rich.E) All of the above
F) None of the above

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Accepted Answer

A)  a more efficient allocation of resources
B)  a distortion of incentives
C)  unchanged behavior
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 12

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

Accepted Answer

A)  in-kind transfers
B)  negative income tax
C)  transitory versus permanent income
D)  economic mobilityE) B) and D)
F) All of the above

Question 13

Binding minimum-wage laws

Accepted Answer

A)  are most effective at alleviating poverty when labor demand is highly elastic.
B)  force a market imbalance between the supply and demand for labor.
C)  increase the efficiency of labor markets.
D)  are typically associated with a rise in employment among the poor.E) B) and D)
F) A) and D)

Question 14

Figure 20-5 o,and employment would rise above Qo. B) above Wo,and employment would fall below Qo. C) below Wo,and employment would rise above Qo. D) below Wo,and employment would fall below Qo." class="answers-bank-image d-inline" rel="preload" >

-Refer to Figure 20-5.An effective minimum wage would be set at a level

Accepted Answer

A)  above Wo,and employment would rise above Qo.
B)  above Wo,and employment would fall below Qo.
C)  below Wo,and employment would rise above Qo.
D)  below Wo,and employment would fall below Qo.E) None of the above
F) All of the above

Question 15

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Accepted Answer

A)  trickle-down effects.
B)  enhancing market efficiency.
C)  redistributing income.
D)  maintaining the status quo income distribution.E) A) and B)
F) A) and C)

Question 16

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

Accepted Answer

A) True 
 B)False

Question 17

The typical economic life cycle illustrates how people tend to

Accepted Answer

A)  borrow more when they are younger and save more when they are middle-aged.
B)  earn their peak incomes immediately prior to the typical retirement age of 65.
C)  adjust their consumption based on changes in their transitory income.
D)  All of the above are correct.E) B) and D)
F) C) and D)

Question 18

Explain the relationship between labor earnings and the distribution of income.

Accepted Answer

A person's earnings depend on the supply...

Question 19

A family's ability to buy goods and services depends largely on the family's

Accepted Answer

A)  economic mobility.
B)  place in the economic life cycle.
C)  transitory income.
D)  permanent income.E) None of the above
F) B) and D)

Question 20

There is very little economic mobility in the United States,which means that once a family is poor,it is very likely to remain poor for at least a decade.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

Correct AnswerverifiedShow Answer

Which of the following is an advantage of an in-kind transfer in comparison to a cash payment?

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

Correct AnswerverifiedShow Answer

People have their highest saving rates when they are

Correct AnswerverifiedShow Answer

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Correct AnswerverifiedShow Answer

Measures of poverty that fail to account for the value of in-kind transfers

Correct AnswerverifiedShow Answer

The poverty line is adjusted each year to reflect changes in the

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Binding minimum-wage laws

Correct AnswerverifiedShow Answer

There is very little economic mobility in the United States,which means that once a family is poor,it is very likely to remain poor for at least a decade.

Correct AnswerverifiedShow Answer

Explain the relationship between labor earnings and the distribution of income.

Correct AnswerverifiedA person's earnings depend on the supply...View AnswerShow Answer

Figure 20-5 -Refer to Figure 20-5.An effective minimum wage would be set at a level

Correct AnswerverifiedShow Answer

A commonly-used gauge of poverty is the

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A family's ability to buy goods and services depends largely on the family's

Correct AnswerverifiedShow Answer

The typical economic life cycle illustrates how people tend to

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

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Diminishing marginal utility suggests that

Correct AnswerverifiedShow Answer

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A person's earnings depend on the supply...
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