Question 1

Unemployment insurance benefits is a type of

Accepted Answer

A)   in-kind transfer.
B)   negative income tax payment.
C)   property income.
D)   welfare payment.E) A) and D)
F) A) and C)

Question 2

Data for the United States suggests that about how many millionaires inherited their fortunes?

Accepted Answer

A)   one in seven
B)   one in five
C)   one in three
D)   one in twoE) A) and D)
F) A) and C)

Question 3

The rule for redistribution proposed by John Rawls in his book A Theory of Justice is called the

Accepted Answer

A)   "optimal ignorance" rule.
B)   libertarian justice rule.
C)   maximin criterion.
D)   egalitarian criterion.E) A) and D)
F) A) and C)

Question 4

The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Jones family,their

Accepted Answer

A)   transitory income for the year of the frost likely exceeds their permanent income.
B)   permanent income likely exceeds their transitory income for the year of the frost.
C)   permanent income will be more affected by the frost than their transitory income.
D)   Both a and c are correct.E) All of the above
F) A) and C)

Question 5

Economists study poverty and income inequality in order to answer which of the following questions?

Accepted Answer

A)   What are people's wages?
B)   How does labor-force experience affect wages?
C)   How much inequality is there in society?
D)   How do people adjust their behavior due to taxation?E) C) and D)
F) None of the above

Question 6

Figure 20-3
Panel A  Source: U.S.Bureau of the Census
Panel B  Source: U.S.Bureau of the Census
-Refer to Figure 20-3.Panel B focuses on children who live in female-headed households.It illustrates the percentage of those children who live in poverty.For example,in 2000,slightly over 57 percent of all children who lived in a female-headed household lived below the poverty line.How is this information related to the graph illustrated in Panel A?

Accepted Answer

A)   The high prevalence of poverty in households headed by women is inversely related to male poverty rates.
B)   The poverty rates shown in Panel B are found by multiplying the female poverty rates shown in Panel A by 450%.
C)   The high prevalence of poverty in households headed by women likely explains why female poverty rates are higher than male poverty rates.
D)   Both b and c are correct.E) None of the above
F) B) and C)

Question 7

A disadvantage associated with in-kind transfers to reduce poverty is that they

Accepted Answer

A)   are more expensive than a negative income tax.
B)   are inefficient because they do not allow poor families to make purchases based on their preferences.
C)   focus on children and the disabled while neglecting the working poor.
D)   may benefit the teenage children of families who are not poor.E) B) and C)
F) None of the above

Question 8

The concept of utility is fundamental to utilitarianism and describes the

Accepted Answer

A)   optimal distribution of wealth in society.
B)   level of satisfaction derived from a person's circumstances.
C)   method by which society chooses to allocate resources.
D)   method whereby wealth is stored.E) None of the above
F) All of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The poverty line is

Accepted Answer

A)   established by the federal government.
B)   approximately equivalent to three times the cost of providing an adequate diet.
C)   an absolute level of income below which a family is deemed to be in poverty.
D)   All of the above are correct.E) All of the above
F) B) and D)

Question 11

Table 20-6
 
-Refer to Table 20-6.In both 2007 and 2008,approximately 25% of the population earned less than

Accepted Answer

A)   $15,000.
B)   $25,000.
C)   $50,000.
D)   $100,000.E) B) and D)
F) A) and B)

Question 12

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 $150,000 owe?

Accepted Answer

A)   $34,000
B)   $42,000
C)   $50,000
D)   $68,000E) C) and D)
F) All of the above

Question 13

Which of the following statements is correct?

Accepted Answer

A)   Less than three percent of families are categorized as poor for eight years or more.
B)   In the United States,the grandson of a millionaire is much more likely to be rich than the grandson of an average-income person.
C)   The majority of millionaires in the United States inherited their wealth.
D)   Most workers have about the same income (adjusted for inflation) when they are young as when they are middle-aged.E) None of the above
F) B) and C)

Question 14

Governments enact policies to

Accepted Answer

A)   make the distribution of income more efficient.
B)   make the distribution of income more equal.
C)   maximize the use of the welfare system.
D)   minimize the use of in-kind transfers.E) A) and C)
F) B) and D)

Question 15

Economic mobility in the United States is

Accepted Answer

A)   uncommon.Over 50 percent of poor families remain poor for 8 or more years.
B)   uncommon.Over 75 percent of poor families remain poor for 8 or more years.
C)   common.Fewer than 3 percent of poor families remain poor for 8 or more years.
D)   common.Fewer than 1 percent of poor families remain poor for 8 or more years.E) B) and C)
F) A) and D)

Question 16

The regular pattern of income variation over a person's life is called

Accepted Answer

A)   the earned income cycle.
B)   the substitution effect.
C)   the life cycle.
D)   the pattern of change.E) None of the above
F) A) and B)

Question 17

Relative to direct cash payments,in-kind transfers have the advantage of being

Accepted Answer

A)   more politically popular.
B)   more efficient.
C)   more respectful of the poor.
D)   of a higher dollar value than cash payments.E) A) and B)
F) None of the above

Question 18

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3  Income) - 10,000.A family that earns an income of $30,000 will

Accepted Answer

A)   neither pay taxes nor receive an income subsidy.
B)   receive an income subsidy of $500.
C)   pay $1,000 in taxes.
D)   pay $600 in taxes.E) B) and C)
F) A) and B)

Question 19

Figure 20-2
Number of Poor 
-Refer to Figure 20-2.Between 1959 and 2001 the poverty rate has

Accepted Answer

A)   increased overall.
B)   decreased overall.
C)   stayed the same overall.
D)   moved in the opposite direction of the number of people in poverty.E) A) and C)
F) None of the above

Exam 20: Income Inequality and Poverty

Unemployment insurance benefits is a type of

Correct Answer
verified

Table 20-6 -Refer to Table 20-6.In both 2007 and 2008,approximately 25% of the population earned less than

Correct Answer
verified

Economists study poverty and income inequality in order to answer which of the following questions?

Correct Answer
verified

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

Correct Answer
verified

The rule for redistribution proposed by John Rawls in his book A Theory of Justice is called the

Correct Answer
verified

A disadvantage associated with in-kind transfers to reduce poverty is that they

Correct Answer
verified

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 Income) - 10,000.A family that earns an income of $30,000 will

Correct Answer
verified

Relative to direct cash payments,in-kind transfers have the advantage of being

Correct Answer
verified

Correct Answer
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Which of the following statements is correct?

Correct Answer
verified

The poverty line is

Correct Answer
verified

The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Jones family,their

Correct Answer
verified

Data for the United States suggests that about how many millionaires inherited their fortunes?

Correct Answer
verified

Figure 20-2 Number of Poor -Refer to Figure 20-2.Between 1959 and 2001 the poverty rate has

Correct Answer
verified

Governments enact policies to

Correct Answer
verified

The concept of utility is fundamental to utilitarianism and describes the

Correct Answer
verified

The regular pattern of income variation over a person's life is called

Correct Answer
verified

Economic mobility in the United States is

Correct Answer
verified

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 $150,000 owe?

Correct Answer
verified

Exam 20: Income Inequality and Poverty

Unemployment insurance benefits is a type of

Correct AnswerverifiedShow Answer

Table 20-6 -Refer to Table 20-6.In both 2007 and 2008,approximately 25% of the population earned less than

Correct AnswerverifiedShow Answer

Economists study poverty and income inequality in order to answer which of the following questions?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The rule for redistribution proposed by John Rawls in his book A Theory of Justice is called the

Correct AnswerverifiedShow Answer

A disadvantage associated with in-kind transfers to reduce poverty is that they

Correct AnswerverifiedShow Answer

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 Income) - 10,000.A family that earns an income of $30,000 will

Correct AnswerverifiedShow Answer

Relative to direct cash payments,in-kind transfers have the advantage of being

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The poverty line is

Correct AnswerverifiedShow Answer

The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Jones family,their

Correct AnswerverifiedShow Answer

Data for the United States suggests that about how many millionaires inherited their fortunes?

Correct AnswerverifiedShow Answer

Figure 20-2 Number of Poor -Refer to Figure 20-2.Between 1959 and 2001 the poverty rate has

Correct AnswerverifiedShow Answer

Governments enact policies to

Correct AnswerverifiedShow Answer

The concept of utility is fundamental to utilitarianism and describes the

Correct AnswerverifiedShow Answer

The regular pattern of income variation over a person's life is called

Correct AnswerverifiedShow Answer

Economic mobility in the United States is

Correct AnswerverifiedShow Answer

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 $150,000 owe?

Correct AnswerverifiedShow Answer

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