Question 1

Liberalism suggests that public policies should aim to

Accepted Answer

A)  maximize the sum of utility of everyone in society.
B)  maximize the well-being of the average person in society.
C)  maximize the well-being of the worst-off person in society.
D)  minimize the difference between the utility of the best-off person in the society and the utility of the worst-off person in society.E) B) and C)
F) All of the above

Question 2

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

Accepted Answer

A)  in-kind transfers
B)  economic life cycle
C)  transitory income
D)  All of the above contribute to an incomplete picture of inequality.E) C) and D)
F) B) and D)

Question 3

The maximin criterion for government policies is associated with

Accepted Answer

A)  the school of thought called utilitarianism.
B)  the school of thought called liberalism.
C)  the school of thought called libertarianism.
D)  the school of thought called stoicism.E) A) and B)
F) C) and D)

Question 4

In the US, is it more likely that someone will become a millionaire by making money on his/her own or by inheriting a fortune?

Accepted Answer

Making mon...

Question 5

Figure 20-3 
-Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Accepted Answer

A)  Policies to reduce elderly (65 years and older)  poverty rates since 1959 seem to have been effective.
B)  The age group suffering the highest poverty rate in recent years has been 18 to 64 year olds.
C)  Policies to reduce youth (under 18 years)  poverty rates since 1959 seem to have been effective.
D)  All of the above are correct.E) A) and B)
F) B) and C)

Question 6

The poverty rate is the percentage of the population whose family income falls below the poverty line..

Accepted Answer

A) True 
 B)False

Question 7

If the U.S. government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is

Accepted Answer

A)  $7,500.
B)  $15,000.
C)  $22,500.
D)  $30,000.E) C) and D)
F) A) and C)

Question 8

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

Question 9

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Accepted Answer

A) True 
 B)False

Question 10

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Accepted Answer

A) True 
 B)False

Question 11

Figure 20-3 
-Refer to Figure 20-3. In 2011, the percent of elderly aged 65 and over in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty.
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.
D)  lower than the percentage of children under age 18 but is equal to the percentage of adults aged 18 to 64 in poverty.E) A) and C)
F) A) and B)

Question 12

The political philosophy that views the redistribution of income as a form of social insurance is

Accepted Answer

A)  utilitarianism
B)  liberalism
C)  libertarianism
D)  welfarismE) None of the above
F) B) and C)

Question 13

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 .

Accepted Answer

The answer of The Earned Income Tax Credit (EITC) is...

Question 14

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

Accepted Answer

The answer of Aniella believes that the demand for unskilled...

Question 15

In the United States from 1935 to 2011 the share of total income earned by the bottom fifth of income earners rose and then fell.

Accepted Answer

A) True 
 B)False

Question 16

Compare and contrast the "life cycle" hypothesis and the "permanent income" hypothesis. What are their respective implications for inequality in the income distribution?

Accepted Answer

Life-cycle variation in income suggests ...

Question 17

-Refer to Table 20-13. If the poverty rate in Imagination is 10%, what is the poverty line?

Accepted Answer

The answer of 
-Refer to Table 20-13. If the poverty...

Question 18

Table 20-7 
-Refer to Table 20-7. Which of the following is the best overall conclusion to draw from the data?

Accepted Answer

A)  The most alarming statistic is the lowering of the top income level that defines the bottom fifth of the income distribution because this indicates that the income distribution is becoming more unequal.
B)  The greatest cause for concern is the increase in the minimum income level that defines the top fifth of the income distribution because this indicates that the rich have become richer.
C)  The income distribution has been relatively unchanged from 2001 to 2011.
D)  Both a and b are correct.E) A) and C)
F) B) and C)

Question 19

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.

Accepted Answer

A high marginal tax rate exists on welfa...

Question 20

Fewer than three percent of families are poor for eight or more years.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

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 .

Correct AnswerverifiedShow Answer

In the US, is it more likely that someone will become a millionaire by making money on his/her own or by inheriting a fortune?

Correct AnswerverifiedMaking mon...View AnswerShow Answer

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Correct AnswerverifiedShow Answer

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Correct AnswerverifiedShow Answer

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

Correct AnswerverifiedShow Answer

In the United States from 1935 to 2011 the share of total income earned by the bottom fifth of income earners rose and then fell.

Correct AnswerverifiedShow Answer

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of elderly aged 65 and over in poverty is

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The poverty rate is the percentage of the population whose family income falls below the poverty line..

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The maximin criterion for government policies is associated with

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Fewer than three percent of families are poor for eight or more years.

Correct AnswerverifiedShow Answer

Compare and contrast the "life cycle" hypothesis and the "permanent income" hypothesis. What are their respective implications for inequality in the income distribution?

Correct AnswerverifiedLife-cycle variation in income suggests ...View AnswerShow Answer

Economic mobility in the United States is

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedA high marginal tax rate exists on welfa...View AnswerShow Answer

Figure 20-3 -Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

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The political philosophy that views the redistribution of income as a form of social insurance is

Correct AnswerverifiedShow Answer

Liberalism suggests that public policies should aim to

Correct AnswerverifiedShow Answer

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

Correct AnswerverifiedShow Answer

If the U.S. government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is

Correct AnswerverifiedShow Answer

-Refer to Table 20-13. If the poverty rate in Imagination is 10%, what is the poverty line?

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Table 20-7 -Refer to Table 20-7. Which of the following is the best overall conclusion to draw from the data?

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Making mon...
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Life-cycle variation in income suggests ...
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A high marginal tax rate exists on welfa...
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