Question 1

Because in-kind transfers are not accounted for in standard measures of income distribution, the standard measures of income distribution

Accepted Answer

A)   accurately represent the true inequality of living standards.
B)   understate the inequality of living standards.
C)   exaggerate the inequality of living standards.
D)   could exaggerate or understate the inequality of living standards depending on whether the transfers are goods or services.E) None of the above
F) All of the above

Question 2

Assume that the government proposes a negative income tax that calculates taxes owed by the formula: Taxes Owed = (a x Income) -
a. What is the value for "a"?
b. A family with an income of R400 000 pays R50 000 in taxes, and a family with an income of R120 000 receives an income subsidy of R20 000.
b. What is the value for "b"?
c. What is the tax liability of a family with an income of R500 000?
d. At what level of income will a family neither pay taxes, nor receive an income subsidy?

Accepted Answer

a. 0.25 or...

Question 3

Marie earns more than Stefan and she came by her income fairly and honestly. Which of the following political philosophies would argue against the redistribution of income from Marie to Stefan?

Accepted Answer

A)   All of these answers.
B)   Libertarianism.
C)   Liberalism.
D)   Utilitarianism.
E)   Communism.F) B) and D)
G) B) and E)

Question 4

Using the same assumption as above about a negative income tax system, complete this sentence: A person who is earning an annual salary of R200 000 will receive __________ of income from work and __________ of income from the government.

Accepted Answer

A)   R200 000; R150 000
B)   R200 000; R100 000
C)   R200 000; R50 000
D)   R200 000; R0E) A) and B)
F) A) and C)

Question 5

Permanent income is more equally distributed than is current income because:

Accepted Answer

A)   permanent income includes income from social security benefits.
B)   permanent income includes winnings from gambling.
C)   current income is usually lower than permanent income.
D)   current income is subject to transitory changes which sometimes raise a person's income and sometimes reduce it.E) All of the above
F) B) and C)

Question 6

Social security benefits are examples of

Accepted Answer

A)   transfer payments.
B)   negative income payments.
C)   property income.
D)   compensating differentials.E) A) and B)
F) B) and C)

Question 7

Someone said to live in relative poverty is

Accepted Answer

A)   poor and single, with no relatives.
B)   poor relative to their neighbours.
C)   unable to access the standard of living considered to be the minimum acceptable standard in their society.
D)   unable to access the necessities of life: food, shelter and clothing.E) A) and C)
F) A) and B)

Question 8

The maximin criterion suggested by John Rawls's theory of justice means that the government should aim to

Accepted Answer

A)   maximise the total utility of society.
B)   maximise the well-being of the worst-off person in society.
C)   minimise the difference between the rich and poor.
D)   maximise the economic freedom of individuals by minimising government interference in private decision-making.
E)   minimise the well-being of the best-off person in society.F) C) and E)
G) A) and B)

Question 9

Figure 1 
-Refer to Figure 1. The blue 45 degree line refers to

Accepted Answer

A)   the Gini coefficient.
B)   the Lorenz curve.
C)   the line of perfect inequality.
D)   the line of perfect equality.E) None of the above
F) All of the above

Question 10

John Rawls's suggestion that policy should be directed at maximising the welfare of the least well off person in society is derived from

Accepted Answer

A)   the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that as long as there is no theft then there is no need for governments to intervene and redistribute income.
B)   the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and the idea that people will then be particularly concerned about the possibility that they might find themselves at the bottom of the income distribution.
C)   the idea that people should consider policy as if behind a veil of ignorance as to what their circumstances might be in society, and that the ignorant people should be looked after.
D)   the idea that everyone in society should have an equal income.E) All of the above
F) A) and D)

Question 11

The greatest advantage of a negative income tax is that it

Accepted Answer

A)   generates a smaller disincentive to work than most alternative anti-poverty policies.
B)   reduces the cost to the government of fighting poverty.
C)   would not provide benefits to lazy people.
D)   ensures that the poor actually receive what the government thinks they need.
E)   means no-one is taxed unfairly.F) B) and D)
G) C) and D)

Question 12

Permanent income is

Accepted Answer

A)   Social Security income of the elderly and disabled.
B)   the maximum earned during a worker's lifetime.
C)   wages fixed by a union or other labour contract.
D)   equal to the minimum wage.
E)   a person's normal, or average, income.F) None of the above
G) B) and E)

Question 13

When households are divided into deciles, each group covers what percentage of the population?

Accepted Answer

A)   5%
B)   10%
C)   15%
D)   20%E) All of the above
F) A) and B)

Question 14

Using the same assumption as above about a negative income tax system, if a person who was earning no income takes a job paying an annual salary of R150 000, how much better off will that person be after taking income tax into account?

Accepted Answer

A)   No better off.
B)   R37 500 better off.
C)   R112 500 better off.
D)   R150 000 better off.E) All of the above
F) A) and B)

Question 15

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

Accepted Answer

An in-kind transfer program distributes ...

Question 16

Figure 2 
-Refer to Figure 2. The Gini coefficient is calculated by

Accepted Answer

A)   taking area B from area A.
B)   dividing area B by area A.
C)   dividing area A + B by area A.
D)   dividing A by B.E) B) and C)
F) A) and D)

Question 17

Given the table shown, which country has a more equal income distribution? Explain your answer.
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Courtry } & \text { Bottorn Fifth } & \text { Becond Fifth } & \text { Middle Fifth } & \text { Fouth Fift } & \text { Top Fifth } \
\hline \text { Country A } & 9.0 \% & 13.5 \% & 17.5 \% & 22.9 \% & 37.1 \% \
\hline \text { Country B } & 4.8 \% & 10.5 \% & 16.0 \% & 23.5 \% & 45.2 \% \
\hline
\end{array}$$

Accepted Answer

Country A has a more equal income distri...

Question 18

Utilitarianism is based on the assumption of diminishing marginal product.

Accepted Answer

A) True 
 B)False

Question 19

Figure 1 
-Refer to Figure 1. The middle quintile group earn

Accepted Answer

A)   10%
B)   20%
C)   30%
D)   7%E) B) and D)
F) A) and D)

Question 20

A problem with a negative income tax system is that it

Accepted Answer

A)   guarantees every household a minimum level of income.
B)   causes excessive government meddling in people's lives.
C)   is too complex to administer fairly.
D)   supports people who are simply lazy.E) A) and C)
F) A) and B)

Exam 18: Income Inequality and Poverty

Using the same assumption as above about a negative income tax system, complete this sentence: A person who is earning an annual salary of R200 000 will receive of income from work and of income from the government.

Correct Answer
verified

Permanent income is

Correct Answer
verified

Correct Answer
verified
Country A has a more equal income distri...
View Answer

Figure 2 -Refer to Figure 2. The Gini coefficient is calculated by

Correct Answer
verified

Someone said to live in relative poverty is

Correct Answer
verified

Figure 1 -Refer to Figure 1. The middle quintile group earn

Correct Answer
verified

Figure 1 -Refer to Figure 1. The blue 45 degree line refers to

Correct Answer
verified

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

Correct Answer
verified
An in-kind transfer program distributes ...
View Answer

Social security benefits are examples of

Correct Answer
verified

The greatest advantage of a negative income tax is that it

Correct Answer
verified

Permanent income is more equally distributed than is current income because:

Correct Answer
verified

Marie earns more than Stefan and she came by her income fairly and honestly. Which of the following political philosophies would argue against the redistribution of income from Marie to Stefan?

Correct Answer
verified

A problem with a negative income tax system is that it

Correct Answer
verified

Because in-kind transfers are not accounted for in standard measures of income distribution, the standard measures of income distribution

Correct Answer
verified

Using the same assumption as above about a negative income tax system, if a person who was earning no income takes a job paying an annual salary of R150 000, how much better off will that person be after taking income tax into account?

Correct Answer
verified

Correct Answer
verified
a. 0.25 or...
View Answer

The maximin criterion suggested by John Rawls's theory of justice means that the government should aim to

Correct Answer
verified

John Rawls's suggestion that policy should be directed at maximising the welfare of the least well off person in society is derived from

Correct Answer
verified

Utilitarianism is based on the assumption of diminishing marginal product.

Correct Answer
verified

When households are divided into deciles, each group covers what percentage of the population?

Correct Answer
verified

Exam 18: Income Inequality and Poverty

Using the same assumption as above about a negative income tax system, complete this sentence: A person who is earning an annual salary of R200 000 will receive __________ of income from work and __________ of income from the government.

Correct AnswerverifiedShow Answer

Permanent income is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCountry A has a more equal income distri...View AnswerShow Answer

Figure 2 -Refer to Figure 2. The Gini coefficient is calculated by

Correct AnswerverifiedShow Answer

Someone said to live in relative poverty is

Correct AnswerverifiedShow Answer

Figure 1 -Refer to Figure 1. The middle quintile group earn

Correct AnswerverifiedShow Answer

Figure 1 -Refer to Figure 1. The blue 45 degree line refers to

Correct AnswerverifiedShow Answer

Explain what is meant by "in-kind transfer" programs. Briefly outline the advantages and disadvantages of an in-kind transfer program.

Correct AnswerverifiedAn in-kind transfer program distributes ...View AnswerShow Answer

Social security benefits are examples of

Correct AnswerverifiedShow Answer

The greatest advantage of a negative income tax is that it

Correct AnswerverifiedShow Answer

Permanent income is more equally distributed than is current income because:

Correct AnswerverifiedShow Answer

Marie earns more than Stefan and she came by her income fairly and honestly. Which of the following political philosophies would argue against the redistribution of income from Marie to Stefan?

Correct AnswerverifiedShow Answer

A problem with a negative income tax system is that it

Correct AnswerverifiedShow Answer

Because in-kind transfers are not accounted for in standard measures of income distribution, the standard measures of income distribution

Correct AnswerverifiedShow Answer

Using the same assumption as above about a negative income tax system, if a person who was earning no income takes a job paying an annual salary of R150 000, how much better off will that person be after taking income tax into account?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. 0.25 or...View AnswerShow Answer

The maximin criterion suggested by John Rawls's theory of justice means that the government should aim to

Correct AnswerverifiedShow Answer

John Rawls's suggestion that policy should be directed at maximising the welfare of the least well off person in society is derived from

Correct AnswerverifiedShow Answer

Utilitarianism is based on the assumption of diminishing marginal product.

Correct AnswerverifiedShow Answer

When households are divided into deciles, each group covers what percentage of the population?

Correct AnswerverifiedShow Answer

Using the same assumption as above about a negative income tax system, complete this sentence: A person who is earning an annual salary of R200 000 will receive of income from work and of income from the government.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Country A has a more equal income distri...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An in-kind transfer program distributes ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. 0.25 or...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified