Question 1

Critics argue that a disadvantage of minimum-wage laws is that they do not effectively target the working poor because many minimum-wage workers are the teenage children of middle-income families.

Accepted Answer

A) True 
 B)False

Question 2

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) A) and C)

Question 3

Since about 1970 in the U.S.,

Accepted Answer

A)   decreases in the wages of unskilled workers, relative to skilled workers, have led to increased inequality in family incomes.
B)   increases in the wages of unskilled workers, relative to skilled workers, have led to increased equality in family incomes.
C)   inequality in family incomes has increased, despite increases in the wages of unskilled workers relative to skilled workers.
D)   inequality in family incomes has decreased, despite increases in the wages of skilled workers relative to unskilled workers.E) None of the above
F) All of the above

Question 4

Poverty is found to be correlated with

Accepted Answer

A)   age and race but not family composition.
B)   race only.
C)   race and family composition but not age.
D)   age, race, and family composition.E) C) and D)
F) A) and B)

Question 5

On average,the distribution of income tends to be

Accepted Answer

A)   random across richer and poorer countries.
B)   similar between richer and poorer countries.
C)   less equal in richer countries than in poorer countries.
D)   more equal in richer countries than in poorer countries.E) A) and D)
F) C) and D)

Question 6

Suppose that young people often borrow and then repay the loans when they are older.These actions relate to which problem in measuring inequality?

Accepted Answer

A)   in-kind transfers
B)   the economic life cycle
C)   a negative income tax
D)   economic mobilityE) All of the above
F) None of the above

Question 7

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Accepted Answer

A)   liberalism
B)   utilitarianism
C)   libertarianism
D)   welfarismE) C) and D)
F) A) and B)

Question 8

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

Question 9

Despite continued growth in average income since the early 1970s,the poverty rate has not declined below the level reached in 1973.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

The 2008 U.S.distribution of income shows that the top fifth of all families have

Accepted Answer

A)   more than ten times the income of the bottom 20 percent.
B)   more than five times the income of the bottom 20 percent.
C)   more than double the income of the bottom 20 percent.
D)   the same share of income as the bottom 20 percent.E) B) and C)
F) B) and D)

Question 12

For a typical worker,her income will be lower when she is younger,peak around age 50,and decrease drastically when she retires.This pattern of changes in income for a typical worker is called

Accepted Answer

A)   the life cycle.
B)   permanent income.
C)   transitory income.
D)   in-kind transfers.E) A) and B)
F) A) and C)

Question 13

In the United States,a typical worker's income peaks around age

Accepted Answer

A)   70.
B)   60.
C)   50.
D)   40.E) A) and D)
F) A) and C)

Question 14

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 is has been relatively unchanged from 1998 to 2008.
D)   Both a)  and b)  are correct.E) B) and C)
F) A) and D)

Question 15

A goal of libertarians is to provide citizens with equal opportunities rather than to ensure equal outcomes.

Accepted Answer

A) True 
 B)False

Question 16

The invisible hand of the marketplace acts to allocate resources

Accepted Answer

A)   efficiently but does not necessarily ensure that resources are allocated fairly.
B)   both fairly and efficiently.
C)   fairly but does not necessarily ensure that resources are allocated efficiently.
D)   neither fairly nor efficiently.E) A) and B)
F) A) and C)

Question 17

The distribution of income for Grim is as follows: 
If the poverty rate in Grim is 17 percent,what is the poverty line in Grim?

Accepted Answer

A)   $5,000.
B)   $10,000.
C)   $15,000.
D)   $20,000.E) A) and C)
F) A) and B)

Question 18

Table 20-8
  
Source: U.S. Bureau of Census
-Refer to Table 20-8.In 2008,the top fifth of families has

Accepted Answer

A)   about 12 times as much income as the bottom fifth of families.
B)   6.8% more income than the bottom fifth of families.
C)   47.8% more income than the bottom fifth of families.
D)   96.6% more income than the bottom fifth of families.E) None of the above
F) B) and D)

Question 19

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

Question 20

Caroline earns more than John.Under a new tax system,some of the taxes paid by Caroline would go to John.A libertarian would

Accepted Answer

A)   support the system because an extra dollar earned by Caroline would be worth less to her than an extra dollar given to John.
B)   oppose the system if it redistributed income in the presence of equal opportunity.
C)   oppose the system because an extra dollar earned by Caroline would be worth more to her than an extra dollar given to John.
D)   support the system if it maximized the well-being of the poorest member of society.E) B) and C)
F) A) and D)

Exam 20: Income Inequality and Poverty.

In the United States,a typical worker's income peaks around age

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

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A goal of libertarians is to provide citizens with equal opportunities rather than to ensure equal outcomes.

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Critics argue that a disadvantage of minimum-wage laws is that they do not effectively target the working poor because many minimum-wage workers are the teenage children of middle-income families.

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The distribution of income for Grim is as follows: If the poverty rate in Grim is 17 percent,what is the poverty line in Grim?

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Since about 1970 in the U.S.,

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On average,the distribution of income tends to be

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Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8.In 2008,the top fifth of families has

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A commonly-used gauge of poverty is the

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Caroline earns more than John.Under a new tax system,some of the taxes paid by Caroline would go to John.A libertarian would

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The 2008 U.S.distribution of income shows that the top fifth of all families have

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Despite continued growth in average income since the early 1970s,the poverty rate has not declined below the level reached in 1973.

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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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Poverty is found to be correlated with

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"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

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Suppose that young people often borrow and then repay the loans when they are older.These actions relate to which problem in measuring inequality?

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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

For a typical worker,her income will be lower when she is younger,peak around age 50,and decrease drastically when she retires.This pattern of changes in income for a typical worker is called

Correct AnswerverifiedShow Answer

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

The invisible hand of the marketplace acts to allocate resources

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