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Table 20-13 Distribution of Income in Imagination Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. The Human Development Report computes a measure of inequality by dividing the income of the richest 10% of the population by the income of the poorest 10%. If the value for this measure of inequality in the US is 15.9 and the value for India is 8.6, how does Imagination compare to these two nations? -Refer to Table 20-13. The Human Development Report computes a measure of inequality by dividing the income of the richest 10% of the population by the income of the poorest 10%. If the value for this measure of inequality in the US is 15.9 and the value for India is 8.6, how does Imagination compare to these two nations?

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Imagination has a mo...

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An example of an in-kind transfer to the poor is


A) the negative income tax.
B) the Earned Income Tax Credit (EITC) .
C) Medicaid.
D) Temporary Assistance for Needy Families (TANF) .

E) B) and C)
F) None of the above

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Table 20-12 Income Inequality in 2010 in the United States by Race The values in the table reflect the percentages of pre-tax-and-transfer income. Table 20-12 Income Inequality in 2010 in the United States by Race The values in the table reflect the percentages of pre-tax-and-transfer income. -Refer to Table 20-12. According to the information in the table, which race had the most income inequality in 2010? A) Asian B) Black C) Hispanic D) White -Refer to Table 20-12. According to the information in the table, which race had the most income inequality in 2010?


A) Asian
B) Black
C) Hispanic
D) White

E) B) and D)
F) A) and C)

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Many economists believe that a family bases its spending decisions on its permanent, or average, income rather than on transitory income.

A) True
B) False

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In a typical 10-year period, about one in four families falls below the poverty line in at least one year. What percentage of families are poor for eight or more years?

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Which of the three political philosophies discussed in the textbook, if any, view the total income of society as a shared resource that a social planner can freely redistribute to achieve some social goal?

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utilitaria...

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Which of the following is correct?


A) Incomes tend to be high for young workers.
B) Incomes tend to rise sharply at retirement.
C) Incomes tend to peak at around age 50.
D) Current income is more equally distributed than permanent income.

E) A) and B)
F) All of the above

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Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?


A) Trade can make everyone better off.
B) The cost of something is what you give up to get it.
C) People face trade-offs.
D) Markets are usually a good way to organize economic activity.

E) A) and B)
F) All of the above

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The poverty rate is a measure of the percentage of people whose incomes fall below


A) a relative level of income.
B) an absolute level of income.
C) the median income for a family of three.
D) the bottom 20 percent of the income distribution.

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

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Libertarians believe that


A) the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance."
B) the government should aim to maximize the well-being of the worst-off person in society.
C) everyone in society should have equal utility.
D) the government should not redistribute income.

E) None of the above
F) All of the above

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"Only individual members of society earn income, not society itself." This statement is most closely associated with the political philosophy of a


A) utilitarian.
B) liberal.
C) libertarian.
D) None of the above is correct.

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

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Scenario 20-4 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/5 of income) - $15,000 -Refer to Scenario 20-4. This negative income tax would guarantee what minimum level of income to every family?


A) $5,000
B) $10,000
C) $15,000
D) $50,000

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

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Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

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The poverty rate is the percentage of th...

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Critics of the minimum wage argue that


A) labor demand is inelastic so firms can adjust production.
B) too many older employees benefit at the expense of teenage workers.
C) many minimum-wage earners are teenagers from middle-class families.
D) All of the above are correct.

E) C) and D)
F) B) and D)

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Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] -Refer to Table 20-11. What is the poverty line for a family with one 35-year-old adult and one child? A) $11,702 B) $15,446 C) $15,504 D) $18,106 -Refer to Table 20-11. What is the poverty line for a family with one 35-year-old adult and one child?


A) $11,702
B) $15,446
C) $15,504
D) $18,106

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

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When considering a person's standard of living, data on the income distribution and the poverty rate may provide an incomplete picture because the poor may


A) receive in-kind transfers.
B) be lending to smooth their income over their life cycle.
C) be saving to smooth their income due to a drop in transitory income.
D) under-report their income.

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

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Which of the following statements is not correct?


A) An advantage of an in-kind transfer is that it prevents an alcoholic from spending a cash benefit on alcohol.
B) An advantage of the Supplemental Security Income (SSI) program is that it benefits the sick and disabled.
C) An advantage of a negative income tax program is that the poor must work to be eligible.
D) Minimum wage laws result in higher unemployment among those groups of workers affected by the minimum wage.

E) None of the above
F) B) and C)

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Which of the following is correct?


A) Governments can never improve market outcomes.
B) Governments can sometimes improve market outcomes.
C) Governments can always improve market outcomes.
D) Government can never make the income distribution more equal.

E) B) and D)
F) B) and C)

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Supplemental Security Income (SSI) is a type of


A) in-kind transfer.
B) minimum wage law.
C) private charity.
D) welfare payment.

E) A) and B)
F) C) and D)

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The table below reflects the levels of total utility received from income for each of four members of a society. The table below reflects the levels of total utility received from income for each of four members of a society. Assume that the society has the following income distribution: Peter $3 Paul $7 a. Mary $5 Jane $3 Is it possible for the government to increase total aggregate utility by redistributing income among members of society? Explain your answer. Assume that the government has $19 to allocate among the four members of society. b. (Assume that no one has any income to start with.) If the government is interested in distributing income in a way that maximizes aggregate total utility, how should it distribute the $19 of income? c. Does the table above describe a situation characterized by diminishing marginal utility? Explain your answer. Assume that the society has the following income distribution: Peter $3 Paul $7 a. Mary $5 Jane $3 Is it possible for the government to increase total aggregate utility by redistributing income among members of society? Explain your answer. Assume that the government has $19 to allocate among the four members of society. b. (Assume that no one has any income to start with.) If the government is interested in distributing income in a way that maximizes aggregate total utility, how should it distribute the $19 of income? c. Does the table above describe a situation characterized by diminishing marginal utility? Explain your answer.

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a. No. If a dollar is taken from anyone,...

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