Question 1

The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person

Accepted Answer

A)   would be equal to the income of the poorest person.
B)   would be no more than four times the income of the poorest person.
C)   would be reflective of the effort put forth by that person.
D)   would be taxed at a higher rate than the income of the poorest person.E) None of the above
F) A) and B)

Question 2

In 2011, what percentage of U.S. families had income levels below $75,000?

Accepted Answer

A)   20 percent
B)   40 percent
C)   60 percent
D)   80 percentE) B) and C)
F) A) and C)

Question 3

With a minimum wage law, the workers who remain employed benefit from a .

Accepted Answer

The answer of With a minimum wage law, the workers...

Question 4

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 D)
F) None of the above

Question 5

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

Accepted Answer

A)   alter peoples' incentives, whereas a negative income tax does not alter peoples' incentives.
B)   do not allow poor families to make purchases based on their preferences.
C)   can only be distributed by the federal government.
D)   cannot restrict the group of recipients and some middle-class families may benefit from them.E) All of the above
F) B) and C)

Question 6

The United States has a more equal income distribution than many developing economies such as Mexico, South Africa, and Brazil.

Accepted Answer

A) True 
 B)False

Question 7

Which group (or groups)  would be the most upset by wide variation in the income distribution?

Accepted Answer

A)   utilitarians
B)   utilitarians and liberals
C)   libertarians
D)   liberals and libertariansE) C) and D)
F) B) and D)

Question 8

What percentage of millionaires in the United States are self-made?

Accepted Answer

A)   about 20 percent
B)   about 40 percent
C)   about 60 percent
D)   about 80 percentE) None of the above
F) B) and D)

Question 9

Which of the following is an advantage of an in-kind transfer in comparison to a cash payment?

Accepted Answer

A)   In-kind transfers cost less to administer than cash transfers.
B)   In-kind transfers restrict the use of the benefit; thus, recipients receive necessities such as food and health care.
C)   In-kind transfers are more efficient than cash transfers.
D)   In-kind transfers give the recipient more utility than cash transfers.E) A) and B)
F) A) and C)

Question 10

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) None of the above
F) A) and C)

Question 11

When we compare the income distribution of the United States to those of other countries, we find that the U.S. has

Accepted Answer

A)   an income distribution similar to Japan's.
B)   an income distribution similar to South Africa's.
C)   one of the most unequal income distributions.
D)   a bit more inequality than the typical country.E) A) and B)
F) A) and C)

Question 12

Ms. Spring currently earns $100,000 a year, while her junior partner, Mr. Fall, earns $55,000 a year. From the perspective of a utilitarian, if both of their incomes are subject to diminishing marginal utility, taking a dollar from Ms. Spring and giving it to Mr. Fall will

Accepted Answer

A)   increase society's total utility.
B)   lower Ms. Spring's marginal utility of income.
C)   increase Mr. Fall's marginal utility of income.
D)   lower society's total utility.E) A) and B)
F) A) and C)

Question 13

Supplemental Security Income (SSI)  is a type of

Accepted Answer

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

Question 14

A disadvantage associated with an Earned Income Tax Credit (EITC)  program to reduce poverty is that it

Accepted Answer

A)   encourages illegitimate births because single women with children receive higher payments.
B)   rewards laziness because it provides payments to those with low incomes regardless of their work effort.
C)   does not help the poor who are unemployed.
D)   creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage.E) C) and D)
F) B) and C)

Question 15

The distribution of income for Dismal is as follows: Number of Families Income   1,000 less than $10,000
2,000 between $10,000 and $20,000
2,000 between $20,000 and $30,000
800 between $30,000 and $40,000
200 over $40,000  If the poverty rate in Dismal is 50 percent, what is the poverty line in Dismal?

Accepted Answer

A)   $10,000.
B)   $20,000.
C)   $30,000.
D)   $40,000.E) C) and D)
F) A) and B)

Question 16

In the United States approximately 80 percent of millionaires did not inherit their wealth. This illustrates the

Accepted Answer

A)   amount of transitory income in the United States.
B)   effectiveness of government anti-poverty programs in the United States.
C)   great economic mobility in the United States.
D)   level of permanent income in the United States.E) All of the above
F) B) and C)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not correct?

Accepted Answer

A)   Many measures of inequality are based on income, which may not reflect a person's standard of living.
B)   Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income.
C)   Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living.
D)   A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.E) C) and D)
F) None of the above

Question 19

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 20

According to a utilitarian, total social utility will be maximized when marginal dollars are distributed to the people with the

Accepted Answer

A)   lowest marginal utility of income.
B)   highest marginal utility of income.
C)   highest total utility from their income.
D)   most productive labor resources.E) All of the above
F) A) and B)

Exam 20: Income Inequality and Poverty

A commonly-used gauge of poverty is the

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When we compare the income distribution of the United States to those of other countries, we find that the U.S. has

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

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Which of the following is an advantage of an in-kind transfer in comparison to a cash payment?

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Which group (or groups) would be the most upset by wide variation in the income distribution?

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According to a utilitarian, total social utility will be maximized when marginal dollars are distributed to the people with the

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A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that it

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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?

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The United States has a more equal income distribution than many developing economies such as Mexico, South Africa, and Brazil.

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In 2011, what percentage of U.S. families had income levels below $75,000?

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

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With a minimum wage law, the workers who remain employed benefit from a .

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Ms. Spring currently earns $100,000 a year, while her junior partner, Mr. Fall, earns $55,000 a year. From the perspective of a utilitarian, if both of their incomes are subject to diminishing marginal utility, taking a dollar from Ms. Spring and giving it to Mr. Fall will

Correct AnswerverifiedShow Answer

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Which of the following is not correct?

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The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person

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Supplemental Security Income (SSI) is a type of

Correct AnswerverifiedShow Answer

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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What percentage of millionaires in the United States are self-made?

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In the United States approximately 80 percent of millionaires did not inherit their wealth. This illustrates the

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