Question 1

If society chose to maximize total utility rather than minimum utility,

Accepted Answer

A)   society would achieve perfect income equality.
B)   society would achieve the maximin objective.
C)   its justice would be more utilitarian than Rawlsian.
D)   its justice would be more Rawlsian than utilitarian.E) All of the above
F) B) and C)

Question 2

Income)  - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

Accepted Answer

A)   It will receive an income subsidy of $1,000.
B)   It will receive an income subsidy of $3,000.
C)   It will receive an income subsidy of $10,000.
D)   It will not be affected at all, since the negative income tax requires a family to earn income.E) A) and B)
F) B) and D)

Question 3

On what type of income do many economists believe that people base their consumption?

Accepted Answer

The answer of On what type of income do many...

Question 4

Which of the following statements is correct?

Accepted Answer

A)   A minimum wage law will result in less additional unemployment if labor demand is elastic rather than inelastic.
B)   An in-kind transfer allows a person to use the benefit to purchase whatever they think they need most.
C)   If a tax policy states that taxes owed equal 1/3 of income less $15,000, a person earning $25,000 per year would owe $6,666.67 in taxes.
D)   Welfare reform enacted in 1996 limited the amount of time recipients could stay on welfare.E) A) and B)
F) None of the above

Question 5

Measures of poverty that fail to account for the value of in-kind transfers

Accepted Answer

A)   understate the actual poverty rate.
B)   have little effect on the validity of reported poverty rates.
C)   are generally more reliable measures of actual poverty rates.
D)   overstate the actual poverty rate.E) C) and D)
F) A) and C)

Question 6

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

Accepted Answer

A)   Changes in technology.
B)   An increase in minimum wages.
C)   A reduction in the demand for unskilled labor.
D)   Increased international trade with low-wage countries.E) A) and B)
F) A) and C)

Question 7

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?

Accepted Answer

utilitaria...

Question 8

In comparison to the average poverty rate,

Accepted Answer

A)   children and the elderly are more likely to be poor.
B)   children and the elderly are less likely to be poor.
C)   children are more likely to be poor, but the elderly are less likely to be poor.
D)   children are less likely to be poor, but the elderly are more likely to be poor.E) A) and B)
F) C) and D)

Question 9

Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

Accepted Answer

A)   taking $1 from Mitchell and giving it to Phil would increase society's total utility.
B)   taking $1 from Mitchell and giving it to Jay would increase society's total utility.
C)   taking $1 from Phil and giving it to Jay would increase society's total utility.
D)   None of the above are correct because all three individuals have sufficient income.E) B) and C)
F) All of the above

Question 10

According to a study by Michael Cox and Richard Alm, consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

Accepted Answer

A) True 
 B)False

Question 11

Scenario 20-5
Suppose the government implemented a negative income tax and used the following formula to compute a family's
tax liability:
Taxes owed = (1/4 of income)  - $10,000
-Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)   $5,000
B)   $10,000
C)   $15,000
D)   $25,000E) B) and D)
F) B) and C)

Question 12

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

Accepted Answer

The answer of If greater equality is the benefit of...

Question 13

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

Accepted Answer

The answer of Of the following groups, which group is...

Question 14

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

Accepted Answer

A) True 
 B)False

Question 15

Relative to direct cash payments, in-kind transfers have the advantage of being

Accepted Answer

A)   more politically popular.
B)   more efficient.
C)   more respectful of the poor.
D)   of a higher dollar value than cash payments.E) C) and D)
F) A) and D)

Question 16

The poverty line is adjusted each year to reflect changes in the

Accepted Answer

A)   number of people currently on public assistance.
B)   level of prices.
C)   nutritional content of an "adequate" diet.
D)   size of a family.E) C) and D)
F) A) and B)

Question 17

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

Accepted Answer

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) All of the above
F) B) and C)

Question 18

Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits. What is the foundation of your critique?

Accepted Answer

The critique is based on the premise tha...

Question 19

Comparing the United States household income distribution to other countries is

Accepted Answer

A)   easy, because data is available for all countries in the world.
B)   easy, because some countries collect data on expenditures instead of incomes.
C)   problematic, because international agreements require countries to standardize their income accounting procedures.
D)   problematic, because countries collect data in different ways.E) All of the above
F) A) and B)

Question 20

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Accepted Answer

inequality...

Exam 20: Income Inequality and Poverty

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

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Suppose society consists of three individuals: Phil, Jay, and Mitchell. Phil has $60,000 of income, Jay has $200,000 of income, and Mitchell has $100,000 of income. A utilitarian would argue that

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The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

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On what type of income do many economists believe that people base their consumption?

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In comparison to the average poverty rate,

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The poverty line is adjusted each year to reflect changes in the

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Measures of poverty that fail to account for the value of in-kind transfers

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Comparing the United States household income distribution to other countries is

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The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Correct Answerverifiedinequality...View AnswerShow Answer

Scenario 20-5 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $10,000 -Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

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If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

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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?

Correct Answerverifiedutilitaria...View AnswerShow Answer

Of the following groups, which group is least likely to live in poverty - whites, blacks, Hispanics, Asians?

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According to a study by Michael Cox and Richard Alm, consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

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Which of the following statements is correct?

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Relative to direct cash payments, in-kind transfers have the advantage of being

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Income) - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

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Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits. What is the foundation of your critique?

Correct AnswerverifiedThe critique is based on the premise tha...View AnswerShow Answer

Which of the following does not explain the rise in income inequality in the United States from 1970 to 2011?

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If society chose to maximize total utility rather than minimum utility,

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inequality...
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utilitaria...
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The critique is based on the premise tha...
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