Question 1

In general,libertarians would argue that which of the following is more important than equal outcomes?

Accepted Answer

A)  opportunity
B)  income
C)  providing a social safety net
D)  assuring fair compensation for workersE) A) and C)
F) A) and D)

Question 2

In the United States in 2003,the bottom fifth of the income distribution had incomes below $19,250.

Accepted Answer

A) True 
 B)False  False

Question 3

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

Accepted Answer

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

Question 4

In the parable of the leaky bucket,a fundamental problem with government redistribution programs is identified.As long as the government only has "leaky buckets" at its disposal,

Accepted Answer

A)  the costs of welfare programs will exceed the benefits.
B)  it should not try to reach complete equality in income.
C)  income equality will be the best policy option.
D)  equality of economic opportunity will reduce society's utility.E) A) and D)
F) A) and B)

Question 5

When the government redistributes income to achieve greater equality,it

Accepted Answer

A)  distorts incentives.
B)  improves allocative efficiency.
C)  focuses on illegal immigrants.
D)  relies on foreign aid to help balance the budget.E) A) and B)
F) B) and C)

Question 6

Which of the following statements is not correct?

Accepted Answer

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 it encourages the poor to work in order to be eligible.
D)  An advantage of a minimum wage law is that it benefits some unskilled workers.E) None of the above
F) A) and D)

Question 7

The poverty line is not adjusted for which of the following?

Accepted Answer

A)  food stamps
B)  regional cost-of-living differences
C)  Earned Income Tax Credit
D)  All of the above are correct.E) B) and D)
F) A) and D) D

Question 8

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Accepted Answer

A)  can never be funded through taxes on labor income.
B)  must always achieve a full egalitarian society.
C)  only benefits the middle class.
D)  always falls short of a fully egalitarian society.E) None of the above
F) B) and C) D

Question 9

Economists who support minimum-wage legislation are likely to believe that the

Accepted Answer

A)  demand for unskilled labor is relatively inelastic.
B)  demand for unskilled labor is relatively elastic.
C)  supply of unskilled labor is relatively elastic.
D)  supply of unskilled labor is relatively inelastic.E) None of the above
F) C) and D)

Question 10

The movement of individuals among income classes is likely to be caused by

Accepted Answer

A)  chance or luck.
B)  laziness.
C)  hard work.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 11

The income level below which families are said to be poor is known as the

Accepted Answer

A)  income maintenance threshold.
B)  poverty line.
C)  bottom quintile of the income distribution.
D)  minimum wage.E) A) and B)
F) A) and C)

Question 12

Proponents of welfare reform claim that programs that do not establish a time limit on recipient benefits harm children by

Accepted Answer

A)  forcing mothers to work outside the home.
B)  encouraging a psychological dependency on government programs.
C)  encouraging child abuse by absent fathers.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 13

Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer.Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida.Which of the following is correct?

Accepted Answer

A)  Both Family A and Family B's spending habits suggest that they base their purchasing decisions on transitory income.
B)  Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income.Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income.
C)  Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income.Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income.
D)  Both Family A and Family B's spending habits suggest that they base their purchasing decisions on permanent income.E) None of the above
F) A) and B)

Question 14

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula,
Taxes Owed = (1/3 × Income)- $10,000.
Compute the tax that would be owed given each level of income.
a.$120,000
b.$90,000
c.$60,000
d.$30,000
e.$0

Accepted Answer

a. $30,000
b. $20,000
c. $10,0...

Question 15

Table 20-2
Poverty Thresholds in 2002, by Size of Family and Number of Related Children Under 18 Years
[Dollars]
  
Source: U. S. Bureau of the Census, Current Population Survey.
-Refer to Table 20-2.What is the poverty line for a 75 year old individual?

Accepted Answer

A)  $8,628
B)  $9,359
C)  $12,353
D)  $12,400E) A) and B)
F) A) and C)

Question 16

Libertarianism identifies a redistribution of income role for government when

Accepted Answer

A)  individual incomes vary widely.
B)  the income distribution is altered by illegal means (e.g.theft) .
C)  a social planner is needed to smooth out the transitory income stream.
D)  workers lose their jobs as a result of structural changes in the economy.E) B) and D)
F) A) and C)

Question 17

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

Accepted Answer

A) True 
 B)False

Question 18

Scenario 20-1
Suppose that a society is made up of five families whose incomes are as follows:
$120,000; $90,000; $30,000; $30,000; and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where the poverty line is $35,000; families earning over $35,000 pay 10% of their income in taxes, and families earning less than $35,000 pay no income tax.
-Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of libertarianism prefer?

Accepted Answer

A)  Plan A
B)  Plan B
C)  either Plan A or Plan B
D)  neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophyE) All of the above
F) B) and C)

Question 19

Figure 20-2
Poverty Rates by Age
 
-Refer to Figure 20-2.In 1968,the percent of children under age 18 in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty.
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 and over in poverty.
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty.
D)  lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 and over in poverty.E) A) and D)
F) A) and C)

Question 20

The poverty line is based on the percentage of people who cannot afford an adequate diet.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

In general,libertarians would argue that which of the following is more important than equal outcomes?

Correct Answer
verified

In the United States in 2003,the bottom fifth of the income distribution had incomes below $19,250.

Correct Answer
verified
False

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

Correct Answer
verified

In the parable of the leaky bucket,a fundamental problem with government redistribution programs is identified.As long as the government only has "leaky buckets" at its disposal,

Correct Answer
verified

When the government redistributes income to achieve greater equality,it

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

The poverty line is not adjusted for which of the following?

Correct Answer
verified
D

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Correct Answer
verified
D

Economists who support minimum-wage legislation are likely to believe that the

Correct Answer
verified

The movement of individuals among income classes is likely to be caused by

Correct Answer
verified

The income level below which families are said to be poor is known as the

Correct Answer
verified

Proponents of welfare reform claim that programs that do not establish a time limit on recipient benefits harm children by

Correct Answer
verified

Correct Answer
verified

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 × Income)- $10,000. Compute the tax that would be owed given each level of income. a.$120,000 b.$90,000 c.$60,000 d.$30,000 e.$0

Correct Answer
verified
a. $30,000
b. $20,000
c. $10,0...
View Answer

Table 20-2 Poverty Thresholds in 2002, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-2.What is the poverty line for a 75 year old individual?

Correct Answer
verified

Libertarianism identifies a redistribution of income role for government when

Correct Answer
verified

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

Correct Answer
verified

Correct Answer
verified

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.In 1968,the percent of children under age 18 in poverty is

Correct Answer
verified

The poverty line is based on the percentage of people who cannot afford an adequate diet.

Correct Answer
verified

Exam 20: Income Inequality and Poverty

In general,libertarians would argue that which of the following is more important than equal outcomes?

Correct AnswerverifiedShow Answer

In the United States in 2003,the bottom fifth of the income distribution had incomes below $19,250.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

In the parable of the leaky bucket,a fundamental problem with government redistribution programs is identified.As long as the government only has "leaky buckets" at its disposal,

Correct AnswerverifiedShow Answer

When the government redistributes income to achieve greater equality,it

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The poverty line is not adjusted for which of the following?

Correct AnswerverifiedD

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Correct AnswerverifiedD

Economists who support minimum-wage legislation are likely to believe that the

Correct AnswerverifiedShow Answer

The movement of individuals among income classes is likely to be caused by

Correct AnswerverifiedShow Answer

The income level below which families are said to be poor is known as the

Correct AnswerverifiedShow Answer

Proponents of welfare reform claim that programs that do not establish a time limit on recipient benefits harm children by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 × Income)- $10,000. Compute the tax that would be owed given each level of income. a.$120,000 b.$90,000 c.$60,000 d.$30,000 e.$0

Correct Answerverifieda. $30,000b. $20,000c. $10,0...View AnswerShow Answer

Table 20-2 Poverty Thresholds in 2002, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-2.What is the poverty line for a 75 year old individual?

Correct AnswerverifiedShow Answer

Libertarianism identifies a redistribution of income role for government when

Correct AnswerverifiedShow Answer

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.In 1968,the percent of children under age 18 in poverty is

Correct AnswerverifiedShow Answer

The poverty line is based on the percentage of people who cannot afford an adequate diet.

Correct AnswerverifiedShow Answer

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False

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D

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D

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a. $30,000
b. $20,000
c. $10,0...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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