Question 1

Table 20-13
Distribution of Income in Imagination 
-Refer to Table 20-13. If the poverty rate in Imagination is 10%, what is the poverty line?

Accepted Answer

The answer of Table 20-13
Distribution of Income in Imagination 
-Refer...

Question 2

The utilitarian case for redistributing income is based on the assumption of

Accepted Answer

A)   collective consensus.
B)   a notion of fairness engendered by equality.
C)   diminishing marginal utility.
D)   rising marginal utility.E) None of the above
F) A) and B)

Question 3

Which group would be the least upset by wide variation in the income distribution?

Accepted Answer

A)   utilitarians
B)   liberals
C)   libertarians
D)   Each group would be equally upset.E) A) and D)
F) A) and C)

Question 4

Which of the following statements is correct?

Accepted Answer

A)   A disadvantage of a minimum-wage law is that it may benefit unskilled workers who are not low-income workers.
B)   A disadvantage of a negative income tax program is that a poor person who chooses not to work many hours would receive a cash benefit.
C)   A disadvantage of an Earned Income Tax Credit (EIT
C)   is that a person who is unable to work due to a disability does not benefit from the program.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 5

For which of the following programs can a person qualify solely by having a low income?

Accepted Answer

A)   both Temporary Assistance for Needy Families (TANF)  and Supplemental Security Income (SSI) 
B)   Temporary Assistance for Needy Families (TANF)  but not Supplemental Security Income (SSI) 
C)   Supplemental Security Income (SSI)  but not Temporary Assistance for Needy Families (TANF) 
D)   neither Temporary Assistance for Needy Families (TANF)  nor Supplemental Security Income (SSI) E) None of the above
F) A) and C)

Question 6

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

Question 7

The rule for redistribution proposed by John Rawls in his book A Theory of Justice is called the

Accepted Answer

A)   "optimal ignorance" rule.
B)   libertarian justice rule.
C)   maximin criterion.
D)   egalitarian criterion.E) C) and D)
F) A) and D)

Question 8

The political philosophy that views the redistribution of income as a form of social insurance is

Accepted Answer

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

Question 9

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 10

The best government policy to reduce poverty is

Accepted Answer

A)   a minimum wage law because the resulting unemployment is small in comparison to the benefits to people it helps.
B)   an expanded welfare program because people must have an additional "need" such as small children or a disability.
C)   an in-kind transfer because it ensures that the poor receive what they need most such as food or shelter.
D)   not obvious. Government programs to reduce poverty have many advantages but also many disadvantages.E) None of the above
F) All of the above

Question 11

Goods and services given to the poor such as food stamps, housing vouchers, and medical services are called

Accepted Answer

The answer of Goods and services given to the poor...

Question 12

The calculation of the poverty line includes adjustments for

Accepted Answer

A)   energy costs.
B)   child care costs.
C)   the level of prices.
D)   the Earned Income Tax Credit.E) C) and D)
F) B) and C)

Question 13

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

A)   tends to follow a seasonal pattern.
B)   rises as a worker gains maturity and experience.
C)   rises and falls in conjunction with the business cycle.
D)   falls during the early years of market activity and peaks at retirement.E) B) and C)
F) C) and D)

Question 14

Which of the following is correct?

Accepted Answer

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

Question 15

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

Question 16

A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?

Accepted Answer

A)   Utilitarianism suggests that government policies should strive to maximize Ulyana's utility.
B)   Liberalism suggests that government policies should strive to increase Ulyana's utility.
C)   Libertarianism suggests that government policies should strive to improve Tristan's utility at the cost of Sam's utility.
D)   Libertarianism suggests that government policies should strive to make Sam, Tristan, and Ulyana equally well off.E) A) and C)
F) A) and D)

Question 17

The US government sets the poverty line equal to approximately

Accepted Answer

A)   three times the cost of providing subsidized housing.
B)   three times the cost of providing an adequate diet.
C)   the minimum wage for a single person working 40 hours per week and 50 weeks per year.
D)   the cost of providing food, shelter, and health care expenses for a family of four.E) A) and B)
F) B) and D)

Question 18

Table 20-3
The Distribution of Income in Edgerton 
-Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

Accepted Answer

A)   $28,000
B)   $44,000
C)   $76,000
D)   $88,000E) None of the above
F) All of the above

Question 19

The United States has greater income

Accepted Answer

A)   disparity than most other economically advanced countries, but a more equal income distribution than some developing countries.
B)   disparity than both other economically advanced and all developing countries.
C)   equality than most other economically advanced countries but greater income disparity than some developing countries.
D)   equality than both other economically advanced and developing countries.E) B) and D)
F) All of the above

Question 20

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. A family earning $50,000 before taxes would have how much after-tax income?

Accepted Answer

A)   -$5,000
B)   $40,000
C)   $45,000
D)   $55,000E) All of the above
F) C) and D)

Exam 20: Income Inequality and Poverty

The US government sets the poverty line equal to approximately

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For which of the following programs can a person qualify solely by having a low income?

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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. A family earning $50,000 before taxes would have how much after-tax income?

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Which group would be the least upset by wide variation in the income distribution?

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Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. Where would the government in Edgerton set the poverty line to have a poverty rate of 40 percent?

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A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?

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The political philosophy that views the redistribution of income as a form of social insurance is

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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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The rule for redistribution proposed by John Rawls in his book A Theory of Justice is called the

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The best government policy to reduce poverty is

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The life cycle effect characterizes a lifetime income profile in which income

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Suppose that a family saves and borrows to buffer itself against changes in income. These actions relate to which problem in measuring inequality?

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Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty rate in Imagination is 10%, what is the poverty line?

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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 United States has greater income

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Goods and services given to the poor such as food stamps, housing vouchers, and medical services are called

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The utilitarian case for redistributing income is based on the assumption of

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Which of the following statements is correct?

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The calculation of the poverty line includes adjustments for

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Which of the following is correct?

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