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Exam 20: Income Inequality and Poverty

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Question 41

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According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

A) True
B) False

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Question 42

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Which of the following is not a characteristic of the Earned Income Tax Credit (EITC) ?

A) It does not discourage recipients from working.
B) It is less distortionary than other anti-poverty programs.
C) It helps the disabled who cannot work.
D) It applies only to the working poor.

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

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Question 43

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

The United States has more income inequality than Brazil and South Africa.

Table 20-7 Distribution of Income in Imagination $\begin{array} { | l | l | l | } \hline \text { Number of Families } & \text { Income Range } & \text { Average Income } \\\hline 23,500 & \text { less than } \$ 18,000 & \$ 15,890 \\\hline 42,410 & \text { between } \$ 18,000 \text { and } \$ 36,000 & \$ 27,450 \\\hline 57,330 & \text { between } \$ 36,000 \text { and } \$ 54,000 & \$ 46,220 \\\hline 63,490 & \text { between } \$ 54,000 \text { and } \$ 72,000 & \$ 65,000 \\\hline 24,770 & \text { between } \$ 72,000 \text { and } \$ 90,000 & \$ 80,790 \\\hline 23,500 & \text { more than } \$ 90,000 & \$ 118,750 \\\hline\end{array}$ -Refer to Table 20-7. If the poverty rate in Imagination is 10%, what is the poverty line?

Sofia won $2,600 at the blackjack tables on her birthday. Her winnings are an example of

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

People can borrow and lend money to smooth out short term variations in income known as what kind of changes?

In the United States from 1935 to 2011 the share of total income earned by the bottom fifth of income earners rose and then fell.

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?

Table 20-4 ​ Source: U.S. Bureau of Census ​ ​ -Refer to Table 20-4. Comparing data from 2000 and 2017, which of the following statements is correct?

Comparing the US to other countries ranked by inequality,

What measure does the federal government use when setting the official poverty line in the US?

Economists Cox and Alm compared the gap between rich and poor and found that the richest 20% was about 2 times better off than the poorest 20% when they compared what data?

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Which of the following is not an example of in-kind transfers?

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

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.

Which of the following lists correctly ranks countries from most equal to least equal distribution of income?

Table 20-2 Percentage of Before-Tax Income Received by Families in Hapland ​ ​ $\begin{array} { | c | c | c | } \hline \text { Group } & \begin{array} { c } \mathbf { \text { Percentage of Family } }\\\text { Incomein } \mathbf { 2 0 2 0 }\end{array} & \begin{array} { c } \text { Percentage of Family } \\\text { Incomein 1970 }\end{array} \\\hline \text { Bottom Quintile } & 4.1 & 5.5 \\\hline \text { Second Quintile } & 6.2 & 7.2 \\\hline \text { Middle Quintile } & 12.1 & 13.6 \\\hline \text { Fourth Quintile } & 26.9 & 25.8 \\\hline \text { Top Quintile } & 50.7 & 45.9 \\\hline\end{array}$ ​ -Refer to Table 20-2. According to the table, from 1970 to 2020, the Hapland income distribution became