Question 1

Figure 20-1
Number of Poor 
-Refer to Figure 20-1.The absolute number of people in poverty

Accepted Answer

A)   is higher in 2001 than in 1959.
B)   is lower in 2001 than in 1959.
C)   has not changed between 1959 and 2001.
D)   has steadily decreased between 1959 and 2001.E) B) and D)
F) A) and B)

Question 2

When incentives to earn income are distorted by income redistribution programs,

Accepted Answer

A)   losses can exceed potential gains from greater equality of income.
B)   total income in an economy can fall.
C)   total utility in society can fall.
D)   All of the above are correct.E) A) and C)
F) B) and D)

Question 3

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

Question 4

The normal life cycle pattern of income

Accepted Answer

A)   contributes to more inequality in the distribution of annual income and to more inequality in living standards.
B)   contributes to more inequality in the distribution of annual income,but it does not necessarily contribute to more inequality in living standards.
C)   contributes to less inequality in the distribution of annual income and to less inequality in living standards.
D)   has no effect on either the distribution of annual income or on living standards.E) A) and B)
F) A) and C)

Question 5

Utilitarianism is

Accepted Answer

A)   a liberal religion that focuses on individual rights.
B)   a political philosophy that believes the government should choose policies deemed to be just by an impartial observer.
C)   a political philosophy that believes the government should not redistribute income.
D)   a political philosophy that believes the government should choose policies to maximize the total utility of society.E) None of the above
F) A) and B)

Question 6

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

Accepted Answer

A) True 
 B)False

Question 7

Most children work in which sector of the economy?

Accepted Answer

A)   agriculture
B)   manufacturing
C)   information technology
D)   service sector jobs,such as McDonaldsE) A) and D)
F) All of the above

Question 8

The elderly represent the largest demographic group in poverty.

Accepted Answer

A) True 
 B)False

Question 9

Explain what is meant by "in-kind transfer" programs.Briefly outline the advantages and disadvantages of an in-kind transfer program.

Accepted Answer

An in-kind transfer program distributes ...

Question 10

Libertarians believe that

Accepted Answer

A)   it is more important to evaluate the process by which economic outcomes are produced,rather than the outcomes themselves.
B)   government should attempt to redistribute income from the rich to the poor when the gap between rich and poor is more than 20%.
C)   Efficiency of opportunities is more important than efficiency of income levels.
D)   it is more important to evaluate economic outcomes first and then the process that produced them.E) A) and B)
F) None of the above

Question 11

The United States has more income inequality than Japan,Germany,and Canada.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is not correct?

Accepted Answer

A)   An advantage of the Earned Income Tax Credit (EIT
C)  is that it targets the working poor better than the minimum wage because it does not benefit teenagers from middle-class families who work summer jobs at the minimum wage.
B)   A disadvantage of in-kind transfer programs such as food stamps is that they force recipients to purchase from a restricted set of items which may not include things that the poor need the most such as diapers or cleaning supplies.
C)   A disadvantage of minimum wage laws is that they are expensive for state and local governments to fund.
D)   Effective minimum wage laws create a surplus of labor.E) A) and D)
F) A) and C)

Question 13

Figure 20-1
Number of Poor 
-Refer to Figure 20-1.Between 1965 and 2001,during recessions (the shaded bars) the number of individuals in poverty has

Accepted Answer

A)   increased.
B)   decrease.
C)   not changed.
D)   decreased and then increased.E) None of the above
F) All of the above

Question 14

Which of the following statements is correct?

Accepted Answer

A)   An disadvantage of Supplemental Security Income (SSI) is that it does not encourage families to break up in order to qualify for assistance.
B)   A disadvantage of in-kind transfer programs such as food stamps is that they force recipients to purchase from a restricted set of items which may not include things that the poor need the most such as diapers or cleaning supplies.
C)   A disadvantage of minimum wage laws is that they are expensive for state and local governments to fund.
D)   An advantage of a negative income tax is that it encourages the poor to work in order to receive government assistance.E) A) and D)
F) A) and B)

Question 15

From 1935 to 2005 the share of total income earned by the bottom fifth of income earners rose and then fell.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not discussed by economist Tyler Cowen as an alternative to measuring inequality by income?

Accepted Answer

A)   Leisure.
B)   Happiness.
C)   Consumption.
D)   Age.E) C) and D)
F) A) and B)

Question 17

Based on U.S.data for 2005,the poverty rate is the highest for which group of people?

Accepted Answer

A)   children
B)   married couples
C)   female households,no spouse present
D)   the elderlyE) B) and C)
F) A) and D)

Question 18

Table 20-4
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 20-4.What is the poverty line for a family of six with three children?

Accepted Answer

A)   $21,469
B)   $24,797
C)   $25,738
D)   $28,718E) A) and D)
F) B) and C)

Question 19

The poverty line in the country of Inequalia is $10,000.The distribution of income for Inequalia is as follows:

The poverty rate in Inequalia is

Accepted Answer

A)   11.1 percent.
B)   16.7 percent.
C)   27.8 percent.
D)   55.5 percent.E) A) and C)
F) A) and B)

Question 20

A tax provision that works much like a negative income tax is the

Accepted Answer

A)   Earned Income Tax Credit (EIT
C)  .
B)   Temporary Assistance for Needy Families (TANF) .
C)   deduction for charitable contributions.
D)   mortgage interest rate deduction.E) All of the above
F) B) and C)

Exam 20: Income Inequality and Poverty

Libertarians believe that

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Which of the following statements is not correct?

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Based on U.S.data for 2005,the poverty rate is the highest for which group of people?

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Explain what is meant by "in-kind transfer" programs.Briefly outline the advantages and disadvantages of an in-kind transfer program.

Correct AnswerverifiedAn in-kind transfer program distributes ...View AnswerShow Answer

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

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Utilitarianism is

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Most children work in which sector of the economy?

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Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

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From 1935 to 2005 the share of total income earned by the bottom fifth of income earners rose and then fell.

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Which of the following is not discussed by economist Tyler Cowen as an alternative to measuring inequality by income?

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A tax provision that works much like a negative income tax is the

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The United States has more income inequality than Japan,Germany,and Canada.

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When incentives to earn income are distorted by income redistribution programs,

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Which of the following statements is correct?

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Figure 20-1 Number of Poor -Refer to Figure 20-1.The absolute number of people in poverty

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Figure 20-1 Number of Poor -Refer to Figure 20-1.Between 1965 and 2001,during recessions (the shaded bars) the number of individuals in poverty has

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The normal life cycle pattern of income

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The elderly represent the largest demographic group in poverty.

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The poverty line in the country of Inequalia is $10,000.The distribution of income for Inequalia is as follows: The poverty rate in Inequalia is

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Table 20-4 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 20-4.What is the poverty line for a family of six with three children?

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An in-kind transfer program distributes ...
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