Question 1

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Accepted Answer

A)   lifetime income rather than annual income.
B)   aggregate income rather than annual personal income.
C)   annual extended-family income rather than annual personal income.
D)   income averaged across seasons rather than across years.E) None of the above
F) A) and D)

Question 2

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

Accepted Answer

A)   Nigeria, India, Mexico, Germany
B)   Brazil, United States, India, Japan
C)   United States, Ethiopia, Japan, South Africa
D)   Japan, India, United States, BrazilE) B) and D)
F) A) and C)

Question 3

With which three demographic variables is poverty correlated?

Accepted Answer

race, age,...

Question 4

Binding minimum-wage laws

Accepted Answer

A)   are costly for the government to impose.
B)   force a market imbalance between the supply and demand for labor.
C)   have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people.
D)   do not affect segments of the population who are not poor.E) A) and B)
F) A) and C)

Question 5

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Accepted Answer

A)   increasing income inequality
B)   a reduction in the poverty line
C)   rapid economic growth
D)   a reduction in international tradeE) A) and B)
F) B) and C)

Question 6

Of the four countries below, the country that has the most income equality is

Accepted Answer

A)   Ethiopia.
B)   France.
C)   Russia.
D)   Thailand.E) A) and C)
F) B) and D)

Question 7

An example of an in-kind transfer to the poor is

Accepted Answer

A)   the negative income tax.
B)   the Earned Income Tax Credit (EIT
C)  .
C)   Medicaid.
D)   Temporary Assistance for Needy Families (TANF) .E) A) and B)
F) B) and D)

Question 8

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Accepted Answer

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

Question 9

Economic mobility in the United States is so great that fewer than

Accepted Answer

A)   3 percent of families are poor for 8 or more years.
B)   5 percent of families are poor for 8 or more years.
C)   8 percent of families are poor for 8 or more years.
D)   10 percent of families are poor for 8 or more years.E) A) and D)
F) B) and D)

Question 10

Table 20-5
Distribution of Income in Umakastan 
-Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Accepted Answer

A)   $18,750
B)   $20,000
C)   $34,690
D)   $38,000E) None of the above
F) B) and C)

Question 11

Scenario 20-7
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-7. One of Zooey's friends tells her she would have more money for the year if she quit her job and filed her tax return with $0 in income. Is her friend correct? Why or why not?

Accepted Answer

No, she would have $...

Question 12

Income mobility studies suggest that poverty

Accepted Answer

A)   cannot be alleviated by privately sponsored anti-poverty programs.
B)   cannot be alleviated by government sponsored anti-poverty programs.
C)   is a long-term problem for a relatively large number of families.
D)   is not a long-term problem for most families.E) B) and D)
F) A) and B)

Question 13

Of the four countries below, which has the highest degree of income inequality?

Accepted Answer

A)   Germany
B)   Turkey
C)   South Africa
D)   MexicoE) A) and C)
F) A) and B)

Question 14

When the government enacts policies to redistribute income,

Accepted Answer

A)   the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal.
B)   the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal.
C)   the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient.
D)   the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.E) A) and D)
F) A) and C)

Question 15

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Accepted Answer

It would d...

Question 16

Scenario 20-2
The government is proposing switching from a progressive tax system, in which families pay 15% of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000 to a tax system in which every family pays 1/4 of its income regardless of how much they earn and all income redistribution is eliminated. That is, the tax revenue generated is used only for infrastructure, public administration, and national defense.
-Refer to Scenario 20-2. Which philosopher would be most in favor of the proposed change in tax policy?

Accepted Answer

A)   Jeremy Bentham
B)   John Stuart Mill
C)   John Rawls
D)   Robert NozickE) All of the above
F) None of the above

Question 17

Most economists believe that a family bases its spending decisions on its transitory income.

Accepted Answer

A) True 
 B)False

Question 18

Figure 20-1 Number of Poor 
-Refer to Figure 20-1. Between 1959 and 2011 the poverty rate has

Accepted Answer

A)   increased overall.
B)   decreased overall.
C)   stayed the same overall.
D)   moved in the opposite direction of the number of people in poverty.E) A) and C)
F) A) and B)

Question 19

Anti-poverty programs

Accepted Answer

A)   encourage saving among recipient groups.
B)   impose a very low marginal tax rate on income.
C)   are only made available to those with no other source of income.
D)   may discourage the poor from escaping poverty on their own.E) A) and B)
F) A) and C)

Question 20

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

Anti-poverty programs

Correct Answer
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Binding minimum-wage laws

Correct Answer
verified

An example of an in-kind transfer to the poor is

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Correct Answer
verified

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Correct Answer
verified
It would d...
View Answer

Correct Answer
verified
No, she would have $...
View Answer

Economic mobility in the United States is so great that fewer than

Correct Answer
verified

Of the four countries below, the country that has the most income equality is

Correct Answer
verified

When the government enacts policies to redistribute income,

Correct Answer
verified

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Correct Answer
verified

Figure 20-1 Number of Poor -Refer to Figure 20-1. Between 1959 and 2011 the poverty rate has

Correct Answer
verified

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Correct Answer
verified

Income mobility studies suggest that poverty

Correct Answer
verified

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Correct Answer
verified

With which three demographic variables is poverty correlated?

Correct Answer
verified
race, age,...
View Answer

Most economists believe that a family bases its spending decisions on its transitory income.

Correct Answer
verified

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Correct Answer
verified

Of the four countries below, which has the highest degree of income inequality?

Correct Answer
verified

Exam 20: Income Inequality and Poverty

Anti-poverty programs

Correct AnswerverifiedShow Answer

Binding minimum-wage laws

Correct AnswerverifiedShow Answer

An example of an in-kind transfer to the poor is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy?

Correct AnswerverifiedShow Answer

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Correct AnswerverifiedIt would d...View AnswerShow Answer

Correct AnswerverifiedNo, she would have $...View AnswerShow Answer

Economic mobility in the United States is so great that fewer than

Correct AnswerverifiedShow Answer

Of the four countries below, the country that has the most income equality is

Correct AnswerverifiedShow Answer

When the government enacts policies to redistribute income,

Correct AnswerverifiedShow Answer

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. If the poverty rate in Umakastan is 10%, what is the poverty line?

Correct AnswerverifiedShow Answer

Figure 20-1 Number of Poor -Refer to Figure 20-1. Between 1959 and 2011 the poverty rate has

Correct AnswerverifiedShow Answer

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Correct AnswerverifiedShow Answer

Income mobility studies suggest that poverty

Correct AnswerverifiedShow Answer

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Correct AnswerverifiedShow Answer

With which three demographic variables is poverty correlated?

Correct Answerverifiedrace, age,...View AnswerShow Answer

Most economists believe that a family bases its spending decisions on its transitory income.

Correct AnswerverifiedShow Answer

The lack of progress in reducing the poverty rate since the early 1970s is most closely related with which of the following factors?

Correct AnswerverifiedShow Answer

Of the four countries below, which has the highest degree of income inequality?

Correct AnswerverifiedShow Answer

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It would d...
View Answer

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No, she would have $...
View 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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race, age,...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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