Question 1

A government policy aimed at protecting people against the risk of adverse events is called .

Accepted Answer

The answer of A government policy aimed at protecting people...

Question 2

Economists who study economic mobility have found that, if a father earns 20 percent above his generation's average income, his son will most likely earn

Accepted Answer

A)   an income equal to his generation's average income.
B)   8 percent above his generation's average income.
C)   5 percent below his generation's average income.
D)   3 percent above his generation's average income.E) None of the above
F) B) and C)

Question 3

Table 20-3
The Distribution of Income in Edgerton 
-Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?

Accepted Answer

A)   under $28,000
B)   between $28,000 and $43,999
C)   between $44,000 and $75,999
D)   between $76,000 and $87,999E) A) and C)
F) B) and D)

Question 4

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Accepted Answer

A) True 
 B)False

Question 5

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. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)   $5,000
B)   $10,000
C)   $15,000
D)   $50,000E) B) and D)
F) B) and C)

Question 6

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

Accepted Answer

The answer of People can borrow and lend money to...

Question 7

The distribution of income for Danville is as follows: Number of Families Income   500 less than $15,000
600 between $15,000 and $20,000
1,000 between $20,000 and $25,000
700 between $25,000 and $30,000
500 over $30,000  If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?

Accepted Answer

A)   $15,000.
B)   $20,000.
C)   $25,000.
D)   $30,000.E) A) and D)
F) B) and C)

Question 8

Which of the following statements is not correct?

Accepted Answer

A)   The poverty line is an absolute level of income set by the federal government below which a family is considered to be in poverty.
B)   The poverty line is approximately equal to three times the cost of providing an adequate diet.
C)   The poverty line is adjusted annually to reflect changes in price levels.
D)   The poverty line is adjusted semiannually to reflect changes in fuel prices.E) B) and D)
F) A) and C)

Question 9

Since the early 1970s, welfare benefits have declined,

Accepted Answer

A)   which is largely due to the success of the negative income tax program.
B)   which is largely due to the success of private charities.
C)   yet the percentage of children living with only one parent has increased.
D)   and the percentage of children living with only one parent has decreased.E) A) and B)
F) None of the above

Question 10

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives. To maximize total utility, therefore, the government

Accepted Answer

A)   would never tax labor income.
B)   must always achieve a fully egalitarian society.
C)   enacts policies that only benefit the middle class.
D)   stops short of a fully egalitarian society.E) C) and D)
F) B) and D)

Question 11

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

Accepted Answer

A)   A negative income tax because it would maximize the minimum income of members of society.
B)   An Earned Income Tax Credit (EIT
C)   because a policy that rewards the working poor would be the most just.
C)   An in-kind transfer program because it would maximize the total utility of all members of society.
D)   None of the programs would be favored because each of them forcibly redistributes income that was fairly, if not equally, earned.E) All of the above
F) B) and C)

Question 12

Since 1959 when the official data on the poverty rate began, the poverty rate was at its highest in

Accepted Answer

A)   1959.
B)   1968.
C)   1977.
D)   1986.E) B) and D)
F) A) and B)

Question 13

Who said "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries"?

Accepted Answer

The answer of Who said "The inherent vice of capitalism...

Question 14

Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

Accepted Answer

The poverty rate is the percentage of th...

Question 15

The poverty rate for female households with no spouse present is approximately

Accepted Answer

A)   10 percent.
B)   20 percent.
C)   30 percent.
D)   40 percent.E) A) and D)
F) B) and C)

Question 16

Supporters of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A)   a tax-free way to help the working poor. Businesses bear the burden of paying higher wages, not the government.
B)   better than the Earned Income Tax Credit (EIT
C)   in targeting the working poor. The EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage.
C)   better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol.
D)   a way to increase employment of those likely to earn the minimum wage.E) C) and D)
F) A) and C)

Question 17

Figure 20-5 
-Refer to Figure 20-5. An effective minimum wage would be set at a level

Accepted Answer

A)   above Wo, and employment would rise above Qo.
B)   above Wo, and employment would fall below Qo.
C)   below Wo, and employment would rise above Qo.
D)   below Wo, and employment would fall below Qo.E) A) and B)
F) A) and C)

Question 18

Minimum wage laws

Accepted Answer

A)   benefit all unskilled workers.
B)   create unemployment, but if demand is relatively elastic, the unemployment effects will be minor.
C)   may help the nonpoor, such as teenagers from wealthy families.
D)   reduce poverty by reducing unemployment.E) A) and C)
F) A) and B)

Question 19

When the government provides poor families with antipoverty programs such as welfare, Medicaid, food stamps, and the Earned Income Tax Credit which are all tied to income,

Accepted Answer

A)   the government creates an egalitarian distribution of income.
B)   the recipients can usually receive benefits for an unlimited amount of time.
C)   it is common for families to face very high effective marginal tax rates.
D)   the incentive to work and earn more income remains unchanged.E) A) and B)
F) None of the above

Question 20

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

Accepted Answer

A)   The gap shrinks if taxes are taken into account.
B)   The gap shrinks if consumption, rather than income, is compared.
C)   The gap shrinks if the number of people in the household is taken into account.
D)   The gap shrinks if the state of residence is taken into account.E) A) and B)
F) A) and C)

Exam 20: Income Inequality and Poverty

Minimum wage laws

Correct Answer
verified

Since the early 1970s, welfare benefits have declined,

Correct Answer
verified

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. This negative income tax would guarantee what minimum level of income to every family?

Correct Answer
verified

Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

Correct Answer
verified
The poverty rate is the percentage of th...
View Answer

Who said "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries"?

Correct Answer
verified

The poverty rate for female households with no spouse present is approximately

Correct Answer
verified

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

Correct Answer
verified

Correct Answer
verified

Supporters of raising the minimum wage argue that minimum-wage laws are

Correct Answer
verified

Economists who study economic mobility have found that, if a father earns 20 percent above his generation's average income, his son will most likely earn

Correct Answer
verified

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

Correct Answer
verified

A government policy aimed at protecting people against the risk of adverse events is called .

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

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

Correct Answer
verified

Figure 20-5 -Refer to Figure 20-5. An effective minimum wage would be set at a level

Correct Answer
verified

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives. To maximize total utility, therefore, the government

Correct Answer
verified

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Correct Answer
verified

When the government provides poor families with antipoverty programs such as welfare, Medicaid, food stamps, and the Earned Income Tax Credit which are all tied to income,

Correct Answer
verified

Since 1959 when the official data on the poverty rate began, the poverty rate was at its highest in

Correct Answer
verified

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?

Correct Answer
verified

Exam 20: Income Inequality and Poverty

Minimum wage laws

Correct AnswerverifiedShow Answer

Since the early 1970s, welfare benefits have declined,

Correct AnswerverifiedShow Answer

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. This negative income tax would guarantee what minimum level of income to every family?

Correct AnswerverifiedShow Answer

Explain what information is contained in the poverty rate statistic. Are there problems in using an absolute scale to measure poverty? If so, explain them.

Correct AnswerverifiedThe poverty rate is the percentage of th...View AnswerShow Answer

Who said "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries"?

Correct AnswerverifiedShow Answer

The poverty rate for female households with no spouse present is approximately

Correct AnswerverifiedShow Answer

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Supporters of raising the minimum wage argue that minimum-wage laws are

Correct AnswerverifiedShow Answer

Economists who study economic mobility have found that, if a father earns 20 percent above his generation's average income, his son will most likely earn

Correct AnswerverifiedShow Answer

Which of the following is not a finding of Cox and Alm regarding the gap between rich and poor?

Correct AnswerverifiedShow Answer

A government policy aimed at protecting people against the risk of adverse events is called .

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 20-5 -Refer to Figure 20-5. An effective minimum wage would be set at a level

Correct AnswerverifiedShow Answer

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives. To maximize total utility, therefore, the government

Correct AnswerverifiedShow Answer

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Correct AnswerverifiedShow Answer

When the government provides poor families with antipoverty programs such as welfare, Medicaid, food stamps, and the Earned Income Tax Credit which are all tied to income,

Correct AnswerverifiedShow Answer

Since 1959 when the official data on the poverty rate began, the poverty rate was at its highest in

Correct AnswerverifiedShow Answer

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?

Correct AnswerverifiedShow Answer

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The poverty rate is the percentage of th...
View Answer

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