Question 1

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

Accepted Answer

A)   Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility.
B)   Liberalism suggests that government policies should strive to maximize the sum of Billie's utility and Chris's utility.
C)   Libertarianism suggests that government policies should strive to maximize Chris's utility.
D)   Mobilism suggests that the government policies should strive to make Billie better off than Arthur.E) B) and D)
F) A) and B)

Question 2

Figure 20-4
Poverty Rates by Age 
-Refer to Figure 20-4.In 1968,the percent of adults aged 18 to 64 years in poverty is

Accepted Answer

A)   higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty.
B)   higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty.
C)   lower than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty.
D)   lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty.E) A) and B)
F) All of the above

Question 3

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

Question 4

According to the article by Rebecca Blank,how is the official poverty line computed in the US?

Accepted Answer

three time...

Question 5

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?

Accepted Answer

consumptio...

Question 6

Which of the following is not correct?

Accepted Answer

A)   Poverty is long-term problem for relatively few families.
B)   Measurements of income inequality usually do not include in-kind transfers.
C)   Measurements of income inequality use lifetime incomes rather than annual incomes.
D)   Measurements of income inequality would be more meaningful if they reflected permanent rather than current income.E) B) and C)
F) None of the above

Question 7

U.S.income data over the last 75 years suggests that the distribution of income

Accepted Answer

A)   has gradually become more equal over the entire time period.
B)   has gradually become less equal over the entire time period.
C)   gradually became less equal until about 1970,then became more equal from 1970 to 2008.
D)   gradually became more equal until about 1970,then became less equal from 1970 to 2008.E) None of the above
F) B) and D)

Question 8

Liberalism aims to raise the welfare of the worst-off person in society.This rule is called the

Accepted Answer

A)   minimax regret criterion.
B)   conservative approach.
C)   Nozick criterion.
D)   maximin criterion.E) B) and C)
F) C) and D)

Question 9

"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) All of the above
F) None of the above

Question 10

Which group (or groups) would be the most upset by wide variation in the income distribution?

Accepted Answer

A)   utilitarians
B)   utilitarians and liberals
C)   libertarians
D)   liberals and libertariansE) All of the above
F) None of the above

Question 11

Many economists believe that a family bases its spending decisions on its permanent,or average,income rather than on transitory income.

Accepted Answer

A) True 
 B)False

Question 12

Poverty is found to be correlated with

Accepted Answer

A)   age and race but not family composition.
B)   race only.
C)   race and family composition but not age.
D)   age,race,and family composition.E) A) and B)
F) A) and C)

Question 13

Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of libertarianism prefer?

Accepted Answer

A)   Plan A
B)   Plan B
C)   either Plan A or Plan B
D)   neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophyE) A) and C)
F) A) and D)

Question 14

Table 20-1
The following table shows the distribution of income in Thomasville.
 
-Refer to Table 20-1.If the poverty line was $22,063,what would be the poverty rate?

Accepted Answer

A)   less than 25%
B)   between 25% and 50%
C)   between 50% and 75%
D)   There is insufficient information to answer this question.E) C) and D)
F) A) and B)

Question 15

A disadvantage associated with a minimum wage law to reduce poverty is that it

Accepted Answer

A)   encourages illegitimate births because single women with children receive higher payments.
B)   rewards laziness because it provides payments to those with low incomes regardless of their work effort.
C)   focuses on children and the disabled while neglecting the working poor.
D)   may benefit the teenage children of families who are not poor.E) A) and D)
F) B) and D)

Question 16

"The government should choose policies to maximize the total utility of society." This statement is most closely associated with which political philosophy?

Accepted Answer

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

Question 17

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000.How much would a family have to earn to owe $0 in taxes?

Accepted Answer

A)   $8,000
B)   $16,283
C)   $28,571
D)   $30,694E) A) and B)
F) A) and C)

Question 18

The United States has a more unequal income distribution than many other developed countries such as Japan and Canada.

Accepted Answer

A) True 
 B)False

Question 19

Figure 20-4
Poverty Rates by Age 
-Refer to Figure 20-4.In 1968,the percent of children under age 18 in poverty is

Accepted Answer

A)   higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty.
B)   higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 and over in poverty.
C)   lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty.
D)   lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 and over in poverty.E) B) and C)
F) A) and B)

Question 20

The Supplemental Security Income (SSI)program focuses on the poor who are sick or disabled.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of libertarianism prefer?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Many economists believe that a family bases its spending decisions on its permanent,or average,income rather than on transitory income.

Correct AnswerverifiedShow Answer

Which group (or groups) would be the most upset by wide variation in the income distribution?

Correct AnswerverifiedShow Answer

U.S.income data over the last 75 years suggests that the distribution of income

Correct AnswerverifiedShow Answer

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?

Correct Answerverifiedconsumptio...View AnswerShow Answer

The Supplemental Security Income (SSI)program focuses on the poor who are sick or disabled.

Correct AnswerverifiedShow Answer

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.In 1968,the percent of children under age 18 in poverty is

Correct AnswerverifiedShow Answer

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.In 1968,the percent of adults aged 18 to 64 years in poverty is

Correct AnswerverifiedShow Answer

A disadvantage associated with a minimum wage law to reduce poverty is that it

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

"The government should choose policies to maximize the total utility of society." This statement is most closely associated with which political philosophy?

Correct AnswerverifiedShow Answer

Liberalism aims to raise the welfare of the worst-off person in society.This rule is called the

Correct AnswerverifiedShow Answer

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000.How much would a family have to earn to owe $0 in taxes?

Correct AnswerverifiedShow Answer

Poverty is found to be correlated with

Correct AnswerverifiedShow Answer

According to the article by Rebecca Blank,how is the official poverty line computed in the US?

Correct Answerverifiedthree time...View AnswerShow 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

The United States has a more unequal income distribution than many other developed countries such as Japan and Canada.

Correct AnswerverifiedShow Answer

Table 20-1 The following table shows the distribution of income in Thomasville. -Refer to Table 20-1.If the poverty line was $22,063,what would be the poverty rate?

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Which of the following is not correct?

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