Question 1

The invisible hand of the marketplace acts to allocate resources

Accepted Answer

A)  efficiently but does not necessarily ensure that resources are allocated fairly.
B)  both fairly and efficiently.
C)  fairly but does not necessarily ensure that resources are allocated efficiently.
D)  neither fairly nor efficiently.E) B) and D)
F) B) and C)

Question 2

The United States has greater income

Accepted Answer

A)  disparity than most other economically advanced countries, but a more equal income distribution than some developing countries.
B)  disparity than both other economically advanced and all developing countries.
C)  equality than most other economically advanced countries but greater income disparity than some developing countries.
D)  equality than both other economically advanced and developing countries.E) B) and C)
F) C) and D)

Question 3

The US government sets the poverty line equal to approximately

Accepted Answer

A)  three times the cost of providing subsidized housing.
B)  three times the cost of providing an adequate diet.
C)  the minimum wage for a single person working 40 hours per week and 50 weeks per year.
D)  the cost of providing food, shelter, and health care expenses for a family of four.E) A) and B)
F) A) and C)

Question 4

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 5

Comparing the United States household income distribution to other countries is

Accepted Answer

A)  easy, because data is available for all countries in the world.
B)  easy, because some countries collect data on expenditures instead of incomes.
C)  problematic, because international agreements require countries to standardize their income accounting procedures.
D)  problematic, because countries collect data in different ways.E) A) and C)
F) B) and C)

Question 6

Which of the following statements illustrates diminishing marginal utility?

Accepted Answer

A)  An extra dollar of income to a poor person provides that person with more additional utility than does an extra dollar to a rich person.
B)  An extra dollar of income to a poor person provides that person with less additional utility than does an extra dollar to a rich person.
C)  An extra dollar of income to a poor person provides that person with the same additional utility as does an extra dollar to a rich person.
D)  An extra dollar of income to a poor person provides that person with the same total utility as does an extra dollar to a rich person.E) B) and C)
F) C) and D)

Question 7

An income distribution may not give an accurate picture of the standard of living for the poor because it does not include in-kind transfers.

Accepted Answer

A) True 
 B)False

Question 8

Table 20-8  Source: U.S. Bureau of Census
-Refer to Table 20-8. In 2011, the bottom 40% of families has

Accepted Answer

A)  about 13% of total income in the U.S.
B)  about 28% of total income in the U.S.
C)  about 51% of total income in the U.S.
D)  about 72% of total income in the U.S.E) None of the above
F) A) and D)

Question 9

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Accepted Answer

A)  raises the well-being of the least fortunate.
B)  does not alter incentives to work and save.
C)  promotes an equal distribution of income.
D)  does not lower the welfare of the elderly.E) C) and D)
F) B) and C)

Question 10

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) All of the above
F) B) and C)

Question 11

Which political philosophy argues that the government should choose policies to maximize the total utility of everyone in society?

Accepted Answer

The answer of Which political philosophy argues that the government...

Question 12

Temporary Assistance for Needy Families (TANF) is an example of a negative income tax program.

Accepted Answer

A) True 
 B)False

Question 13

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 B)
F) A) and C)

Question 14

Figure 20-3 
-Refer to Figure 20-3. In 2011, 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 years 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 years and over in poverty.
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 years 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 years and over in poverty.E) All of the above
F) A) and B)

Question 15

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

Accepted Answer

A) True 
 B)False

Question 16

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Accepted Answer

A)  The government is effectively taxing every dollar earned up to $25,000 at a rate of 100%.
B)  This program would reduce the incentive to work to earn any wage up to $25,000.
C)  If workers are discouraged from working due to this program, they will miss any on-the-job training that would have otherwise occurred, limiting their ability to improve their skills.
D)  All of the above are correct.E) B) and C)
F) A) and B)

Question 17

Table 20-13
Distribution of Income in Imagination 
-Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Accepted Answer

between $1...

Question 18

When John F. Kennedy said, "A rising tide lifts all boats," to what was he referring?

Accepted Answer

A)  With government intervention, all citizens receive a greater allocation of resources.
B)  With market forces working independently, everyone receives an equitable share of resources.
C)  With economic growth, more families are pushed above the poverty line.
D)  None of the above are correct.E) A) and D)
F) B) and C)

Question 19

Scenario 20-3
Suppose that a society is made up of five families whose incomes are as follows:
$120,000; $90,000; $30,000; $30,000; and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where families earning less than $35,000 pay no income tax and families earning more than $35,000 pay 10% of their income in taxes. The income tax revenue collected from those families earning over $35,000 is then redistributed equally to those families earning less than $35,000.
-Refer to Scenario 20-3. Assuming that utility is directly proportional to the cash value of after-tax income, which government policy would an advocate of utilitarianism 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 D)
F) None of the above

Question 20

Table 20-1
The following table shows the distribution of income in Marysville. 
-Refer to Table 20-1. If the poverty line was $31,852, 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) A) and C)
F) All of the above

Exam 20: Income Inequality and Poverty

An income distribution may not give an accurate picture of the standard of living for the poor because it does not include in-kind transfers.

Correct Answer
verified

The United States has greater income

Correct Answer
verified

The invisible hand of the marketplace acts to allocate resources

Correct Answer
verified

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

Correct Answer
verified

The US government sets the poverty line equal to approximately

Correct Answer
verified

When John F. Kennedy said, "A rising tide lifts all boats," to what was he referring?

Correct Answer
verified

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

Correct Answer
verified

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. In 2011, the bottom 40% of families has

Correct Answer
verified

Temporary Assistance for Needy Families (TANF) is an example of a negative income tax program.

Correct Answer
verified

Comparing the United States household income distribution to other countries is

Correct Answer
verified

Which of the following statements illustrates diminishing marginal utility?

Correct Answer
verified

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Correct Answer
verified

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

Correct Answer
verified

Which political philosophy argues that the government should choose policies to maximize the total utility of everyone in society?

Correct Answer
verified

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. If the poverty line was $31,852, what would be the poverty rate?

Correct Answer
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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
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Correct Answer
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According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Correct Answer
verified

Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Correct Answer
verified
between $1...
View Answer

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of children under age 18 in poverty is

Correct Answer
verified

Exam 20: Income Inequality and Poverty

An income distribution may not give an accurate picture of the standard of living for the poor because it does not include in-kind transfers.

Correct AnswerverifiedShow Answer

The United States has greater income

Correct AnswerverifiedShow Answer

The invisible hand of the marketplace acts to allocate resources

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The US government sets the poverty line equal to approximately

Correct AnswerverifiedShow Answer

When John F. Kennedy said, "A rising tide lifts all boats," to what was he referring?

Correct AnswerverifiedShow Answer

The poverty rate is an absolute level of income set by the federal government for each family size. A family with income below this rate is deemed to be in poverty.

Correct AnswerverifiedShow Answer

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. In 2011, the bottom 40% of families has

Correct AnswerverifiedShow Answer

Temporary Assistance for Needy Families (TANF) is an example of a negative income tax program.

Correct AnswerverifiedShow Answer

Comparing the United States household income distribution to other countries is

Correct AnswerverifiedShow Answer

Which of the following statements illustrates diminishing marginal utility?

Correct AnswerverifiedShow Answer

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which political philosophy argues that the government should choose policies to maximize the total utility of everyone in society?

Correct AnswerverifiedShow Answer

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. If the poverty line was $31,852, what would be the poverty rate?

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

Correct AnswerverifiedShow Answer

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Correct AnswerverifiedShow Answer

Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty rate in Imagination is 25%, in what income range on the table is the poverty line?

Correct Answerverifiedbetween $1...View AnswerShow Answer

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of children under age 18 in poverty is

Correct AnswerverifiedShow Answer

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between $1...
View Answer

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