Question 1

John Rawls, who developed the way of thinking called liberalism, argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Accepted Answer

A) True 
 B)False

Question 2

The poverty rate is

Accepted Answer

A)  a measure of income inequality across families.
B)  the percentage of the population whose family income falls below a specified level.
C)  an absolute level of income set by the federal government for each family size.
D)  measured by the number of in-kind transfers that a family receives.E) B) and D)
F) B) and C)

Question 3

Figure 20-3 
-Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 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)  is lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty.
D)  is lower than the percentage of children under age 18 and is equal to the percentage of elderly aged 65 and over in poverty.E) All of the above
F) C) and D)

Question 4

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 that earned $20,000 owe?

Accepted Answer

A)  -$8,000
B)  -$2,400
C)  $0
D)  $2,400E) A) and C)
F) None of the above

Question 5

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Accepted Answer

A)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on transitory income.
B)  Angelo's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Sonia's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income.
C)  Angelo's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Sonia's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income.
D)  Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on permanent income.E) A) and B)
F) C) and D)

Question 6

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) None of the above
F) B) and D)

Question 7

Libertarians believe that

Accepted Answer

A)  the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance."
B)  the government should aim to maximize the well-being of the worst-off person in society.
C)  everyone in society should have equal utility.
D)  the government should not redistribute income.E) A) and B)
F) A) and C)

Question 8

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

Question 9

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 10

Figure 20-3 
-Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Accepted Answer

A)  Policies to reduce elderly (65 years and older)  poverty rates since 1959 seem to have been effective.
B)  The age group suffering the highest poverty rate in recent years has been 18 to 64 year olds.
C)  Policies to reduce youth (under 18 years)  poverty rates since 1959 seem to have been effective.
D)  All of the above are correct.E) None of the above
F) B) and C)

Question 11

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 liberalism 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) All of the above
F) A) and C)

Question 12

A utilitarian government must

Accepted Answer

A)  calculate the utility of each individual in society.
B)  avoid enacting any policies that redistribute income from the rich to the poor.
C)  balance the gains from greater equality against the losses from distorted incentives.
D)  pursue policies that do not affect the middle class.E) B) and D)
F) A) and C)

Question 13

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

Accepted Answer

A)  in-kind transfers
B)  economic life cycle
C)  transitory income
D)  All of the above contribute to an incomplete picture of inequality.E) A) and B)
F) A) and C)

Question 14

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

Question 15

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

Question 16

In 2011, the poverty rate in the United States was

Accepted Answer

A)  5.9 percent.
B)  11.1 percent.
C)  15.0 percent.
D)  22.4 percent.E) A) and B)
F) C) and D)

Question 17

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) B) and C)
F) None of the above

Question 18

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal,

Accepted Answer

A)  the costs of welfare programs will exceed the benefits.
B)  it should not try to reach complete equality in income.
C)  income equality will be the best policy option.
D)  equality of economic opportunity will reduce society's utility.E) A) and D)
F) A) and C)

Question 19

The founders of utilitarianism include

Accepted Answer

A)  A. C. Pigou and John Maynard Keynes.
B)  Jeremy Bentham and John Stuart Mill.
C)  Augustin Cournot and Jean B. Say.
D)  A. Kondratieff and Thomas Malthus.E) B) and C)
F) A) and C)

Question 20

One way of expressing the tradeoff between income equality and efficiency is to say the more equally the pie is divided, the .

Accepted Answer

smaller th...

Exam 20: Income Inequality and Poverty

John Rawls, who developed the way of thinking called liberalism, argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Correct Answer
verified

In 2011, the poverty rate in the United States was

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

Income mobility studies suggest that poverty

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

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 that earned $20,000 owe?

Correct Answer
verified

A utilitarian government must

Correct Answer
verified

One way of expressing the tradeoff between income equality and efficiency is to say the more equally the pie is divided, the .

Correct Answer
verified
smaller th...
View Answer

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

Correct Answer
verified

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal,

Correct Answer
verified

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

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

Correct Answer
verified

The founders of utilitarianism include

Correct Answer
verified

Libertarians believe that

Correct Answer
verified

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Correct Answer
verified

Figure 20-3 -Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Correct Answer
verified

The poverty rate is

Correct Answer
verified

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

Correct Answer
verified

Which of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

Correct Answer
verified

Exam 20: Income Inequality and Poverty

John Rawls, who developed the way of thinking called liberalism, argued that government policies should be aimed at maximizing the sum of utility of everyone in society.

Correct AnswerverifiedShow Answer

In 2011, the poverty rate in the United States was

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

Income mobility studies suggest that poverty

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

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 that earned $20,000 owe?

Correct AnswerverifiedShow Answer

A utilitarian government must

Correct AnswerverifiedShow Answer

One way of expressing the tradeoff between income equality and efficiency is to say the more equally the pie is divided, the .

Correct Answerverifiedsmaller th...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal,

Correct AnswerverifiedShow Answer

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

Figure 20-3 -Refer to Figure 20-3. In 2011, the percent of adults between ages 18 and 64 in poverty is

Correct AnswerverifiedShow Answer

The founders of utilitarianism include

Correct AnswerverifiedShow Answer

Libertarians believe that

Correct AnswerverifiedShow Answer

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Correct AnswerverifiedShow Answer

Figure 20-3 -Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Correct AnswerverifiedShow Answer

The poverty rate 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 of the following does not explain why data on income distribution and the poverty rate give an incomplete picture of inequality?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
smaller th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified