Question 1

Critics of the minimum wage argue that

Accepted Answer

A)  labor demand is inelastic so firms can adjust production.
B)  too many older employees benefit at the expense of teenage workers.
C)  many minimum-wage earners are teenagers from middle-class families.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 2

Figure 20-1
Number of Poor 
-Refer to Figure 20-1. Between 1965 and 2011, during recessions (the shaded bars)  the number of individuals in poverty has

Accepted Answer

A)  increased.
B)  decreased.
C)  not changed.
D)  decreased and then increased.E) B) and D)
F) B) and C)

Question 3

The maximin criterion is attributed to which political philosophy?

Accepted Answer

A)  utilitarianism
B)  liberalism
C)  libertarianism
D)  repubicanismE) B) and C)
F) None of the above

Question 4

Which of the following explains the rise in income inequality in the United States from 1970 to 2011?

Accepted Answer

A)  An increase in minimum wages.
B)  An increase in the demand for skilled labor.
C)  An increase in the demand for unskilled labor.
D)  Reduced international trade with low-wage countries.E) B) and C)
F) A) and D)

Question 5

The study by economists Cox and Alm found that the 2006 after-tax income of the richest fifth of U.S. households is

Accepted Answer

A)  equal to the after-tax income of the poorest fifth.
B)  7 times the after-tax income of the poorest fifth.
C)  14 times the after-tax income of the poorest fifth.
D)  21 times the after-tax income of the poorest fifth.E) A) and B)
F) A) and C)

Question 6

"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) None of the above
F) A) and B)

Question 7

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Accepted Answer

A) True 
 B)False

Question 8

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is not correct?

Accepted Answer

A)  Welfare programs may encourage illegitimate births.
B)  The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent.
C)  Welfare programs may reduce incentives for people to work.
D)  A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.E) A) and B)
F) None of the above

Question 10

Scenario 20-8
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $14,000
​
​
-Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.​

Accepted Answer

A) True 
 B)False

Question 11

In comparison to the average poverty rate,

Accepted Answer

A)  children and the elderly are more likely to be poor.
B)  children and the elderly are less likely to be poor.
C)  children are more likely to be poor, but the elderly are less likely to be poor.
D)  children are less likely to be poor, but the elderly are more likely to be poor.E) A) and D)
F) B) and D)

Question 12

Suppose that Jamal is moving to a state where personal incomes are distributed randomly. If Jamal believes in liberalism, he would prefer

Accepted Answer

A)  an income distribution that is relatively equal.
B)  that everyone has the same work opportunities and market-determined wage rates.
C)  that private property be transformed to government property to safeguard people's incomes.
D)  less economic assistance to the poor because it distorts the price system.E) A) and D)
F) B) and C)

Question 13

Libertarianism identifies a redistribution of income role for government when

Accepted Answer

A)  the utility of the worst-off could be improved.
B)  the income distribution is altered by illegal means (e.g. theft) .
C)  the total utility for society can be improved through redistribution of income.
D)  a "veil of ignorance" would result in a recommendation of redistribution of income.E) None of the above
F) A) and B)

Question 14

The Hicks family owns a blueberry farm in Maine. The Ward family owns a blueberry farm in Massachusetts. A drought in Massachusetts destroys half of the Ward family's harvest for one year. For the Ward family, their

Accepted Answer

A)  transitory income for the year of the drought likely exceeds their permanent income.
B)  permanent income likely exceeds their transitory income for the year of the drought.
C)  transitory income likely will be affected but the permanent income of the Hicks family will increase.
D)  permanent income likely will be affected but the permanent income of the Hicks family will not be affected.E) B) and D)
F) C) and D)

Question 15

The poverty rate is the percentage of the population whose family income falls below the poverty line..

Accepted Answer

A) True 
 B)False

Question 16

Table 20-5
Distribution of Income in Umakastan 
-Refer to Table 20-5. Approximately what percentage of families in Umakastan have income levels below $74,000?

Accepted Answer

A)  27%
B)  28%
C)  52%
D)  79%E) A) and B)
F) B) and D)

Question 17

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

Accepted Answer

A)  equalize the incomes of John and Jane.
B)  equalize John's utility and Jane's utility.
C)  equalize John's marginal utility and Jane's marginal utility.
D)  maximize the sum of John's utility and Jane's utility.E) None of the above
F) B) and C)

Question 18

In the United States, long-term poverty, defined as a family having an income below the poverty line for eight or more years, is

Accepted Answer

A)  common, affecting approximately 25 percent of all American families.
B)  common, affecting approximately 15 percent of all American families.
C)  uncommon, affecting approximately 8 percent of all American families.
D)  rare, affecting approximately 3 percent of all American families.E) None of the above
F) A) and D)

Question 19

Fewer than three percent of families are poor for eight or more years.

Accepted Answer

A) True 
 B)False

Question 20

When comparing the percentage of income (or expenditure)  of the lowest and highest 10 percent of the population,

Accepted Answer

A)  South Africa has a more equal income distribution than the United States.
B)  South Africa has a more equal income distribution than Japan.
C)  Japan has a more equal income distribution than the United States.
D)  Mexico has a more equal income distribution than Germany.E) A) and B)
F) All of the above

Exam 20: Income Inequality and Poverty

The Hicks family owns a blueberry farm in Maine. The Ward family owns a blueberry farm in Massachusetts. A drought in Massachusetts destroys half of the Ward family's harvest for one year. For the Ward family, their

Correct AnswerverifiedShow Answer

Scenario 20-8 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $14,000 ​ ​ -Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.​

Correct AnswerverifiedShow Answer

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Correct AnswerverifiedShow Answer

Libertarianism identifies a redistribution of income role for government when

Correct AnswerverifiedShow Answer

Figure 20-1 Number of Poor -Refer to Figure 20-1. Between 1965 and 2011, during recessions (the shaded bars) the number of individuals in poverty has

Correct AnswerverifiedShow Answer

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to

Correct AnswerverifiedShow Answer

Which of the following explains the rise in income inequality in the United States from 1970 to 2011?

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

In the United States, long-term poverty, defined as a family having an income below the poverty line for eight or more years, is

Correct AnswerverifiedShow Answer

The poverty rate is the percentage of the population whose family income falls below the poverty line..

Correct AnswerverifiedShow Answer

Fewer than three percent of families are poor for eight or more years.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Suppose that Jamal is moving to a state where personal incomes are distributed randomly. If Jamal believes in liberalism, he would prefer

Correct AnswerverifiedShow Answer

When comparing the percentage of income (or expenditure) of the lowest and highest 10 percent of the population,

Correct AnswerverifiedShow Answer

Critics of the minimum wage argue that

Correct AnswerverifiedShow Answer

In comparison to the average poverty rate,

Correct AnswerverifiedShow Answer

The maximin criterion is attributed to which political philosophy?

Correct AnswerverifiedShow Answer

Table 20-5 Distribution of Income in Umakastan -Refer to Table 20-5. Approximately what percentage of families in Umakastan have income levels below $74,000?

Correct AnswerverifiedShow Answer

The invisible hand of the marketplace acts to allocate resources efficiently, but it does not necessarily ensure that resources are allocated fairly.

Correct AnswerverifiedShow Answer

The study by economists Cox and Alm found that the 2006 after-tax income of the richest fifth of U.S. households is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Scenario 20-8 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $14,000 -Refer to Scenario 20-8. A family earning $56,000 before taxes will have $56,000 after tax.

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified