Question 1

The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Accepted Answer

A)   $170,000 and over
B)   $205,000 and over
C)   $250,000 and over
D)   $325,000 and overE) A) and B)
F) B) and C)

Question 2

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) C) and D)

Question 3

Economists who study economic mobility have found that the income of a grandfather and his grandson's income are

Accepted Answer

A)   not closely related.
B)   negatively related.
C)   directly related.
D)   equal.E) A) and B)
F) None of the above

Question 4

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Accepted Answer

The answer of A system in which anyone collecting antipoverty...

Question 5

In the US, is it more likely that someone will become a millionaire by making money on his/her own or by inheriting a fortune?

Accepted Answer

Making mon...

Question 6

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

Question 7

A typical worker's normal or average income is called

Accepted Answer

A)   the life cycle.
B)   permanent income.
C)   transitory income.
D)   in-kind transfers.E) A) and C)
F) B) and D)

Question 8

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 9

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Accepted Answer

Utilitarians reject complete equalizatio...

Question 10

Table 20-13
Distribution of Income in Imagination
 
-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Accepted Answer

The answer of Table 20-13
Distribution of Income in Imagination
 
-Refer...

Question 11

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

Question 12

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

A)   tends to follow a seasonal pattern.
B)   rises as a worker gains maturity and experience.
C)   rises and falls in conjunction with the business cycle.
D)   falls during the early years of market activity and peaks at retirement.E) C) and D)
F) A) and D)

Question 13

Which of the following statements is correct?

Accepted Answer

A)   The poverty line is a relative standard.
B)   More families are pushed above the poverty line as economic growth pushes the entire income distribution upward.
C)   Increasing income inequality reduces poverty.
D)   Economic growth, by definition, affects all families equally.E) C) and D)
F) None of the above

Question 14

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

Accepted Answer

The answer of Aniella believes that the demand for unskilled...

Question 15

The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not correct?

Accepted Answer

A)   Poverty is correlated with race.
B)   Poverty is correlated with age.
C)   Poverty is correlated with family composition.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 17

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

Question 18

Which of the following statements accurately characterizes the effects of minimum-wage laws?

Accepted Answer

A)   Some workers who might have been employed at a lower wage become unemployed.
B)   Those workers who remain employed benefit from a higher wage.
C)   The effects of minimum-wage laws depend strongly on the elasticity of demand.
D)   All of the above accurately characterize the effects of minimum-wage laws.E) None of the above
F) B) and C)

Question 19

The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

Accepted Answer

The answer of The Earned Income Tax Credit (EITC) is...

Question 20

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

Exam 20: Income Inequality and Poverty

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

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A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

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The life cycle effect characterizes a lifetime income profile in which income

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Table 20-13 Distribution of Income in Imagination -Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

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Which of the following statements is not correct?

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The Earned Income Tax Credit (EITC) is a tax provision that allows poor working families to receive income tax refunds greater than the taxes they paid during the year. Therefore, the EITC works much like a .

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

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Which of the following statements accurately characterizes the effects of minimum-wage laws?

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Which of the following is not correct?

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The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

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A typical worker's normal or average income is called

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

Correct AnswerverifiedShow Answer

Economists who study economic mobility have found that the income of a grandfather and his grandson's income are

Correct AnswerverifiedShow Answer

In the US, is it more likely that someone will become a millionaire by making money on his/her own or by inheriting a fortune?

Correct AnswerverifiedMaking mon...View AnswerShow Answer

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Correct AnswerverifiedUtilitarians reject complete equalizatio...View AnswerShow Answer

Which of the following statements is correct?

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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

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

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The 2011 U.S. distribution of income shows that the top 5 percent of families earn approximately how much income per year?

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

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Making mon...
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Utilitarians reject complete equalizatio...
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between $1...
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