Question 1

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 C)
F) B) and D)

Question 2

Relative to direct cash payments, in-kind transfers have the advantage of being

Accepted Answer

A)   more politically popular.
B)   more efficient.
C)   more respectful of the poor.
D)   of a higher dollar value than cash payments.E) A) and B)
F) A) and C)

Question 3

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their

Accepted Answer

A)   transitory income for the year of the recession likely exceeds their permanent income.
B)   permanent income likely exceeds their transitory income for the year of the recession.
C)   permanent income will be more affected by the recession than their transitory income.
D)   Both a and c are correct.E) A) and C)
F) None of the above

Question 4

The federal government sets the poverty line at roughly

Accepted Answer

A)   five times the cost of providing an adequate diet.
B)   four times the cost of providing an adequate diet.
C)   three times the cost of providing an adequate diet.
D)   two times the cost of providing an adequate diet.E) None of the above
F) C) and D)

Question 5

Which of the following statements is correct?

Accepted Answer

A)   Followers of the liberalism political philosophy believe that society should maximize the total of individual utilities.
B)   The poverty line is adjusted for regional differences in the costs of raising children.
C)   One advantage to the Earned Income Tax Credit (EIT
C)   is that it benefits the working poor.
D)   Libertarians pursue policies to redistribute income from the rich to the poor.E) All of the above
F) A) and C)

Question 6

The United States has more income inequality than Brazil and South Africa.

Accepted Answer

A) True 
 B)False

Question 7

Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

Accepted Answer

The answer of Of the following countries, which has the...

Question 8

Liberalism suggests that public policies should aim to

Accepted Answer

A)   maximize the sum of utility of everyone in society.
B)   maximize the well-being of the average person in society.
C)   maximize the well-being of the worst-off person in society.
D)   minimize the difference between the utility of the best-off person in the society and the utility of the worst-off person in society.E) A) and B)
F) None of the above

Question 9

The typical economic life cycle illustrates how people tend to

Accepted Answer

A)   borrow more when they are younger and save more when they are middle-aged.
B)   earn their peak incomes immediately prior to the typical retirement age of 65.
C)   adjust their consumption based on changes in their transitory income.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 10

Data for the United States suggests that about how many millionaires inherited their fortunes?

Accepted Answer

A)   one in seven
B)   one in five
C)   one in three
D)   one in twoE) None of the above
F) C) and D)

Question 11

Scenario 20-5
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)  - $10,000
-Refer to Scenario 20-5. Below what level of income would families start to receive a subsidy from this negative income tax?

Accepted Answer

A)   $10,000
B)   $25,000
C)   $40,000
D)   $50,000E) B) and D)
F) C) and D)

Question 12

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 13

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> If income were equally distributed acro...

Question 14

Jermaine believes that it is important to maximize the well-being of the worst-off person in society. He believes in the principle called the .

Accepted Answer

The answer of Jermaine believes that it is important to...

Question 15

Scenario 20-6
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which Taxes owed = (1/4 of income)  - $15,000.
-Refer to Scenario 20-6. If Zooey decides to quit her job and earns $0 in income annually, how much more or less money will she have compared to continuing to work as a cashier?

Accepted Answer

A)   If she quits her job, she will have $10,000 less per year.
B)   If she quits her job, she will have $15,000 less per year.
C)   If she quits her job, she will have $10,000 more per year.
D)   If she quits her job, she will have $15,000 more per year.E) A) and C)
F) A) and B)

Question 16

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

Question 17

Of the four countries below, the country that has the most income equality is

Accepted Answer

A)   Ethiopia.
B)   France.
C)   Russia.
D)   Thailand.E) B) and D)
F) None of the above

Question 18

In-kind transfers are politically popular because

Accepted Answer

A)   they provide high quality food and shelter.
B)   they provide cash.
C)   allow resale of food stamps for cash, if needed.
D)   the public believes that the aid is not going to support alcohol and drug addiction.E) A) and B)
F) None of the above

Question 19

Scenario 20-1
The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income less $20,000.
-Refer to Scenario 20-1. What would the libertarians think of the proposed policy change?

Accepted Answer

A)   They would favor the current progressive policy over the proposed policy because it accounts for diminishing marginal utility.
B)   They would favor the proposed tax policy over the current progressive policy because it would result in a negative tax for the poorest families.
C)   They would favor the current progressive tax policy over the proposed policy because it rewards those who work the hardest.
D)   They would oppose both tax policies because both redistribute income.E) All of the above
F) A) and B)

Question 20

The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person

Accepted Answer

A)   would be equal to the income of the poorest person.
B)   would be no more than four times the income of the poorest person.
C)   would be reflective of the effort put forth by that person.
D)   would be taxed at a higher rate than the income of the poorest person.E) None of the above
F) B) and C)

Exam 20: Income Inequality and Poverty

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their

Correct Answer
verified

The United States has more income inequality than Brazil and South Africa.

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

Liberalism suggests that public policies should aim to

Correct Answer
verified

Of the four countries below, the country that has the most income equality is

Correct Answer
verified

Correct Answer
verified

The typical economic life cycle illustrates how people tend to

Correct Answer
verified

Relative to direct cash payments, in-kind transfers have the advantage of being

Correct Answer
verified

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

Correct Answer
verified
If income were equally distributed acro...
View Answer

The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person

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

Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

Correct Answer
verified

Jermaine believes that it is important to maximize the well-being of the worst-off person in society. He believes in the principle called the .

Correct Answer
verified

In-kind transfers are politically popular because

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified

Data for the United States suggests that about how many millionaires inherited their fortunes?

Correct Answer
verified

The federal government sets the poverty line at roughly

Correct Answer
verified

Correct Answer
verified

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 Answer
verified

Exam 20: Income Inequality and Poverty

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their

Correct AnswerverifiedShow Answer

The United States has more income inequality than Brazil and South Africa.

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

Liberalism suggests that public policies should aim to

Correct AnswerverifiedShow Answer

Of the four countries below, the country that has the most income equality is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The typical economic life cycle illustrates how people tend to

Correct AnswerverifiedShow Answer

Relative to direct cash payments, in-kind transfers have the advantage of being

Correct AnswerverifiedShow Answer

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

Correct Answerverified If income were equally distributed acro...View AnswerShow Answer

The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person

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

Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

Correct AnswerverifiedShow Answer

Jermaine believes that it is important to maximize the well-being of the worst-off person in society. He believes in the principle called the .

Correct AnswerverifiedShow Answer

In-kind transfers are politically popular because

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Data for the United States suggests that about how many millionaires inherited their fortunes?

Correct AnswerverifiedShow Answer

The federal government sets the poverty line at roughly

Correct AnswerverifiedShow Answer

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

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If income were equally distributed acro...
View Answer

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