Question 1

The poverty line in the country of Inequalia is $10,000. The distribution of income for Inequalia is as follows: Number of Families Income   200 less than $5,000
300 between $5,000 and $10,000
500 between $10,000 and $15,000
700 between $15,000 and $20,000
100 over $20,000  The poverty rate in Inequalia is

Accepted Answer

A)   11.1 percent.
B)   16.7 percent.
C)   27.8 percent.
D)   55.5 percent.E) None of the above
F) All of the above

Question 2

The philosopher John Rawls argued that

Accepted Answer

A)   people would choose a more equal distribution of income if they had to determine an economic distribution system before knowing their place in it.
B)   people would choose income inequality to allow the maximum use of their individual talents.
C)   government has a role to ensure income equality to prevent social unrest.
D)   people would choose equal opportunity because it is morally right.E) A) and B)
F) All of the above

Question 3

Pietro is 40 years old and is laid off from his job at the paper plant and borrows from his savings for 8 months until he finds a new job. Pietro's

Accepted Answer

A)   transitory income likely exceeds his permanent income for that year.
B)   borrowing is representative of a normal economic life cycle.
C)   permanent income is largely unaffected by this one time change to his income.
D)   economic mobility during this year is highly unusual, as US workers tend to stay in a particular income class.E) A) and B)
F) A) and C)

Question 4

Liberals believe

Accepted Answer

A)   that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance."
B)   in the assumption of diminishing marginal utility.
C)   that everyone in society should have equal utility.
D)   that the government should not redistribute income.E) B) and C)
F) A) and D)

Question 5

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

Question 6

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

Accepted Answer

A)   pay $6,000 in taxes.
B)   receive an income subsidy of $6,000.
C)   receive an income subsidy of $12,000.
D)   have an after-tax income of $48,000.E) B) and C)
F) All of the above

Question 7

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 8

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

Accepted Answer

According to utilitarianism, the governm...

Question 9

What measure does the federal government use when setting the official poverty line in the US?

Accepted Answer

three times the cost...

Question 10

Table 20-3
The Distribution of Income in Edgerton 
-Refer to Table 20-3. According to the table, what percent of families in Edgerton have income levels at or above $76,000?

Accepted Answer

A)   80 percent
B)   60 percent
C)   50 percent
D)   40 percentE) A) and B)
F) A) and C)

Question 11

Susan won $2,000 at the blackjack tables on her birthday. Her winnings are an example of

Accepted Answer

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

Question 12

A family's ability to buy goods and services depends largely on the family's

Accepted Answer

A)   economic mobility.
B)   place in the economic life cycle.
C)   transitory income.
D)   permanent income.E) A) and B)
F) A) and C)

Question 13

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Accepted Answer

A) True 
 B)False

Question 14

Medicaid and food stamps are

Accepted Answer

A)   available only to the elderly.
B)   forms of in-kind assistance.
C)   forms of cash assistance.
D)   transfer payments.E) None of the above
F) All of the above

Question 15

Which of the following is an example of a welfare program?

Accepted Answer

A)   Temporary Assistance for Needy Families (TANF) .
B)   Capital Gains Tax (CGT) .
C)   Life Cycle Transfers (LCT) .
D)   North American Free Trade Agreement (NAFT
A)  .E) A) and B)
F) A) and C)

Question 16

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A)   improve economic efficiency by reducing poverty.
B)   reduce economic efficiency because they distort incentives.
C)   have no effect on economic efficiency because they both reduce poverty and distort incentives.
D)   sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.E) B) and D)
F) B) and C)

Question 17

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 18

The goal of utilitarians is to

Accepted Answer

A)   punish crimes and enforce voluntary agreements but not to redistribute income.
B)   redistribute income until each person has equal earnings.
C)   redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person.
D)   redistribute income based on the assumption of diminishing marginal utility.E) A) and D)
F) B) and C)

Question 19

Which of the following groups has the highest poverty rate?

Accepted Answer

A)   blacks
B)   Asians
C)   children (under age 18) 
D)   female households, no spouse presentE) A) and B)
F) A) and D)

Question 20

Table 20-14
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.  Source: US Census Bureau
-Refer to Table 20-14. If the distribution of income were completely equal, what percentage of income would the bottom fifth of the population earn?

Accepted Answer

The answer of Table 20-14
Income Inequality in the United States
The...

Exam 20: Income Inequality and Poverty

Correct Answer
verified

The goal of utilitarians is to

Correct Answer
verified

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

Correct Answer
verified

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

Correct Answer
verified
According to utilitarianism, the governm...
View Answer

Which of the following groups has the highest poverty rate?

Correct Answer
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Correct Answer
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Correct Answer
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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

Medicaid and food stamps are

Correct Answer
verified

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. According to the table, what percent of families in Edgerton have income levels at or above $76,000?

Correct Answer
verified

Susan won $2,000 at the blackjack tables on her birthday. Her winnings are an example of

Correct Answer
verified

Pietro is 40 years old and is laid off from his job at the paper plant and borrows from his savings for 8 months until he finds a new job. Pietro's

Correct Answer
verified

The philosopher John Rawls argued that

Correct Answer
verified

Which of the following is an example of a welfare program?

Correct Answer
verified

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 .

Correct Answer
verified

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Correct Answer
verified

Liberals believe

Correct Answer
verified

What measure does the federal government use when setting the official poverty line in the US?

Correct Answer
verified
three times the cost...
View Answer

Government programs that take money from high-income people and give it to low-income people typically

Correct Answer
verified

A family's ability to buy goods and services depends largely on the family's

Correct Answer
verified

Exam 20: Income Inequality and Poverty

Correct AnswerverifiedShow Answer

The goal of utilitarians is to

Correct AnswerverifiedShow Answer

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

Correct AnswerverifiedShow Answer

Briefly describe the three prominent schools of thought in political philosophy. Identify one of the most well-known philosophers in each school.

Correct AnswerverifiedAccording to utilitarianism, the governm...View AnswerShow Answer

Which of the following groups has the highest poverty rate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Medicaid and food stamps are

Correct AnswerverifiedShow Answer

Table 20-3 The Distribution of Income in Edgerton -Refer to Table 20-3. According to the table, what percent of families in Edgerton have income levels at or above $76,000?

Correct AnswerverifiedShow Answer

Susan won $2,000 at the blackjack tables on her birthday. Her winnings are an example of

Correct AnswerverifiedShow Answer

Pietro is 40 years old and is laid off from his job at the paper plant and borrows from his savings for 8 months until he finds a new job. Pietro's

Correct AnswerverifiedShow Answer

The philosopher John Rawls argued that

Correct AnswerverifiedShow Answer

Which of the following is an example of a welfare program?

Correct AnswerverifiedShow Answer

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 .

Correct AnswerverifiedShow Answer

If a government could successfully achieve the maximin criterion, each member of society would have an equal income.

Correct AnswerverifiedShow Answer

Liberals believe

Correct AnswerverifiedShow Answer

What measure does the federal government use when setting the official poverty line in the US?

Correct Answerverifiedthree times the cost...View AnswerShow Answer

Government programs that take money from high-income people and give it to low-income people typically

Correct AnswerverifiedShow Answer

A family's ability to buy goods and services depends largely on the family's

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
According to utilitarianism, the governm...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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three times the cost...
View Answer

Correct Answer
verified

Correct Answer
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