Question 1

Figure 20-2
Number of Poor 
-Refer to Figure 20-2.The absolute number of people in poverty

Accepted Answer

A)   is higher in 2001 than in 1959.
B)   is lower in 2001 than in 1959.
C)   has not changed between 1959 and 2001.
D)   has steadily decreased between 1959 and 2001.E) B) and C)
F) None of the above

Question 2

In 2008 the top 20% of income earners accounted for over 80% of all income received by United States' families.

Accepted Answer

A) True 
 B)False

Question 3

According to the article by Rajan,the root cause of the recent financial crisis was

Accepted Answer

A)   wasteful government spending.
B)   an inefficient policy of increasing the availability of credit due to greater income inequality.
C)   unresponsive policymakers who should have eased regulations sooner to promote economic growth.
D)   an over-reliance on in-kind transfers to correct the nation's poverty problem.E) A) and B)
F) All of the above

Question 4

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 5

The calculation of the poverty line includes adjustments for

Accepted Answer

A)   energy costs.
B)   child care costs.
C)   the level of prices.
D)   the Earned Income Tax Credit.E) None of the above
F) C) and D)

Question 6

Figure 20-3
Panel A  Source: U.S.Bureau of the Census
Panel B  Source: U.S.Bureau of the Census
-Refer to Figure 20-3.Which of the following would be consistent with the data reported in Panel A?

Accepted Answer

A)   Policies that attempted to reduce female poverty rates were relatively successful.
B)   Policies that attempted to narrow the gap between male and female poverty rates were relatively successful.
C)   Both a and b are correct.
D)   Neither a nor b is correct.E) A) and C)
F) B) and C)

Question 7

In the United States,long-term poverty affects

Accepted Answer

A)   more families than short-term poverty.
B)   an equal number of families as short-term poverty.
C)   slightly fewer families than short-term poverty.
D)   many fewer families than short-term poverty.E) A) and D)
F) A) and C)

Question 8

A negative income tax system is designed to

Accepted Answer

A)   provide in-kind benefits to the poor.
B)   provide a minimum income to the poor.
C)   reduce taxes on the rich when their incomes surpass the maximum income tax bracket.
D)   subsidize food consumption in poor families.E) All of the above
F) B) and D)

Question 9

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) None of the above

Question 10

Which of the following is correct?

Accepted Answer

A)   Governments can never improve market outcomes.
B)   Governments can sometimes improve market outcomes.
C)   Governments can always improve market outcomes.
D)   Government can never make the income distribution more equal.E) A) and B)
F) All of the above

Question 11

The study by economists Cox and Alm found

Accepted Answer

A)   inequality in consumption is much smaller than inequality in annual income.
B)   inequality in consumption is slightly smaller than inequality in annual income.
C)   inequality in consumption is slightly larger than inequality in annual income.
D)   inequality in consumption is much larger than inequality in annual income.E) B) and D)
F) B) and C)

Question 12

In the United States from 1935 to 2008 the share of total income earned by the bottom fifth of income earners rose and then fell.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an example of in-kind transfers?

Accepted Answer

A)   food stamps
B)   Medicaid
C)   the Earned Income Tax Credit
D)   housing vouchersE) B) and D)
F) A) and B)

Question 14

Even though the average income in the United States has continued to grow,the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

Accepted Answer

A)   A negative income tax because it would maximize the minimum income of members of society.
B)   An Earned Income Tax Credit (EIT
C)  because a policy that rewards the working poor would be the most just.
C)   An in-kind transfer program because it would maximize the total utility of all members of society.
D)   None of the programs would be favored because each of them forcibly redistributes income that was fairly,if not equally,earned.E) B) and D)
F) A) and B)

Question 16

When incentives to earn income are distorted by income redistribution programs,

Accepted Answer

A)   losses can exceed potential gains from greater equality of income.
B)   total income in an economy can fall.
C)   total utility in society can fall.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Question 17

Many Democrats who campaigned in the 2006 elections supported raising the U.S.minimum wage.Supporters of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A)   a tax-free way to help the working poor;after all,businesses bear the burden of paying higher wages,not the government.
B)   better than the Earned Income Tax Credit (EIT
C)  in targeting the working poor;after all,the EITC may benefit teenagers from middle-class families who work summer jobs at the minimum wage.
C)   better than in-kind transfers such as food stamps in providing food rather than unhealthy items such as drugs or alcohol.
D)   a way to increase employment of those likely to earn the minimum wage.E) A) and B)
F) B) and C)

Question 18

Which political philosophy believes that the government should equalize the incomes of all members of society?

Accepted Answer

A)   Utilitarianism.
B)   Liberalism.
C)   Libertarianism.
D)   None of the above is correct.E) All of the above
F) B) and D)

Question 19

The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Smith family,their

Accepted Answer

A)   transitory income for the year of the frost likely exceeds their permanent income.
B)   permanent income likely exceeds their transitory income for the year of the frost.
C)   permanent income will be more affected by the frost than their transitory income.
D)   Both a and c are correct.E) A) and D)
F) A) and B)

Question 20

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

Exam 20: Income Inequality and Poverty

The goal of utilitarians is to

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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

Which of the following programs to alleviate poverty would be most favored by philosopher Robert Nozick and why?

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Which of the following is correct?

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In 2008 the top 20% of income earners accounted for over 80% of all income received by United States' families.

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According to the article by Rajan,the root cause of the recent financial crisis was

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Figure 20-2 Number of Poor -Refer to Figure 20-2.The absolute number of people in poverty

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A negative income tax system is designed to

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When incentives to earn income are distorted by income redistribution programs,

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The calculation of the poverty line includes adjustments for

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Figure 20-3 Panel A Source: U.S.Bureau of the Census Panel B Source: U.S.Bureau of the Census -Refer to Figure 20-3.Which of the following would be consistent with the data reported in Panel A?

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Which political philosophy believes that the government should equalize the incomes of all members of society?

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In the United States,long-term poverty affects

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In the United States from 1935 to 2008 the share of total income earned by the bottom fifth of income earners rose and then fell.

Correct AnswerverifiedShow Answer

Even though the average income in the United States has continued to grow,the poverty rate has increased to over 20% since the early 1970s.

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

Correct AnswerverifiedShow Answer

The study by economists Cox and Alm found

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Which of the following is not an example of in-kind transfers?

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The Smith family owns an apple orchard in Illinois.The Jones family owns an apple orchard in Wisconsin.A late frost destroys half of the Smith family's harvest for one year.For the Smith family,their

Correct AnswerverifiedShow Answer

Many Democrats who campaigned in the 2006 elections supported raising the U.S.minimum wage.Supporters of raising the minimum wage argue that minimum-wage laws are

Correct AnswerverifiedShow Answer

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