Question 1

According to a study by Michael Cox and Richard Alm,consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

Accepted Answer

A) True 
 B)False

Question 2

A commonly-used gauge of poverty is the

Accepted Answer

A)   income inequality rate.
B)   average income rate.
C)   poverty rate.
D)   social inequality rate.E) B) and C)
F) A) and D)

Question 3

The goal of libertarianism is to

Accepted Answer

A)   redistribute income based on the assumption of diminishing marginal utility.
B)   redistribute income in order to maximize the well-being of the worst-off person in society.
C)   punish crimes and enforce voluntary agreements but not to redistribute income.
D)   measure happiness and satisfaction.E) A) and D)
F) C) and D)

Question 4

The income level below which families are said to be poor is known as the

Accepted Answer

A)   income maintenance threshold.
B)   poverty line.
C)   bottom quintile of the income distribution.
D)   minimum wage.E) B) and C)
F) A) and D)

Question 5

A binding minimum wage

Accepted Answer

A)   affects employees but not employers.
B)   lowers the productivity of workers.
C)   raises the cost of labor to firms.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 6

Figure 20-4
Poverty Rates by Age 
-Refer to Figure 20-4.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Accepted Answer

A)   declined,while the percentage of children under age 18 in poverty has also declined.
B)   declined,while the percentage of children under age 18 in poverty has increased.
C)   increased,while the percentage of children under age 18 in poverty has declined.
D)   increased,while the percentage of children under age 18 in poverty has also increased.E) B) and D)
F) C) and D)

Question 7

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives.To maximize total utility,therefore,the government

Accepted Answer

A)   would never tax labor income.
B)   must always achieve a fully egalitarian society.
C)   enacts policies that only benefit the middle class.
D)   stops short of a fully egalitarian society.E) B) and D)
F) All of the above

Question 8

Which of the following groups has the lowest 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 C)

Question 9

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Accepted Answer

A)   Trade can make everyone better off.
B)   The cost of something is what you give up to get it.
C)   People face trade-offs.
D)   Markets are usually a good way to organize economic activity.E) B) and D)
F) None of the above

Question 10

Which of the following statements is correct?

Accepted Answer

A)   The distribution of annual income accurately reflects the distribution of living standards.
B)   Permanent incomes are more equally distributed than annual incomes.
C)   Transitory changes in income generally have a significant impact on a family's standard of living.
D)   Annual income is more equally distributed than permanent income.E) A) and B)
F) All of the above

Question 11

According to utilitarians,the ultimate objective of public actions should be to

Accepted Answer

A)   enhance the income of the rich.
B)   ensure an egalitarian distribution of income.
C)   maximize the sum of individual utility.
D)   provide for the betterment of the poor.E) B) and C)
F) None of the above

Question 12

Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of utilitarianism prefer?

Accepted Answer

A)   Plan A
B)   Plan B
C)   either Plan A or Plan B
D)   neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophyE) C) and D)
F) All of the above

Question 13

The distribution of income for Abbyville is as follows:  If the poverty rate in Abbyville is 12 percent,what is the poverty line in Abbyville?

Accepted Answer

A)   $15,000.
B)   $20,000.
C)   $25,000.
D)   $30,000.E) C) and D)
F) All of the above

Question 14

Which two of the Ten Principles of Economics are illustrated in this chapter?

Accepted Answer

A)   A country's standard of living depends on its ability to produce goods & People face tradeoffs.
B)   Prices rise when the government prints too much money & Governments can sometimes improve market outcomes.
C)   Governments can sometimes improve market outcomes & People face tradeoffs.
D)   People face tradeoffs & Prices rise when the government prints too much money .E) B) and C)
F) A) and D)

Question 15

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

Accepted Answer

A)   5 times the pre-tax income of the poorest fifth.
B)   10 times the pre-tax income of the poorest fifth.
C)   15 times the pre-tax income of the poorest fifth.
D)   20 times the pre-tax income of the poorest fifth.E) A) and B)
F) B) and C)

Question 16

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Accepted Answer

A) True 
 B)False

Question 17

The utilitarian case for redistributing income is based on the assumption of

Accepted Answer

A)   collective consensus.
B)   a notion of fairness engendered by equality.
C)   diminishing marginal utility.
D)   rising marginal utility.E) A) and C)
F) B) and D)

Question 18

Table 20-5
  *A Gini coefficient is a commonly used measure of income inequality,with values between 0 and 1 (0 corresponds to perfect equality whereby everyone has exactly the same income,and 1 corresponds to perfect inequality where one person has all the income,while everyone else has zero income) .
Source: The World Bank
-Refer to Table 20-5.Which country has the most unequal income distribution?

Accepted Answer

A)   Latvia
B)   Italy
C)   France
D)   SwedenE) A) and D)
F) A) and C)

Question 19

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Accepted Answer

A)   a more efficient allocation of resources
B)   a distortion of incentives
C)   unchanged behavior
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 20

In 2008 the top 5 percent of income earners accounted for over 50% of all income received by United States' families.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

The distribution of income for Abbyville is as follows: If the poverty rate in Abbyville is 12 percent,what is the poverty line in Abbyville?

Correct Answer
verified

Which two of the Ten Principles of Economics are illustrated in this chapter?

Correct Answer
verified

Which of the following groups has the lowest poverty rate?

Correct Answer
verified

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Correct Answer
verified

According to a study by Michael Cox and Richard Alm,consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

Correct Answer
verified

According to utilitarians,the ultimate objective of public actions should be to

Correct Answer
verified

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

Correct Answer
verified

Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of utilitarianism prefer?

Correct Answer
verified

A commonly-used gauge of poverty is the

Correct Answer
verified

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives.To maximize total utility,therefore,the government

Correct Answer
verified

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Correct Answer
verified

In 2008 the top 5 percent of income earners accounted for over 50% of all income received by United States' families.

Correct Answer
verified

The income level below which families are said to be poor is known as the

Correct Answer
verified

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Correct Answer
verified

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The goal of libertarianism is to

Correct Answer
verified

The utilitarian case for redistributing income is based on the assumption of

Correct Answer
verified

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Correct Answer
verified

A binding minimum wage

Correct Answer
verified

Exam 20: Income Inequality and Poverty

The distribution of income for Abbyville is as follows: If the poverty rate in Abbyville is 12 percent,what is the poverty line in Abbyville?

Correct AnswerverifiedShow Answer

Which two of the Ten Principles of Economics are illustrated in this chapter?

Correct AnswerverifiedShow Answer

Which of the following groups has the lowest poverty rate?

Correct AnswerverifiedShow Answer

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Correct AnswerverifiedShow Answer

According to a study by Michael Cox and Richard Alm,consumption per person in the richest 20% of households was only 2.1 times consumption per person in the poorest 20% of households.

Correct AnswerverifiedShow Answer

According to utilitarians,the ultimate objective of public actions should be to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of utilitarianism prefer?

Correct AnswerverifiedShow Answer

A commonly-used gauge of poverty is the

Correct AnswerverifiedShow Answer

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives.To maximize total utility,therefore,the government

Correct AnswerverifiedShow Answer

Figure 20-4 Poverty Rates by Age -Refer to Figure 20-4.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Correct AnswerverifiedShow Answer

In 2008 the top 5 percent of income earners accounted for over 50% of all income received by United States' families.

Correct AnswerverifiedShow Answer

The income level below which families are said to be poor is known as the

Correct AnswerverifiedShow Answer

The maximin criterion is the idea that the government should aim to maximize the well-being of the worst-off person in society.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The goal of libertarianism is to

Correct AnswerverifiedShow Answer

The utilitarian case for redistributing income is based on the assumption of

Correct AnswerverifiedShow Answer

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Correct AnswerverifiedShow Answer

A binding minimum wage

Correct AnswerverifiedShow Answer

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