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Exam 18: Income Inequality and Poverty

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Question 21

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Someone said to live in relative poverty is

A) poor and single, with no relatives.
B) poor relative to their neighbours.
C) unable to access the standard of living considered to be the minimum acceptable standard in their society.
D) unable to access the necessities of life: food, shelter and clothing.

E) C) and D)
F) A) and D)

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Question 22

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Marie earns more than Seamus and she came by her income fairly and honestly. Which of the following political philosophies would argue against the redistribution of income from Marie to Seamus?

A) all of these answers
B) libertarianism
C) liberalism
D) utilitarianism
E) communism

F) D) and E)
G) B) and D)

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Question 23

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Explain the concept of diminishing marginal utility, and describe the role that it plays in the utilitarian argument for the redistribution of income.

Raising the welfare of the worst-off person in society is an important goal of which political philosophy?

When households are divided into deciles, each group covers what percentage of the population?

A key economic argument against complete equalization of incomes is that

Explain the relationship between labour earnings and the distribution of income.

Using the same assumption as above about a negative income tax system, if a person who was earning no income takes a job paying an annual salary of €15,000, how much better off will that person be after taking income tax into account?

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

Social security benefit payments may increase poverty in the long run because they tend to

Given the table shown, which country has a more equal income distribution? Explain your answer. $\begin{array}{|l|l|l|l|l|l|}\hline \text { Country } & \text { Bottom Fifth } & \text { Second Fifth } & \text { Middle Fifth } & \text { Fourth Fifth } & \text { Top Fifth } \\\hline \text { Country A } & 9.0 \% & 13.5 \% & 17.5 \% & 22.9 \% & 37.1 \% \\\hline \text { Country B } & 4.8 \% & 10.5 \% & 16.0 \% & 23.5 \% & 45.2 \% \\\hline\end{array}$

Because of in-kind transfers to the poor and because people's incomes vary from year to year and across their lifetimes, standard measures of income distribution exaggerate the degree of inequality in standards of living.

There is an easy and perfectly acceptable solution to the problem of poverty traps: recipients' benefit income should be reduced more gradually as they increase their earnings.

Suppose a negative income tax system is established and the formula to compute a person's annual tax liability is: tax due = (25% of income) - €15,000. If a person earns no income then he would receive a negative income tax payment of

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

In-kind transfers are:

A Gini coefficient of .7 suggests a country has a very unequal distribution of income.

Utilitarianism is based on the assumption of diminishing marginal product.

Figure 1 ​ -Refer to figure 1. The middle quintile group earn

Social security benefits are examples of