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Exam 20: Income Inequality and Poverty

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Question 111

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Diminishing marginal utility suggests that

A) more is always preferred to less.
B) the well-being of society is maximized when the distribution of income is equal.
C) the poor are less efficient at spending money than the rich.
D) the poor receive more satisfaction from the last dollar spent than the rich.

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

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Question 112

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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?

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) None of the above
F) All of the above

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Question 113

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Which of the three political philosophies discussed in the textbook, if any, think the government should not take from some individuals and give to others to achieve any particular distribution of income?

Based on U.S. data for 2011, the poverty rate is the highest for which group of people?

In a typical 10-year period, about one in four families falls below the poverty line in at least one year. What percentage of families are poor for eight or more years?

Over the past 50 years, the U.S. poverty rate was at its lowest level in

Liberalism aims to raise the welfare of the worst-off person in society. This rule is called the

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

In comparison to the average poverty rate,

If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?

In 2011, the poverty line for a family of four in the U.S. was

Which political philosophy argues that the government should choose policies deemed just, as evaluated by an impartial observer?

The table below reflects the levels of total utility received from income for each of four members of a society. a.Assume that the society has the following income distribution: Peter $3 Paul $7 Mary $5 Jane $3 Is it possible for the government to increase total aggregate utility by redistributing income among members of society? Explain your answer. b.Assume that the government has $19 to allocate among the four members of society. (Assume that no one has any income to start with.) If the government is interested in distributing income in a way that maximizes aggregate total utility, how should it distribute the $19 of income? c.Does the table above describe a situation characterized by diminishing marginal utility? Explain your answer.

When we examine historical data on income inequality in the U.S., we see that the distribution of income gradually became

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 Income) - 10,000. If a family doesn't earn any income, how does the negative income tax affect it?

Goods and services given to the poor such as food stamps, housing vouchers, and medical services are called

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.

In 2011, the poverty rate in the United States was

Among all countries in the world, the United States has the most income inequality.

What is the term for a measure of happiness or satisfaction a person receives from his or her circumstances?