Question 1

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 2

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that young people often borrow and then repay the loans when they are older. These actions relate to which problem in measuring inequality?

Accepted Answer

A)  in-kind transfers
B)  the economic life cycle
C)  a negative income tax
D)  economic mobilityE) B) and D)
F) A) and D)

Question 4

The United States has greater income

Accepted Answer

A)  disparity than most other economically advanced countries, but a more equal income distribution than some developing countries.
B)  disparity than both other economically advanced and all developing countries.
C)  equality than most other economically advanced countries but greater income disparity than some developing countries.
D)  equality than both other economically advanced and developing countries.E) A) and C)
F) A) and B)

Question 5

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Accepted Answer

The answer of A system in which anyone collecting antipoverty...

Question 6

Despite continued growth in average income since the early 1970s, the poverty rate has not declined below the level reached in 1973.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is correct?

Accepted Answer

A)  Incomes tend to be high for young workers.
B)  Incomes tend to rise sharply at retirement.
C)  Incomes tend to peak at around age 50.
D)  Current income is more equally distributed than permanent income.E) None of the above
F) B) and C)

Question 8

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Accepted Answer

A) True 
 B)False

Question 9

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. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?

Accepted Answer

A)  Utilitarians, because they want to maximize the utility to the worst-off person in society
B)  Liberals, because of the maximin criterion
C)  Libertarians, because they believe in diminishing marginal utility
D)  All three groups would be equally in favor of the switch.E) A) and C)
F) A) and B)

Question 10

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

A)  tends to follow a seasonal pattern.
B)  rises as a worker gains maturity and experience.
C)  rises and falls in conjunction with the business cycle.
D)  falls during the early years of market activity and peaks at retirement.E) B) and D)
F) C) and D)

Question 11

In-kind transfers

Accepted Answer

A)  are cash payments given to the poor from the government.
B)  are available to citizens of all income levels, but usually only sought by the poor.
C)  are non-monetary items given to the poor.
D)  include food stamps, but not housing vouchers or medical services.E) A) and D)
F) All of the above

Question 12

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Accepted Answer

inequality...

Question 13

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Accepted Answer

A)  liberalism
B)  utilitarianism
C)  libertarianism
D)  welfarismE) B) and C)
F) None of the above

Question 14

The US government sets the poverty line equal to approximately

Accepted Answer

A)  three times the cost of providing subsidized housing.
B)  three times the cost of providing an adequate diet.
C)  the minimum wage for a single person working 40 hours per week and 50 weeks per year.
D)  the cost of providing food, shelter, and health care expenses for a family of four.E) B) and D)
F) B) and C)

Question 15

Most economists believe that a family bases its spending decisions on its transitory income.

Accepted Answer

A) True 
 B)False

Question 16

Scenario 20-4
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/5 of income)  - $15,000
-Refer to Scenario 20-4. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)  $5,000
B)  $10,000
C)  $15,000
D)  $50,000E) B) and C)
F) A) and B)

Question 17

-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Accepted Answer

The answer of 
-Refer to Table 20-13. If the poverty...

Question 18

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 20-5
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income)  - $10,000
-Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Accepted Answer

A)  $5,000
B)  $10,000
C)  $15,000
D)  $25,000E) A) and B)
F) B) and C)

Question 20

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 C)
F) A) and B)

Exam 20: Income Inequality and Poverty

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Correct Answer
verified

The life cycle effect characterizes a lifetime income profile in which income

Correct Answer
verified

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

Correct Answer
verified

The US government sets the poverty line equal to approximately

Correct Answer
verified

In-kind transfers

Correct Answer
verified

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Correct Answer
verified

Despite continued growth in average income since the early 1970s, the poverty rate has not declined below the level reached in 1973.

Correct Answer
verified

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Correct Answer
verified
inequality...
View Answer

The United States has greater income

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Correct Answer
verified

Scenario 20-5 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $10,000 -Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

Correct Answer
verified

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.

Correct Answer
verified

-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Correct Answer
verified

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Correct Answer
verified

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

Correct Answer
verified

Suppose that young people often borrow and then repay the loans when they are older. These actions relate to which problem in measuring inequality?

Correct Answer
verified

Scenario 20-4 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/5 of income) - $15,000 -Refer to Scenario 20-4. This negative income tax would guarantee what minimum level of income to every family?

Correct Answer
verified

Most economists believe that a family bases its spending decisions on its transitory income.

Correct Answer
verified

Correct Answer
verified

Exam 20: Income Inequality and Poverty

"The government should choose policies deemed to be just, as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Correct AnswerverifiedShow Answer

The life cycle effect characterizes a lifetime income profile in which income

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The US government sets the poverty line equal to approximately

Correct AnswerverifiedShow Answer

In-kind transfers

Correct AnswerverifiedShow Answer

According to libertarians, the government should redistribute income from rich individuals to poor individuals to achieve a more equal distribution of income.

Correct AnswerverifiedShow Answer

Despite continued growth in average income since the early 1970s, the poverty rate has not declined below the level reached in 1973.

Correct AnswerverifiedShow Answer

The life-cycle pattern of income variation causes inequality in the distribution of annual income, but it does not necessarily represent .

Correct Answerverifiedinequality...View AnswerShow Answer

The United States has greater income

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

A system in which anyone collecting antipoverty program benefits must accept a government-provided job is called .

Correct AnswerverifiedShow Answer

Scenario 20-5 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $10,000 -Refer to Scenario 20-5. This negative income tax would guarantee what minimum level of income to every family?

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.

Correct AnswerverifiedShow Answer

-Refer to Table 20-13. If the poverty line in Imagination is $18,000, what is the poverty rate?

Correct AnswerverifiedShow Answer

The United States has a more unequal income distribution than many other developed countries such as Japan and Germany.

Correct AnswerverifiedShow Answer

Critics argue that a disadvantage of the Earned Income Tax Credit is that it does not effectively target the working poor because many recipients are the teenage children of middle-income families.

Correct AnswerverifiedShow Answer

Suppose that young people often borrow and then repay the loans when they are older. These actions relate to which problem in measuring inequality?

Correct AnswerverifiedShow Answer

Scenario 20-4 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/5 of income) - $15,000 -Refer to Scenario 20-4. This negative income tax would guarantee what minimum level of income to every family?

Correct AnswerverifiedShow Answer

Most economists believe that a family bases its spending decisions on its transitory income.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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inequality...
View Answer

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