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Exam 20: Income Inequality and Poverty

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Question 91

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Which of the following is not correct?

A) A negative income tax only applies to working people, so it encourages people to get full-time work.
B) Supporters advocate the use of the Earned Income Tax Credit as a way to help the working poor.
C) A negative income tax subsidizes the incomes of poor people.
D) An advantage of a negative income tax is that it is not based on the number of children, so it does not provide incentives for unmarried women to have children.

E) A) and B)
F) B) and D)

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Question 92

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

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Question 93

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Table 20-8 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau $\begin{array}{|l|l|l|l|l|l|l|}\hline \text { Year } & \text { Bottom Fifth } & \text { Second Fifth } & \text { Middle Fifth } & \text { Fourth Fifth } & \text { Top Fifth } & \text { Top 5\% } \\\hline \mathbf{2 0 1 0} & 3.3 \% & 8.5 \% & 14.6 \% & 23.4 \% & 50.2 \% & 21.3 \% \\\hline \mathbf{2 0 0 5} & 3.4 & 8.6 & 14.6 & 23.0 & 50.4 & 22.2 \\\hline \mathbf{2 0 0 0} & 3.6 & 8.9 & 14.8 & 23.0 & 49.8 & 22.1 \\\hline \mathbf{1 9 9 5} & 3.7 & 9.1 & 15.2 & 23.3 & 48.7 & 21.0 \\\hline \mathbf{1 9 9 0} & 3.8 & 9.6 & 15.9 & 24.0 & 46.6 & 18.5 \\\hline \mathbf{1 9 8 5} & 3.9 & 9.8 & 16.2 & 24.4 & 45.6 & 17.6 \\\hline \mathbf{1 9 8 0} & 4.2 & 10.2 & 16.8 & 24.7 & 44.1 & 16.5\\\hline \end{array}$ -Refer to Table 20-8. In percentage terms, how much less income did the bottom 40% of families have in 2010 than in 1980?

The United States has more income inequality than Japan, Germany, and France.

The elderly represent the largest demographic group in poverty.

The economic life cycle describes how young people usually have higher savings rates than middle-aged people.

A government policy aimed at protecting people against the risk of adverse events is called .

What is the primary problem in comparing income inequality in the US with income inequality in other countries?

Assume that the government proposes a negative income tax that calculates taxes owed by the following formula, Taxes Owed = (1/3 × Income) - $10,000. Compute the tax that would be owed given each level of income. a.$120,000 b.$90,000 c.$60,000 d.$30,000 e.$0

Aniella believes that the demand for unskilled labor is relatively inelastic. Carmella believes that the demand for unskilled labor is relatively elastic. Which believes that a minimum-wage law will result in significant unemployment?

The Supplemental Security Income (SSI) program focuses on the poor who are sick or disabled.

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

According to the maximin criterion, income should be transferred from the rich to the poor as long as it

Figure 20-3 ​ ​ -If the U.S. government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is

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

Which philosopher claimed that the government should aim to maximize the well-being of the worst-off person in society?

If in-kind transfers were included in income at their market value, what would happen to the number of families below the poverty line?

Which of the following statements accurately characterizes the effects of minimum-wage laws?

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

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $18,000 owe?