Question 1

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

Accepted Answer

A person's earnings depend on the supply...

Question 2

If people can borrow and lend to perfectly smooth out their lifetime living standards, then

Accepted Answer

A)   transitory income is a good measure of the distribution of living standards.
B)   None of these answers.
C)   permanent income is a good measure of the distribution of living standards.
D)   life cycle income is a good measure of the distribution of living standards.
E)   current annual income is a good measure of the distribution of living standards.F) C) and D)
G) B) and C)

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

If permanent income were utilised to measure the income distribution instead of current annual income, the income distribution would appear to be wider.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

According to utilitarianism, the governm...

Question 6

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

Accepted Answer

A)   decrease the incentive to work among the poor.
B)   increase the level of saving among the rich.
C)   increase productivity of labour among the rich and poor.
D)   promote investment activity by the rich.E) B) and C)
F) C) and D)

Question 7

Rank utilitarianism, liberalism, and libertarianism in sequence from the political philosophy that would redistribute income to the greatest extent, to the one that would redistribute income to the least extent.

Accepted Answer

A)   Utilitarianism, liberalism, libertarianism.
B)   Liberalism, libertarianism, utilitarianism.
C)   Libertarianism, liberalism, utilitarianism.
D)   Liberalism, utilitarianism, libertarianism.E) C) and D)
F) A) and C)

Question 8

A period of unemployment due to recession will:

Accepted Answer

A)   increase a worker's current income and permanent income.
B)   reduce a worker's current income but not necessarily their permanent income.
C)   affect neither the current nor the permanent income of a worker.
D)   reduce a worker's permanent income but not their current income.E) A) and B)
F) A) and C)

Question 9

John Rawls argues that economic justice would result if society chose a set of rules for the redistribution of income from behind a "veil of ignorance" and he argues that the set of rules would be the maximin criterion.

Accepted Answer

A) True 
 B)False

Question 10

Utilitarianism suggests that the government should choose policies that maximise the total utility of everyone in society by

Accepted Answer

A)   redistributing income from rich to poor because this is what the members of society would choose to do if they were behind a "veil of ignorance."
B)   redistributing income from rich to poor because, due to the diminishing marginal utility of income, taking a rand from the rich reduces their utility by less than the gain in utility generated by giving a rand to the poor.
C)   allowing individuals to maximise their own utility without interference from the government.
D)   redistributing income from rich to poor because this would maximise the well-being of the worst-off person in society.E) A) and B)
F) C) and D)

Question 11

Current anti-poverty programs discourage work because

Accepted Answer

A)   benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once one is receiving benefits.
B)   in order to be eligible for benefits, a recipient cannot have a job.
C)   they make recipients more comfortable than most middle-class citizens.
D)   anti-poverty programs attract naturally lazy people to begin with.E) A) and D)
F) B) and D)

Question 12

Because people's incomes vary over the life cycle, and because there are transitory shocks to people's incomes, the standard measures of income distribution

Accepted Answer

A)   exaggerate the inequality of living standards.
B)   could exaggerate or understate the inequality of living standards depending on whether the transitory shocks are positive or negative.
C)   understate the inequality of living standards.
D)   accurately represent the true inequality of living standards.E) C) and D)
F) A) and D)

Question 13

The poverty trap refers to

Accepted Answer

A)   a situation in which those receiving state benefits may be almost no better off if they choose to work more to earn more income for themselves and their families because doing so will mean they have to pay back the benefits they have previously received.
B)   a situation in which workers are unable to find jobs.
C)   a situation in which those receiving state benefits may be almost no better off if they choose to work more to earn more income for themselves and their families because doing so will reduce the amount of benefit income to which they are entitled and increase the amount of tax they must pay.
D)   a situation in which those receiving state benefits are discriminated against by employers and so find it more difficult to find jobs.E) A) and B)
F) C) and D)

Question 14

Libertarians are more concerned with equal opportunity than with equal outcome.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

Diminishing marginal utility refers to t...

Question 16

Compare and contrast the "life cycle" hypothesis and the "permanent income" hypothesis. What are their respective implications for inequality in the income distribution?

Accepted Answer

Life-cycle variation in income suggests ...

Question 17

An increase in the minimum wage will cause a relatively large increase in unemployment among

Accepted Answer

A)   unskilled workers if the demand for labour is relatively inelastic.
B)   unskilled workers if the demand for labour is relatively elastic.
C)   skilled workers if the demand for labour is relatively elastic.
D)   skilled workers if the demand for labour is relatively inelastic.E) A) and B)
F) A) and C)

Exam 18: Income Inequality and Poverty

An increase in the minimum wage will cause a relatively large increase in unemployment among

Correct Answer
verified

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

Correct Answer
verified
Diminishing marginal utility refers to t...
View Answer

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

Correct Answer
verified
According to utilitarianism, the governm...
View Answer

Compare and contrast the "life cycle" hypothesis and the "permanent income" hypothesis. What are their respective implications for inequality in the income distribution?

Correct Answer
verified
Life-cycle variation in income suggests ...
View Answer

If people can borrow and lend to perfectly smooth out their lifetime living standards, then

Correct Answer
verified

Because people's incomes vary over the life cycle, and because there are transitory shocks to people's incomes, the standard measures of income distribution

Correct Answer
verified

A period of unemployment due to recession will:

Correct Answer
verified

Libertarians are more concerned with equal opportunity than with equal outcome.

Correct Answer
verified

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.

Correct Answer
verified

Current anti-poverty programs discourage work because

Correct Answer
verified

Rank utilitarianism, liberalism, and libertarianism in sequence from the political philosophy that would redistribute income to the greatest extent, to the one that would redistribute income to the least extent.

Correct Answer
verified

John Rawls argues that economic justice would result if society chose a set of rules for the redistribution of income from behind a "veil of ignorance" and he argues that the set of rules would be the maximin criterion.

Correct Answer
verified

If permanent income were utilised to measure the income distribution instead of current annual income, the income distribution would appear to be wider.

Correct Answer
verified

Utilitarianism suggests that the government should choose policies that maximise the total utility of everyone in society by

Correct Answer
verified

The poverty trap refers to

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
A person's earnings depend on the supply...
View Answer

Exam 18: Income Inequality and Poverty

An increase in the minimum wage will cause a relatively large increase in unemployment among

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedDiminishing marginal utility refers to t...View AnswerShow Answer

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

Correct AnswerverifiedAccording to utilitarianism, the governm...View AnswerShow Answer

Compare and contrast the "life cycle" hypothesis and the "permanent income" hypothesis. What are their respective implications for inequality in the income distribution?

Correct AnswerverifiedLife-cycle variation in income suggests ...View AnswerShow Answer

If people can borrow and lend to perfectly smooth out their lifetime living standards, then

Correct AnswerverifiedShow Answer

Because people's incomes vary over the life cycle, and because there are transitory shocks to people's incomes, the standard measures of income distribution

Correct AnswerverifiedShow Answer

A period of unemployment due to recession will:

Correct AnswerverifiedShow Answer

Libertarians are more concerned with equal opportunity than with equal outcome.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Current anti-poverty programs discourage work because

Correct AnswerverifiedShow Answer

Rank utilitarianism, liberalism, and libertarianism in sequence from the political philosophy that would redistribute income to the greatest extent, to the one that would redistribute income to the least extent.

Correct AnswerverifiedShow Answer

John Rawls argues that economic justice would result if society chose a set of rules for the redistribution of income from behind a "veil of ignorance" and he argues that the set of rules would be the maximin criterion.

Correct AnswerverifiedShow Answer

If permanent income were utilised to measure the income distribution instead of current annual income, the income distribution would appear to be wider.

Correct AnswerverifiedShow Answer

Utilitarianism suggests that the government should choose policies that maximise the total utility of everyone in society by

Correct AnswerverifiedShow Answer

The poverty trap refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA person's earnings depend on the supply...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
Diminishing marginal utility refers to t...
View Answer

Correct Answer
verified
According to utilitarianism, the governm...
View Answer

Correct Answer
verified
Life-cycle variation in income suggests ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A person's earnings depend on the supply...
View Answer