Question 1

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Accepted Answer

A)   Trade can make everyone better off.
B)   The cost of something is what you give up to get it.
C)   People face trade-offs.
D)   Markets are usually a good way to organize economic activity.E) A) and D)
F) C) and D)

Question 2

Economists who study economic mobility have found that,if a father earns 20 percent above his generation's average income,his son will most likely earn

Accepted Answer

A)   an income equal to his generation's average income.
B)   8 percent above his generation's average income.
C)   5 percent below his generation's average income.
D)   3 percent above his generation's average income.E) None of the above
F) C) and D)

Question 3

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

Accepted Answer

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

Question 4

Assume that the government proposes a negative income tax that calculates taxes owed by the formula,Taxes Owed = (a *Income)- 
a.What is the value for "a"?
b.What is the value for "b"?
b.A family with an income of $40,000 pays $5,000 in taxes,and a family with an income of $12,000 receives an income subsidy of $2,000.
c.What is the tax liability of a family with an income of $50,000?
d.At what level of income will a family neither pay taxes,nor receive an income subsidy?

Accepted Answer

a.0.25 or ...

Question 5

Figure 20-2
Poverty Rates by Age 
-Refer to Figure 20-2.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Accepted Answer

A)   declined,while the percentage of children under age 18 in poverty has also declined.
B)   declined,while the percentage of children under age 18 in poverty has increased.
C)   increased,while the percentage of children under age 18 in poverty has declined.
D)   increased,while the percentage of children under age 18 in poverty has also increased.E) A) and B)
F) A) and C)

Question 6

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Accepted Answer

A high marginal tax rate exists on welfa...

Question 7

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income) - 10,000.A family that earns an income of $30,000 will

Accepted Answer

A)   neither pay taxes nor receive an income subsidy.
B)   receive an income subsidy of $500.
C)   pay $1,000 in taxes.
D)   pay $600 in taxes.E) C) and D)
F) All of the above

Question 8

The percentage of families with incomes below the poverty line

Accepted Answer

A)   is defined as the 10 percent of U.S.households with the lowest incomes.
B)   is known as the poverty rate.
C)   is known as the unemployment rate.
D)   rises as the general income level rises.E) A) and D)
F) B) and C)

Question 9

Which of the following statements is correct?

Accepted Answer

A)   An advantage of a minimum-wage law is that it may benefit unskilled workers who are not low-income workers.
B)   An advantage of a negative income tax program is that a poor person who chooses not to work many hours would receive a cash benefit.
C)   An advantage of an Earned Income Tax Credit (EIT
C)  is that a person who is unable to work due to a disability does not benefit from the program.
D)   Following the reform of welfare in 1996 there was a large decrease in the welfare rolls.E) B) and C)
F) A) and D)

Question 10

According to a utilitarian,total social utility will be maximized when marginal dollars are distributed to the people with the

Accepted Answer

A)   lowest marginal utility of income.
B)   highest marginal utility of income.
C)   highest total utility from their income.
D)   most productive labor resources.E) A) and D)
F) None of the above

Question 11

In-kind transfers are transfers to the poor

Accepted Answer

A)   in the form of goods and services rather than cash.
B)   in the form of goods,services,and cash.
C)   from private charitable organizations only.
D)   from the federal government only.E) A) and B)
F) None of the above

Question 12

Critics of the minimum wage argue that

Accepted Answer

A)   labor demand is inelastic so firms can adjust production.
B)   too many older employees benefit at the expense of teenage workers.
C)   many minimum-wage earners are teenagers from middle-class families.
D)   All of the above are correct.E) A) and C)
F) All of the above

Question 13

Which of the following is an example of a welfare program?

Accepted Answer

A)   Temporary Assistance for Needy Families (TANF) .
B)   Capital Gains Tax (CGT) .
C)   Life Cycle Transfers (LCT) .
D)   North American Free Trade Agreement (NAFT
A)  .E) A) and D)
F) A) and B)

Question 14

Susan won $2,000 at the blackjack tables on her birthday.Her winnings are an example of

Accepted Answer

A)   permanent income.
B)   life-cycle income.
C)   transitory income.
D)   an in-kind transfer.E) A) and C)
F) All of the above

Question 15

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

Accepted Answer

a.$30,000
b.$20,000
c.$10,000
...

Question 16

Economists study poverty and income inequality in order to answer which of the following questions?

Accepted Answer

A)   What are people's wages?
B)   How does labor-force experience affect wages?
C)   How much inequality is there in society?
D)   How do people adjust their behavior due to taxation?E) A) and D)
F) A) and B)

Question 17

When the government redistributes income to achieve greater equality,it

Accepted Answer

A)   distorts incentives.
B)   improves efficiency.
C)   focuses on middle income brackets.
D)   relies on foreign aid to help balance the budget.E) A) and C)
F) A) and B)

Question 18

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Accepted Answer

A)   can never be funded through taxes on labor income.
B)   must always achieve a full egalitarian society.
C)   only benefits the middle class.
D)   always falls short of a fully egalitarian society.E) A) and B)
F) A) and C)

Question 19

Libertarians believe that in considering economic fairness,one should primarily consider the

Accepted Answer

A)   outcome of the system.
B)   process by which outcomes arise.
C)   maximin criterion.
D)   maximizing total social utility.E) None of the above
F) C) and D)

Question 20

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) A) and C)

Exam 20: Income Inequality and Poverty

Which of the following is an example of a welfare program?

Correct Answer
verified

When the government redistributes income to achieve greater equality,it

Correct Answer
verified

According to a utilitarian,total social utility will be maximized when marginal dollars are distributed to the people with the

Correct Answer
verified

Correct Answer
verified
a.0.25 or ...
View Answer

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Correct Answer
verified
A high marginal tax rate exists on welfa...
View Answer

Which of the following is correct?

Correct Answer
verified

Critics of the minimum wage argue that

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The percentage of families with incomes below the poverty line

Correct Answer
verified

In-kind transfers are transfers to the poor

Correct Answer
verified

Libertarians believe that in considering economic fairness,one should primarily consider the

Correct Answer
verified

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Correct Answer
verified

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income) - 10,000.A family that earns an income of $30,000 will

Correct Answer
verified

Susan won $2,000 at the blackjack tables on her birthday.Her winnings are an example of

Correct Answer
verified

Economists who study economic mobility have found that,if a father earns 20 percent above his generation's average income,his son will most likely earn

Correct Answer
verified

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

Correct Answer
verified
a.$30,000
b.$20,000
c.$10,000
...
View Answer

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Correct Answer
verified

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

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

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Correct Answer
verified

Economists study poverty and income inequality in order to answer which of the following questions?

Correct Answer
verified

Exam 20: Income Inequality and Poverty

Which of the following is an example of a welfare program?

Correct AnswerverifiedShow Answer

When the government redistributes income to achieve greater equality,it

Correct AnswerverifiedShow Answer

According to a utilitarian,total social utility will be maximized when marginal dollars are distributed to the people with the

Correct AnswerverifiedShow Answer

Correct Answerverifieda.0.25 or ...View AnswerShow Answer

Outline the possible work disincentives created by anti-poverty programs.Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Correct AnswerverifiedA high marginal tax rate exists on welfa...View AnswerShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Critics of the minimum wage argue that

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The percentage of families with incomes below the poverty line

Correct AnswerverifiedShow Answer

In-kind transfers are transfers to the poor

Correct AnswerverifiedShow Answer

Libertarians believe that in considering economic fairness,one should primarily consider the

Correct AnswerverifiedShow Answer

As a result of the trade-off between income equality and incentives to work,an optimal redistribution policy

Correct AnswerverifiedShow Answer

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3*Income) - 10,000.A family that earns an income of $30,000 will

Correct AnswerverifiedShow Answer

Susan won $2,000 at the blackjack tables on her birthday.Her winnings are an example of

Correct AnswerverifiedShow Answer

Economists who study economic mobility have found that,if a father earns 20 percent above his generation's average income,his son will most likely earn

Correct AnswerverifiedShow Answer

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

Correct Answerverifieda.$30,000b.$20,000c.$10,000...View AnswerShow Answer

Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.From 1969 to 2001,the percent of elderly aged 64 and over in poverty has

Correct AnswerverifiedShow Answer

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

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

Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater equality?

Correct AnswerverifiedShow Answer

Economists study poverty and income inequality in order to answer which of the following questions?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a.0.25 or ...
View Answer

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A high marginal tax rate exists on welfa...
View Answer

Correct Answer
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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
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a.$30,000
b.$20,000
c.$10,000
...
View Answer

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

Correct Answer
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Correct Answer
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