Question 1

A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?

Accepted Answer

A)   Utilitarianism suggests that government policies should strive to maximize Ulyana's utility.
B)   Liberalism suggests that government policies should strive to increase Ulyana's utility.
C)   Libertarianism suggests that government policies should strive to improve Tristan's utility at the cost of Sam's utility.
D)   Libertarianism suggests that government policies should strive to make Sam, Tristan, and Ulyana equally well off.E) A) and D)
F) None of the above

Question 2

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Accepted Answer

A)   liberalism
B)   utilitarianism
C)   libertarianism
D)   welfarismE) A) and B)
F) All of the above

Question 3

The U.S. welfare system was revised by a 1996 law that

Accepted Answer

A)   consolidated all of the previous assistance programs into a single program.
B)   limited the amount of time that people could receive assistance.
C)   said it was no longer necessary for poor people to demonstrate an additional "need," such as small children or a disability, to qualify for assistance.
D)   turned all federally-run welfare programs over to the states.E) A) and C)
F) B) and C) B

Question 4

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

Accepted Answer

A)   pay $6,000 in taxes.
B)   receive an income subsidy of $6,000.
C)   receive an income subsidy of $12,000.
D)   have an after-tax income of $48,000.E) C) and D)
F) A) and B)

Question 5

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.

Accepted Answer

A) True 
 B)False

Question 6

Table 20-9
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.
  Source: US Census Bureau
-Refer to Table 20-9. Which of the following statements best describes the trends in the table?

Accepted Answer

A)   From 1980 to 2010, the distribution of income has become less equal.
B)   From 1980 to 2010, the distribution of income has remained the same.
C)   From 1980 to 2010, the distribution of income has become more equal.
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Binding minimum-wage laws

Accepted Answer

A)   are costly for the government to impose.
B)   force a market imbalance between the supply and demand for labor.
C)   have the potential to provide benefits to all poor people, whereas a negative tax can only benefit some poor people.
D)   do not affect segments of the population who are not poor.E) All of the above
F) C) and D)

Question 9

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 10

In the United States in 2011, the bottom fifth of the income distribution had incomes below $27,218.

Accepted Answer

A) True 
 B)False

Question 11

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Accepted Answer

A)   trickle-down effects.
B)   enhancing market efficiency.
C)   redistributing income.
D)   maintaining the status quo income distribution.E) C) and D)
F) B) and C)

Question 12

A tax provision that works much like a negative income tax is the

Accepted Answer

A)   Earned Income Tax Credit (EIT
C)  .
B)   Temporary Assistance for Needy Families (TANF) .
C)   deduction for charitable contributions.
D)   mortgage interest rate deduction.E) A) and D)
F) A) and C) A

Question 13

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A)   improve economic efficiency by reducing poverty.
B)   reduce economic efficiency because they distort incentives.
C)   have no effect on economic efficiency because they both reduce poverty and distort incentives.
D)   sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.E) All of the above
F) A) and B)

Question 14

Which of the following groups has the highest poverty rate?

Accepted Answer

A)   blacks
B)   Asians
C)   children (under age 18) 
D)   female households, no spouse presentE) None of the above
F) B) and D)

Question 15

When designing public policies, which income group would philosopher John Rawls argue needs the most attention?

Accepted Answer

A)   Individuals located in the bottom fifth of the income distribution.
B)   Individuals located at the average income level.
C)   Individuals located in the top fifth of the income distribution.
D)   Individuals located in the top five percent of the income distribution.E) None of the above
F) B) and C)

Question 16

Table 20-15
Income Inequality in 2010 in the United States by Race
The values in the table reflect the percentages of pre-tax-and-transfer income.
  Source: US Census Bureau
-Refer to Table 20-15. Which race shows the least equal distribution of income?

Accepted Answer

The answer of Table 20-15
Income Inequality in 2010 in the...

Question 17

Table 20-8
  Source: U.S. Bureau of Census
-Refer to Table 20-8. Comparing data from 2000 and 2011, which of the following statements is correct?

Accepted Answer

A)   The bottom 40% of the population had a greater share of the income in 2011 than it did in 2001.
B)   The top 40% of the population had a greater share of the income in 2011 than it did in 2001.
C)   The middle 60% of the population had a greater share of the income in 2011 than it did in 2001.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 18

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)   maximization total social utility.E) None of the above
F) A) and B)

Question 19

One existing government program that works much like a negative income tax is the Earned Income Tax Credit.

Accepted Answer

A) True 
 B)False  True

Question 20

A government's policy of redistributing income makes the income distribution

Accepted Answer

A)   more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient.
B)   more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.
C)   less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient.
D)   less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.E) A) and B)
F) A) and C)

Exam 20: Income Inequality and Poverty

A society consists of three individuals: Sam, Tristan, and Ulyana. In terms of income and utility, Sam is currently best-off, Tristan ranks in the middle, and Ulyana is worst-off. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

"The government should punish crimes and enforce voluntary agreements but not redistribute income." This statement is most closely associated with which political philosophy?

Correct AnswerverifiedShow Answer

The U.S. welfare system was revised by a 1996 law that

Correct AnswerverifiedB

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an income of $60,000 will

Correct AnswerverifiedShow Answer

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.

Correct AnswerverifiedShow Answer

Table 20-9 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-9. Which of the following statements best describes the trends in the table?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Binding minimum-wage laws

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

In the United States in 2011, the bottom fifth of the income distribution had incomes below $27,218.

Correct AnswerverifiedShow Answer

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Correct AnswerverifiedShow Answer

A tax provision that works much like a negative income tax is the

Correct AnswerverifiedA

Government programs that take money from high-income people and give it to low-income people typically

Correct AnswerverifiedShow Answer

Which of the following groups has the highest poverty rate?

Correct AnswerverifiedShow Answer

When designing public policies, which income group would philosopher John Rawls argue needs the most attention?

Correct AnswerverifiedShow Answer

Table 20-15 Income Inequality in 2010 in the United States by Race The values in the table reflect the percentages of pre-tax-and-transfer income. Source: US Census Bureau -Refer to Table 20-15. Which race shows the least equal distribution of income?

Correct AnswerverifiedShow Answer

Table 20-8 Source: U.S. Bureau of Census -Refer to Table 20-8. Comparing data from 2000 and 2011, which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One existing government program that works much like a negative income tax is the Earned Income Tax Credit.

Correct AnswerverifiedTrue

A government's policy of redistributing income makes the income distribution

Correct AnswerverifiedShow Answer

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A

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