Question 1

Most economists believe that it is impossible for government programs that benefit the rich to also benefit the poor.

Accepted Answer

A) True 
 B)False

Question 2

An important element that is excluded from U.S. poverty figures is:

Accepted Answer

A)  income tax. 
B)  earned income. 
C)  in-kind transfers such as food stamps and housing assistance. 
D)  interest income. 
A)  income tax. 
B)  earned income. 
C)  in-kind transfers such as food stamps and housing assistance. 
D)  interest income.

Question 3

A Gini coefficient of 1 denotes:

Accepted Answer

A)  zero income. 
B)  infinite income. 
C)  perfect inequality of income distribution. 
D)  perfect equality of income distribution. 
A)  zero income. 
B)  infinite income. 
C)  perfect inequality of income distribution. 
D)  perfect equality of income distribution.

Question 4

The minimum food budget used to determine the poverty line was determined in the:

Accepted Answer

A)  1960s but has been recalculated every decade to account for rising standards of living. 
B)  1960s and is not recalculated to account for rising standards of living. 
C)  1930s but has been recalculated every decade to account for rising standards of living. 
D)  1930s and is not recalculated to account for rising standards of living. 
A)  1960s but has been recalculated every decade to account for rising standards of living. 
B)  1960s and is not recalculated to account for rising standards of living. 
C)  1930s but has been recalculated every decade to account for rising standards of living. 
D)  1930s and is not recalculated to account for rising standards of living.

Question 5

When the top marginal tax rate fell from 40 to 35 percent, with other things the same, the U.S. income tax system became:

Accepted Answer

A)  more progressive. 
B)  less progressive. 
C)  proportional. 
D)  regressive. 
A)  more progressive. 
B)  less progressive. 
C)  proportional. 
D)  regressive.

Question 6

One of the major complaints about state lotteries is that they are played primarily by the poor. Hence, because lotteries do not pay out in prizes as much as they take in as revenue, this way of raising state revenue is:

Accepted Answer

A)  progressive. 
B)  retroactive. 
C)  reactionary. 
D)  regressive. 
A)  progressive. 
B)  retroactive. 
C)  reactionary. 
D)  regressive.

Question 7

Social Security is:

Accepted Answer

A)  a pension program that returns benefits to participants equal to the amount paid in. 
B)  not purely a pension program, because some people receive more than they paid in. 
C)  a means-tested public assistance program designed to reduce income inequality. 
D)  a means-tested public assistance program designed to assist the poor. 
A)  a pension program that returns benefits to participants equal to the amount paid in. 
B)  not purely a pension program, because some people receive more than they paid in. 
C)  a means-tested public assistance program designed to reduce income inequality. 
D)  a means-tested public assistance program designed to assist the poor.

Question 8

Friedrich Nietzsche's views on income distribution and fairness can best be described by the statement:

Accepted Answer

A)  The lesser individuals' duty should be to work for the well-being of the brightest individuals. 
B)  A high level of income inequality is necessary to sustain the arts, beauty, education, and civilization. 
C)  Society's goal should be to maximize the welfare of the least well-off, but some inequality is necessary to meet this goal. 
D)  An efficiently operating marketplace will generate an equal distribution of income without government intervention. 
A)  The lesser individuals' duty should be to work for the well-being of the brightest individuals. 
B)  A high level of income inequality is necessary to sustain the arts, beauty, education, and civilization. 
C)  Society's goal should be to maximize the welfare of the least well-off, but some inequality is necessary to meet this goal. 
D)  An efficiently operating marketplace will generate an equal distribution of income without government intervention.

Question 9

Refer to the graph shown.   The poorest 25 percent of the families earn:

Accepted Answer

A)  6 percent of the income. 
B)  19 percent of the income. 
C)  36 percent of the income. 
D)  64 percent of the income. 
A)  6 percent of the income. 
B)  19 percent of the income. 
C)  36 percent of the income. 
D)  64 percent of the income.

Question 10

Refer to the graph shown.   The country with the most unequal distribution of income is:

Accepted Answer

A)  Sweden. 
B)  Taiwan. 
C)  the United States. 
D)  Brazil. 
A)  Sweden. 
B)  Taiwan. 
C)  the United States. 
D)  Brazil.

Question 11

Refer to the graph shown.   The richest 10 percent of the families earn:

Accepted Answer

A)  37 percent of the income. 
B)  48 percent of the income. 
C)  52 percent of the income. 
D)  63 percent of the income. 
A)  37 percent of the income. 
B)  48 percent of the income. 
C)  52 percent of the income. 
D)  63 percent of the income.

Question 12

Since the minimum food budget used to determine the poverty line is not adjusted for changes in the standard of living, it is, in principle:

Accepted Answer

A)  an absolute measure of poverty. 
B)  a relative measure of poverty. 
C)  an inaccurate measure of poverty. 
D)  an optimal measure of poverty. 
A)  an absolute measure of poverty. 
B)  a relative measure of poverty. 
C)  an inaccurate measure of poverty. 
D)  an optimal measure of poverty.

Question 13

For U.S. workers in tradable sectors such as manufacturing, the effect of globalization has been:

Accepted Answer

A)  to push wages up relative to those in nontradable sectors such as government or service workers. 
B)  to cause greater upward mobility for those workers while reducing downward mobility. 
C)  to push wages down or leave them unemployed. 
D)  to reduce unemployment in this group while leaving wage rates about the same. 
A)  to push wages up relative to those in nontradable sectors such as government or service workers. 
B)  to cause greater upward mobility for those workers while reducing downward mobility. 
C)  to push wages down or leave them unemployed. 
D)  to reduce unemployment in this group while leaving wage rates about the same.

Question 14

According to official statistics in the United States, a family is considered to live in poverty if its money income:

Accepted Answer

A)  is below three times an average family's minimum food budget. 
B)  is below the income earned by 90 percent of all Americans. 
C)  is below the income earned by 80 percent of all Americans. 
D)  and all government transfers are below three times an average family's minimum food budget. 
A)  is below three times an average family's minimum food budget. 
B)  is below the income earned by 90 percent of all Americans. 
C)  is below the income earned by 80 percent of all Americans. 
D)  and all government transfers are below three times an average family's minimum food budget.

Question 15

Refer to the graph shown.   The fourth quintile (a quintile is a fifth) of the families earn:

Accepted Answer

A)  52 percent of the income. 
B)  28 percent of the income. 
C)  24 percent of the income. 
D)  20 percent of the income. 
A)  52 percent of the income. 
B)  28 percent of the income. 
C)  24 percent of the income. 
D)  20 percent of the income.

Question 16

Other things equal, tax cuts favoring the rich and reductions in funding for government programs favoring the poor would be expected to:

Accepted Answer

A)  increase income inequality, causing the Lorenz curve to bend toward the diagonal line. 
B)  decrease income inequality, causing the Lorenz curve to bend toward the diagonal line. 
C)  increase income inequality, causing the Lorenz curve to bend away from the diagonal line. 
D)  decrease income inequality, causing the Lorenz curve to bend away from the diagonal line. 
A)  increase income inequality, causing the Lorenz curve to bend toward the diagonal line. 
B)  decrease income inequality, causing the Lorenz curve to bend toward the diagonal line. 
C)  increase income inequality, causing the Lorenz curve to bend away from the diagonal line. 
D)  decrease income inequality, causing the Lorenz curve to bend away from the diagonal line.

Question 17

An example of share distribution of income is how much:

Accepted Answer

A)  the top 10 percent of a population gets. 
B)  Black people get relative to white people. 
C)  two-parent households get relative to single-parent households. 
D)  the young get relative to the old. 
A)  the top 10 percent of a population gets. 
B)  Black people get relative to white people. 
C)  two-parent households get relative to single-parent households. 
D)  the young get relative to the old.

Question 18

The graph shows that:

Accepted Answer

A)  the effect of taxes is to make the distribution of income less equal. 
B)  the effect of taxes is to make the distribution of income more equal. 
C)  before-tax income and after-tax income are both equally distributed. 
D)  taxes are highly regressive. 
A)  the effect of taxes is to make the distribution of income less equal. 
B)  the effect of taxes is to make the distribution of income more equal. 
C)  before-tax income and after-tax income are both equally distributed. 
D)  taxes are highly regressive.

Question 19

Which of the following is not one of the side effects economists have found in programs to redistribute income?

Accepted Answer

A)  The incentive effects of a tax may result in a switch from labor to leisure. 
B)  The effects of taxes may include attempts to avoid or evade taxes, leading to a decrease in measured income. 
C)  The incentive effects of distributing money may cause people to make themselves look needier than they really are. 
D)  The incentive effects of distributing money may cause people to avoid government assistance programs. 
A)  The incentive effects of a tax may result in a switch from labor to leisure. 
B)  The effects of taxes may include attempts to avoid or evade taxes, leading to a decrease in measured income. 
C)  The incentive effects of distributing money may cause people to make themselves look needier than they really are. 
D)  The incentive effects of distributing money may cause people to avoid government assistance programs.

Question 20

The underclass in the United States has expanded over the last several decades as a fraction of the overall population partly because:

Accepted Answer

A)  there are more people in the United States. 
B)  there has been a substantial movement of Black people into the middle class. 
C)  there has been a substantial amount of well-educated immigrants from Southeast Asia. 
D)  there has been a substantial amount of illegal immigration. 
A)  there are more people in the United States. 
B)  there has been a substantial movement of Black people into the middle class. 
C)  there has been a substantial amount of well-educated immigrants from Southeast Asia. 
D)  there has been a substantial amount of illegal immigration.

Exam 18: Who Gets What the Distribution of Income

Most economists believe that it is impossible for government programs that benefit the rich to also benefit the poor.

An important element that is excluded from U.S. poverty figures is:

A Gini coefficient of 1 denotes:

The minimum food budget used to determine the poverty line was determined in the:

When the top marginal tax rate fell from 40 to 35 percent, with other things the same, the U.S. income tax system became:

One of the major complaints about state lotteries is that they are played primarily by the poor. Hence, because lotteries do not pay out in prizes as much as they take in as revenue, this way of raising state revenue is:

Social Security is:

Friedrich Nietzsche's views on income distribution and fairness can best be described by the statement:

Refer to the graph shown. The poorest 25 percent of the families earn:

Refer to the graph shown. The country with the most unequal distribution of income is:

Refer to the graph shown. The richest 10 percent of the families earn:

Since the minimum food budget used to determine the poverty line is not adjusted for changes in the standard of living, it is, in principle:

For U.S. workers in tradable sectors such as manufacturing, the effect of globalization has been:

According to official statistics in the United States, a family is considered to live in poverty if its money income:

Refer to the graph shown. The fourth quintile (a quintile is a fifth) of the families earn:

Other things equal, tax cuts favoring the rich and reductions in funding for government programs favoring the poor would be expected to:

An example of share distribution of income is how much:

The graph shows that:

Which of the following is not one of the side effects economists have found in programs to redistribute income?

The underclass in the United States has expanded over the last several decades as a fraction of the overall population partly because:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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