Question 1

When taxation is proportional, the tax rate an individual pays:

Accepted Answer

A) remains constant as the individual's income increases. 
B) increases as the individual's income increases. 
C) falls as the individual's income increases. 
D) varies as the individual's income changes. 
A) remains constant as the individual's income increases. 
B) increases as the individual's income increases. 
C) falls as the individual's income increases. 
D) varies as the individual's income changes.

Question 2

Public assistance programs:

Accepted Answer

A) are not means-tested and are targeted to the public. 
B) are means-tested social programs targeted to the poor and providing financial, nutritional, and housing assistance. 
C) provide the same amount of support to families in poverty in every state of the United States. 
D) are available only to single-parent families with at least three children. 
A) are not means-tested and are targeted to the public. 
B) are means-tested social programs targeted to the poor and providing financial, nutritional, and housing assistance. 
C) provide the same amount of support to families in poverty in every state of the United States. 
D) are available only to single-parent families with at least three children.

Question 3

The Lorenz curve:

Accepted Answer

A) is an absolute measure of income inequality. 
B) is a relative measure of income inequality. 
C) takes into account changes in the standard of living. 
D) has elements of absolute and relative measures. 
A) is an absolute measure of income inequality. 
B) is a relative measure of income inequality. 
C) takes into account changes in the standard of living. 
D) has elements of absolute and relative measures.

Question 4

Some people in the U.S.argue that the poverty line is too high and some argue that it is too low.Explain both arguments by highlighting the difference between absolute and relative measures of poverty.

Accepted Answer

Those who favor a relative measure of po

Question 5

Unemployment compensation is available to:

Accepted Answer

A) anyone who is unemployed for an unlimited duration. 
B) anyone who is unemployed but for a limited duration. 
C) people who are out of work through no fault of their own and have worked in a covered occupation for a substantial number of weeks in the period just before they became unemployed. 
D) people who are out of work through no fault of their own regardless of previous employment history. 
A) anyone who is unemployed for an unlimited duration. 
B) anyone who is unemployed but for a limited duration. 
C) people who are out of work through no fault of their own and have worked in a covered occupation for a substantial number of weeks in the period just before they became unemployed. 
D) people who are out of work through no fault of their own regardless of previous employment history.

Question 6

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 7

Because the poor tend to use public transportation more than the rich do, a tax on the Washington, D.C. , metro probably would be:

Accepted Answer

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

Question 8

When a tax is progressive, the average tax rate:

Accepted Answer

A) decreases with income. 
B) is constant with income. 
C) increases with income. 
D) first increases with income, then decreases with income. 
A) decreases with income. 
B) is constant with income. 
C) increases with income. 
D) first increases with income, then decreases with income.

Question 9

What is a Lorenz curve?

Accepted Answer

A Lorenz curve is a geometric

Question 10

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 11

A higher tax rate could result in lower tax revenues if:

Accepted Answer

A) attempts to avoid or evade taxes increase. 
B) individuals switch from leisure to labor. 
C) fewer people qualify for government assistance. 
D) the tax has no incentive effects. 
A) attempts to avoid or evade taxes increase. 
B) individuals switch from leisure to labor. 
C) fewer people qualify for government assistance. 
D) the tax has no incentive effects.

Question 12

Describe five major U.S.expenditure programs that are used to redistribute income

Accepted Answer

Social Security and Medicare are social

Question 13

The Gini coefficient for Algeria is about 0.4. How would this number be shown on a Lorenz curve?

Accepted Answer

A) It cannot be shown; the Lorenz curve and the Gini coefficient are alternative ways of measuring inequality. 
B) The area between the Lorenz curve and the line of absolute equality is 40 percent of the total area under the line of equality. 
C) The area between the Lorenz curve and the x-axis is 40 percent of the total area below the line of equality. 
D) The length of the Lorenz curve is 40 percent longer than the line of equality. 
A) It cannot be shown; the Lorenz curve and the Gini coefficient are alternative ways of measuring inequality. 
B) The area between the Lorenz curve and the line of absolute equality is 40 percent of the total area under the line of equality. 
C) The area between the Lorenz curve and the x-axis is 40 percent of the total area below the line of equality. 
D) The length of the Lorenz curve is 40 percent longer than the line of equality.

Question 14

The program that redistributes the most money is:

Accepted Answer

A) Aid to Families with Dependent Children. 
B) the Department of Housing and Urban Development's housing programs. 
C) Supplemental Security Income. 
D) the Social Security system. 
A) Aid to Families with Dependent Children. 
B) the Department of Housing and Urban Development's housing programs. 
C) Supplemental Security Income. 
D) the Social Security system.

Question 15

The three problems with determining whether an equal income distribution is fair include all of the following except:

Accepted Answer

A) people don't start from equivalent positions. 
B) people's needs differ. 
C) income differences and wealth differences are not the same. 
D) people's efforts differ. 
A) people don't start from equivalent positions. 
B) people's needs differ. 
C) income differences and wealth differences are not the same. 
D) people's efforts differ.

Question 16

In the United States, the class system is a:

Accepted Answer

A) triangle, and in most developing countries the class system is a triangle. 
B) pentagon, and in most developing countries the class system is a diamond. 
C) pentagon, and in most developing countries the class system is a triangle. 
D) triangle, and in most developing countries the class system is a diamond. 
A) triangle, and in most developing countries the class system is a triangle. 
B) pentagon, and in most developing countries the class system is a diamond. 
C) pentagon, and in most developing countries the class system is a triangle. 
D) triangle, and in most developing countries the class system is a diamond.

Question 17

Refer to the graph shown.   The 25 percent of the families with the highest income 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 18

The U.S. official poverty threshold is:

Accepted Answer

A) three times the U.S. Department of Agriculture's minimum food budget. 
B) three times the U.S. Department of Housing's minimum housing allowance. 
C) the level of income earned by a person receiving minimum wage. 
D) the level of welfare benefits received by an eligible family. 
A) three times the U.S. Department of Agriculture's minimum food budget. 
B) three times the U.S. Department of Housing's minimum housing allowance. 
C) the level of income earned by a person receiving minimum wage. 
D) the level of welfare benefits received by an eligible family.

Question 19

What are the social costs of poverty?

Accepted Answer

There are at least two types of social c

Question 20

John Rawls'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) Property rights should be equally distributed, and the market should determine the distribution of income. 
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) Property rights should be equally distributed, and the market should determine the distribution of income.

Exam 18: Who Gets What the Distribution of Income

When taxation is proportional, the tax rate an individual pays:

Public assistance programs:

The Lorenz curve:

Some people in the U.S.argue that the poverty line is too high and some argue that it is too low.Explain both arguments by highlighting the difference between absolute and relative measures of poverty.

Unemployment compensation is available to:

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

Because the poor tend to use public transportation more than the rich do, a tax on the Washington, D.C. , metro probably would be:

When a tax is progressive, the average tax rate:

What is a Lorenz curve?

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

A higher tax rate could result in lower tax revenues if:

Describe five major U.S.expenditure programs that are used to redistribute income

The Gini coefficient for Algeria is about 0.4. How would this number be shown on a Lorenz curve?

The program that redistributes the most money is:

The three problems with determining whether an equal income distribution is fair include all of the following except:

In the United States, the class system is a:

Refer to the graph shown. The 25 percent of the families with the highest income earn:

The U.S. official poverty threshold is:

What are the social costs of poverty?

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

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