Question 1

A commonly-used gauge of poverty is the

Accepted Answer

A) income inequality rate. 
B) average income rate. 
C) poverty rate. 
D) social inequality rate. 
A) income inequality rate. 
B) average income rate. 
C) poverty rate. 
D) social inequality rate. C

Question 2

Table 20-2
Percentage of Before-Tax Income Received by Families in Hapland  
-Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income distribution became

Accepted Answer

A) less equal. 
B) more equal. 
C) more equal at the lowest level of income but less equal at highest level of income. 
D) less equal at the lowest level of income but more equal at highest level of income. 
A) less equal. 
B) more equal. 
C) more equal at the lowest level of income but less equal at highest level of income. 
D) less equal at the lowest level of income but more equal at highest level of income. A

Question 3

U.S. income data over the last 75 years suggests that the distribution of income

Accepted Answer

A) has gradually become more equal over the entire time period. 
B) has gradually become less equal over the entire time period. 
C) gradually became less equal until about 1970, then became more equal from 1970 to 2011. 
D) gradually became more equal until about 1970, then became less equal from 1970 to 2011. 
A) has gradually become more equal over the entire time period. 
B) has gradually become less equal over the entire time period. 
C) gradually became less equal until about 1970, then became more equal from 1970 to 2011. 
D) gradually became more equal until about 1970, then became less equal from 1970 to 2011. D

Question 4

Scenario 20-6
Zooey is a single mother of two young children whose husband died in a tragic car accident. She earns $20,000 per year working as a cashier at a grocery store. The government uses a negative income tax system in which
Taxes owed = (1/4 of income) - $15,000.
-Refer to Scenario 20-6. If Zooey decides to quit her job and earns $0 in income annually, how much more or less money will she have compared to continuing to work as a cashier?

Accepted Answer

A) If she quits her job, she will have $10,000 less per year. 
B) If she quits her job, she will have $15,000 less per year. 
C) If she quits her job, she will have $10,000 more per year. 
D) If she quits her job, she will have $15,000 more per year. 
A) If she quits her job, she will have $10,000 less per year. 
B) If she quits her job, she will have $15,000 less per year. 
C) If she quits her job, she will have $10,000 more per year. 
D) If she quits her job, she will have $15,000 more per year.

Question 5

What percent of families are poor for eight or more years?

Accepted Answer

A) more than 20 percent 
B) between 15 and 20 percent 
C) approximately 10 percent 
D) less than 3 percent 
A) more than 20 percent 
B) between 15 and 20 percent 
C) approximately 10 percent 
D) less than 3 percent

Question 6

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. 
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.

Question 7

The utilitarian case for redistributing income is based on the assumption of

Accepted Answer

A) collective consensus. 
B) a notion of fairness engendered by equality. 
C) diminishing marginal utility. 
D) rising marginal utility. 
A) collective consensus. 
B) a notion of fairness engendered by equality. 
C) diminishing marginal utility. 
D) rising marginal utility.

Question 8

The calculation of the poverty line includes adjustments for

Accepted Answer

A) energy costs. 
B) child care costs. 
C) the level of prices. 
D) the Earned Income Tax Credit. 
A) energy costs. 
B) child care costs. 
C) the level of prices. 
D) the Earned Income Tax Credit.

Question 9

Given the table shown, which country has a more equal income distribution? Explain your answer.

Accepted Answer

Country A has a more equal income distri

Question 10

A disadvantage associated with a minimum wage law to reduce poverty is that it

Accepted Answer

A) encourages illegitimate births because single women with children receive higher payments. 
B) rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C) focuses on children and the disabled while neglecting the working poor. 
D) may benefit the teenage children of families who are not poor. 
A) encourages illegitimate births because single women with children receive higher payments. 
B) rewards laziness because it provides payments to those with low incomes regardless of their work effort. 
C) focuses on children and the disabled while neglecting the working poor. 
D) may benefit the teenage children of families who are not poor.

Question 11

Suppose the government used the following formula to compute a family's tax liability:
Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 12

The life cycle effect characterizes a lifetime income profile in which income

Accepted Answer

A) tends to follow a seasonal pattern. 
B) rises as a worker gains maturity and experience. 
C) rises and falls in conjunction with the business cycle. 
D) falls during the early years of market activity and peaks at retirement. 
A) tends to follow a seasonal pattern. 
B) rises as a worker gains maturity and experience. 
C) rises and falls in conjunction with the business cycle. 
D) falls during the early years of market activity and peaks at retirement.

Question 13

Comparing the US to other countries ranked by inequality,

Accepted Answer

A) the US has a less equal distribution of income than some countries, but a more equal distribution of income than others. 
B) the US has one of the most equal distributions of income. 
C) the US has one of the least equal distributions of income. 
D) the US has a more equal distribution of income than other economically advanced countries such as Japan, Germany, and France. 
A) the US has a less equal distribution of income than some countries, but a more equal distribution of income than others. 
B) the US has one of the most equal distributions of income. 
C) the US has one of the least equal distributions of income. 
D) the US has a more equal distribution of income than other economically advanced countries such as Japan, Germany, and France.

Question 14

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. In percentage point terms, how much more did the top 5% of the Asian population earn than it would have if income were distributed equally?

Accepted Answer

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

Question 15

In 2011, the poverty line for a family of four in the U.S. was

Accepted Answer

A) $60,974. 
B) $23,021. 
C) $20,988. 
D) $17,642. 
A) $60,974. 
B) $23,021. 
C) $20,988. 
D) $17,642.

Question 16

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

Accepted Answer

A) True 
 B)False

Question 17

The distribution of income for Abbyville is as follows:   If the poverty rate in Abbyville is 12 percent, what is the poverty line in Abbyville?

Accepted Answer

A) $15,000. 
B) $20,000. 
C) $25,000. 
D) $30,000. 
A) $15,000. 
B) $20,000. 
C) $25,000. 
D) $30,000.

Question 18

The measured poverty rate may not reflect the true extent of economic deprivation because it does not include some forms of government assistance.

Accepted Answer

A) True 
 B)False

Question 19

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Accepted Answer

A) True 
 B)False

Question 20

Data for the United States suggests that about how many millionaires inherited their fortunes?

Accepted Answer

A) one in seven 
B) one in five 
C) one in three 
D) one in two 
A) one in seven 
B) one in five 
C) one in three 
D) one in two

Exam 20: Income Inequality and Poverty

A commonly-used gauge of poverty is the

Table 20-2 Percentage of Before-Tax Income Received by Families in Hapland -Refer to Table 20-2. According to the table, from 1950 to 2000, the Hapland income distribution became

U.S. income data over the last 75 years suggests that the distribution of income

What percent of families are poor for eight or more years?

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

The utilitarian case for redistributing income is based on the assumption of

The calculation of the poverty line includes adjustments for

Given the table shown, which country has a more equal income distribution? Explain your answer.

A disadvantage associated with a minimum wage law to reduce poverty is that it

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

The life cycle effect characterizes a lifetime income profile in which income

Comparing the US to other countries ranked by inequality,

In 2011, the poverty line for a family of four in the U.S. was

Even though the average income in the United States has continued to grow, the poverty rate has increased to over 20% since the early 1970s.

The distribution of income for Abbyville is as follows: If the poverty rate in Abbyville is 12 percent, what is the poverty line in Abbyville?

The measured poverty rate may not reflect the true extent of economic deprivation because it does not include some forms of government assistance.

A U.S. family earning $80,000 would be in the top 20 percent of income distribution in 2011.

Data for the United States suggests that about how many millionaires inherited their fortunes?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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