Question 1

The distribution of income in the United States is

Accepted Answer

A)  more concentrated than the distribution of income in other developed countries throughout the world 
B)  significantly more even than the distribution of income in other developed countries throughout the world 
C)  quite similar to the distribution of income in other developed countries throughout the world 
D)  significantly less even than the distribution of income in most developing countries 
E)  quite similar to the distribution of income in most developing countries 
A)  more concentrated than the distribution of income in other developed countries throughout the world 
B)  significantly more even than the distribution of income in other developed countries throughout the world 
C)  quite similar to the distribution of income in other developed countries throughout the world 
D)  significantly less even than the distribution of income in most developing countries 
E)  quite similar to the distribution of income in most developing countries A

Question 2

Since 1970, the number of African-American professionals (e.g., doctors, lawyers and the like) in the labor force has increased dramatically.

Accepted Answer

A) True 
 B)False  True

Question 3

In 2009, the official poverty level for a family of four was approximately

Accepted Answer

A)  $1,000 
B)  $5,193 
C)  $22,000 
D)  $24,000 
E)  $33,062 
A)  $1,000 
B)  $5,193 
C)  $22,000 
D)  $24,000 
E)  $33,062 C

Question 4

In a market economy, income depends mostly on

Accepted Answer

A)  productivity 
B)  luck 
C)  age 
D)  sex 
E)  discrimination 
A)  productivity 
B)  luck 
C)  age 
D)  sex 
E)  discrimination

Question 5

Economists have no concern that children on welfare might be more likely to end up on welfare as adults.

Accepted Answer

A) True 
 B)False

Question 6

Children of female heads of households are five times more likely to live in poverty than other children.

Accepted Answer

A) True 
 B)False

Question 7

The official poverty definition in the U.S. is having an income that

Accepted Answer

A)  provides minimum biological needs 
B)  is less than three times the cost of a nutritionally adequate yet frugal diet 
C)  places the household in the bottom 20 percent of the income distribution 
D)  is less than the average U.S. welfare allowance 
E)  is approximately equal to the average household income of Canada 
A)  provides minimum biological needs 
B)  is less than three times the cost of a nutritionally adequate yet frugal diet 
C)  places the household in the bottom 20 percent of the income distribution 
D)  is less than the average U.S. welfare allowance 
E)  is approximately equal to the average household income of Canada

Question 8

In reference to welfare recipients, the high effective marginal tax rate on earnings

Accepted Answer

A)  encourages self-sufficiency 
B)  encourages more labor market activity 
C)  discourages employment 
D)  increases total family income if the marginal tax rate exceeds 100 percent 
E)  tends to increase welfare benefits as more income is earned up to the "means-test" threshold 
A)  encourages self-sufficiency 
B)  encourages more labor market activity 
C)  discourages employment 
D)  increases total family income if the marginal tax rate exceeds 100 percent 
E)  tends to increase welfare benefits as more income is earned up to the "means-test" threshold

Question 9

In every age group, average income in the United States increases with education.

Accepted Answer

A) True 
 B)False

Question 10

Transfer programs that do not tie benefits to contributions are called

Accepted Answer

A)  social insurance programs 
B)  income assistance programs 
C)  health aid programs 
D)  bonus programs 
E)  compensation programs 
A)  social insurance programs 
B)  income assistance programs 
C)  health aid programs 
D)  bonus programs 
E)  compensation programs

Question 11

The normal life-cycle pattern of income reflects differences in earnings based on

Accepted Answer

A)  race and education 
B)  gender and education 
C)  age and education 
D)  race 
E)  household size 
A)  race and education 
B)  gender and education 
C)  age and education 
D)  race 
E)  household size

Question 12

In order for Mary to qualify for benefits under a means-tested transfer payment program,

Accepted Answer

A)  she must have worked and contributed to the program 
B)  she must be able to repay the cash transfer at a later date 
C)  the head of her household must be able to hold a job 
D)  she must be totally disabled 
E)  her household's income and/or assets must fall below a certain level 
A)  she must have worked and contributed to the program 
B)  she must be able to repay the cash transfer at a later date 
C)  the head of her household must be able to hold a job 
D)  she must be totally disabled 
E)  her household's income and/or assets must fall below a certain level

Question 13

The largest U.S. welfare program is

Accepted Answer

A)  Aid to Families with Dependent Children 
B)  Medicaid 
C)  Social Security 
D)  unemployment compensation 
E)  food stamps 
A)  Aid to Families with Dependent Children 
B)  Medicaid 
C)  Social Security 
D)  unemployment compensation 
E)  food stamps

Question 14

Which of the following statements about income and education in the United States is correct?

Accepted Answer

A)  There is no relationship between income and education. 
B)  At every age, average earnings are higher for those with more education. 
C)  Average earnings are higher for those with more education, but only if they are over the age of 60. 
D)  Average earnings are higher for those with more education, but only if they are under the age of 60. 
E)  Income levels peak at a younger age for those with college educations than they do for those with only elementary educations. 
A)  There is no relationship between income and education. 
B)  At every age, average earnings are higher for those with more education. 
C)  Average earnings are higher for those with more education, but only if they are over the age of 60. 
D)  Average earnings are higher for those with more education, but only if they are under the age of 60. 
E)  Income levels peak at a younger age for those with college educations than they do for those with only elementary educations.

Question 15

Since most welfare programs are administered by the federal government, there is uniformity in both eligibility and the dollar value of benefits in a state by state comparison.

Accepted Answer

A) True 
 B)False

Question 16

When an economy experiences strong economic growth,

Accepted Answer

A)  the number of families in the bottom 10 percent of the income distribution decreases 
B)  the income of families in the bottom of the income distribution increases 
C)  only the top of the income distribution is affected 
D)  the accompanying inflation cancels out any change in income distribution 
E)  the rich are no better off because taxes rise with income 
A)  the number of families in the bottom 10 percent of the income distribution decreases 
B)  the income of families in the bottom of the income distribution increases 
C)  only the top of the income distribution is affected 
D)  the accompanying inflation cancels out any change in income distribution 
E)  the rich are no better off because taxes rise with income

Question 17

Compared to the distribution of money income, the distribution of income that takes into consideration the effects of taxes and in-kind benefits

Accepted Answer

A)  is less even 
B)  is the same 
C)  is more even 
D)  is fairer 
E)  is less fair 
A)  is less even 
B)  is the same 
C)  is more even 
D)  is fairer 
E)  is less fair

Question 18

The distribution of income

Accepted Answer

A)  is about the same in most countries 
B)  tends to be more equal in developing countries than in developed countries 
C)  is more concentrated in the United States than in Canada or Japan 
D)  is more even in developing countries than in the Russia 
E)  is not related to a country's level of development 
A)  is about the same in most countries 
B)  tends to be more equal in developing countries than in developed countries 
C)  is more concentrated in the United States than in Canada or Japan 
D)  is more even in developing countries than in the Russia 
E)  is not related to a country's level of development

Question 19

Income assistance programs

Accepted Answer

A)  require that the recipient work and contribute to the program 
B)  are designed to replace lost income 
C)  include unemployment compensation and Medicare 
D)  are funded exclusively by the federal government 
E)  include both cash and in-kind transfer programs 
A)  require that the recipient work and contribute to the program 
B)  are designed to replace lost income 
C)  include unemployment compensation and Medicare 
D)  are funded exclusively by the federal government 
E)  include both cash and in-kind transfer programs

Question 20

In a given population the median income will always be the same as the average income.

Accepted Answer

A) True 
 B)False

Exam 18: Income Distribution and Poverty

The distribution of income in the United States is

Since 1970, the number of African-American professionals (e.g., doctors, lawyers and the like) in the labor force has increased dramatically.

In 2009, the official poverty level for a family of four was approximately

In a market economy, income depends mostly on

Economists have no concern that children on welfare might be more likely to end up on welfare as adults.

Children of female heads of households are five times more likely to live in poverty than other children.

The official poverty definition in the U.S. is having an income that

In reference to welfare recipients, the high effective marginal tax rate on earnings

In every age group, average income in the United States increases with education.

Transfer programs that do not tie benefits to contributions are called

The normal life-cycle pattern of income reflects differences in earnings based on

In order for Mary to qualify for benefits under a means-tested transfer payment program,

The largest U.S. welfare program is

Which of the following statements about income and education in the United States is correct?

Since most welfare programs are administered by the federal government, there is uniformity in both eligibility and the dollar value of benefits in a state by state comparison.

When an economy experiences strong economic growth,

Compared to the distribution of money income, the distribution of income that takes into consideration the effects of taxes and in-kind benefits

The distribution of income

Income assistance programs

In a given population the median income will always be the same as the average income.

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

A: Perfect Competition

B: Perfect Competition

A: Monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

International Trade

International Finance

Economic Development

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