Deck 30: Fiscal Policy

Question 1

The richest 1 percent of our population owns over __________ percent of our wealth.

Answer 1

Distribution of income can be defined as to how a nation's total GDP is distributed among the population. Distribution of income in the long run has strong implications. Income levels are changed multiple times in the entire working life of individuals so that income distribution is seen to be more equal. Short run income distribution in this regard is not comparatively equal.
Distribution of wealth can be defined as the comparison of wealth between various groups or members in a society.
The richest 1 percent of our population owns over 40 percent of our wealth.
Therefore, the answer for the blank is
.

Question 2

Most social scientists define the poor as being the lowest______________ percent of our income recipients.

A) 10
B) 20
C) 3
D) 40
E) 50

Answer 2

B

Question 3

How much is the percentage of income received by the lowest quintile on line R?

F igure 1

Answer 3

9 percent

Question 4

What's the difference between the distribution of income and the distribution of wealth? Describe the distribution of income and the distribution of wealth in the United States.

Question 5

The two biggest benefit programs aimed solely at the poor are___________ and______________

Question 6

Which is the most accurate statement?

A) Although there are several theories of poverty, it is possible to formulate just one theory which completely explains 99 percent of all poverty in the United States.
B) There are at least a dozen theories of poverty, and each has at least some apparent validity.
C) Poverty can be explained largely by employment discrimination.
D) Poverty is no longer a major socioeconomic problem in the United States.

Question 7

How much is the percentage of income earned by the highest quintile on Lorenz curve Q?

F igure 1

Question 8

Discuss the basic determinants of income distribution.

Question 9

About one out of every______________ black Americans is poor.

Question 10

The Darity-Myers thesis is an attempt to explain__________

A) black poverty
B) the poverty of the elderly
C) worldwide poverty
D) the permanent underclass

Question 11

How much is the percentage of income received by the highest quintile on line R?

F igure 1

Question 12

Who are the poor in the United States? A few population groups have very high incidences of poverty. Explain why people in each of these groups tend to be poor.

Question 13

About_____________ percent of all poor people are black.

Question 14

An equal distribution of income would____________

A) hurt both the work incentive and the incentive to save
B) hurt neither the work incentive nor the incentive to save
C) hurt the work incentive but not the incentive to save
D) hurt the incentive to save but not the work incentive

Question 15

How much is the percentage of income received by the middle three quintiles on line S?

F igure 1

Question 16

There are several theories of the causes of poverty. Why can't a single theory explain all the poverty in the United States?

Question 17

The basic problem with the absolute concept of poverty is finding the__________

Question 18

Doctors earn more than people in other professions basically because__________

A) they need to be compensated for all those years they spent in school
B) they are in short supply relative to the demand for their services
C) it costs a lot more to be a doctor-office expenses, support staff, and malpractice insurance-than it does to be in almost any other profession
D) doctors put in longer hours than most other people

Question 19

Turkey has a population of 100 million, 16 million of whom live below the poverty line. Indonesia has a population of 200 million, 50 million of whom live below the poverty line. (a) Calculate the poverty rates of both nations. Twenty-five percent of Turkey's population is under age 18, 5 million of whom are poor. Thirty percent of Indonesia's population is under age 18, 15 million of whom are poor. (b) Calculate the child poverty rates of Turkey and Indonesia.

Question 20

Compare and contrast the conservative and liberal views of poverty.

Question 21

The poverty line is set by the____________

Question 22

More poor people live in _______ than in any other area of the United States.

A) cities
B) suburbs
C) smaller metropolitan areas
D) rural communities

Question 23

What has happened to the welfare rolls since the mid-1990s? What are the causes of this trend?

Question 24

The richest quintile of humanity spends about _____________ times as much on consumption as the world's poorest quintile.

Question 25

Compared to their levels in 2003, the poverty line has__________ and the minimum hourly wage has________

A) gone up, gone up
B) stayed the same, stayed the same
C) gone up, stayed the same
D) stayed the same, gone up

Question 26

Practical Application: What steps would you take to cut our poverty rate in half?

Question 27

Compared to the average net worth of white families, the average net worth of black and Hispanic families is

A) less than one-tenth
B) about half
C) almost equal
D) somewhat larger

Question 28

Practical Application: How many dollars and cents per hour would a person working a 40-hour week need to work to keep a family of four at the poverty line? (Hint: First find the amount of money the family would need per week to stay at the poverty line.)

Question 29

Each of the following is a major source of great wealth except_________

A) earning large salaries
B) starting up new companies
C) real estate
D) inheritance

Question 30

Web Activity: Are you eligible for the Earned Income Tax Credit? Find out at www.bankrate.com/calculators/tax-planning/earned-income-tax-creditcalculator.aspx.

Question 31

Which is not aimed solely at the poor?

A) Food stamps
B) Public assistance
C) Social Security
D) Medicaid

Question 32

Web Activity: Do you want to be a billionaire? Aside from inheriting money, in which three industries or economic sectors have our 100 richest billionaires made their fortunes? Go to www.forbes.com/richlist

Question 33

Which statement is true?

A) Very few poor people hold jobs.
B) The main reason for poverty is that some people refuse to work.
C) A person holding a minimum wage job could raise her family out of poverty.
D) There are millions of people whose jobs don't pay enough to support their families.

Question 34

Which statement is false?

A) About three-fourths of the poor are single mothers and their children.
B) About half of the poor are elderly.
C) People living in the South are more likely to be poor than those living in the rest of the country.
D) None of these statements is false.

Question 35

About___________ million Americans are homeless.

A) 2 to 3
B) 6 to 8
C) 12 to 15
D) 20 to 25
E) 40 to 50

Question 36

Which statement is true?

A) Most poor people are black.
B) Most black people are poor.
C) People over age 65 have a higher poverty rate than the overall rate for Americans.
D) None of these statements is true.

Question 37

Darity and Myers observe that _______

A) welfare reform will lead to a sharp decline in the number of black families living below the poverty line
B) cutting welfare benefits will increase the ranks of marriageable young black men
C) the underlying cause of poverty is too much government intervention
D) cutting benefits will not lower the number of black female-headed households

Question 38

"The exodus of middle- and working-class families from many ghetto neighborhoods removes an important 'social buffer'" was said by_______________

A) Nicholas Lemann
B) Charles Murray
C) Barbara Ehrenreich
D) William Julius Wilson

Question 39

Which statement is true?

A) Virtually none of the homeless have jobs.
B) Many of the homeless are mentally ill.
C) The homeless are concentrated in a few large cities.
D) None of these statements is true.

Question 40

Nearly one out of every children lives in poverty.

A) two
B) three
C) five
D) nine

Question 41

Which one of the following has been the least effective antipoverty program _______?

A) the Welfare Reform Act of 1996
B) Social Security
C) food stamps
D) the Earned Income Tax Credit

Question 42

Which statement is false?

A) Poverty breeds poverty.
B) Poor people have low human capital.
C) The liberals and conservatives disagree on how to get people off the welfare rolls and into self- supporting jobs.
D) None of these statements is false.

Question 43

It would not be reasonable to say that poor people are _____________

A) grudgingly tolerated by society's "productive" members
B) largely superfluous to our socioeconomic system
C) basically self-supporting
D) poor for a variety of reasons

Question 44

Which one of the following statements is false?

A) The poor pay higher prices to buy groceries, furniture, and appliances.
B) Low-income families can pay over $500 more for the same car bought by a higher-income household.
C) The poor pay higher interest rates than people with higher incomes.
D) Very few poor people can claim the earned income tax credit.

Question 45

The earned income tax credit is ____________

A) a form of welfare
B) a refund check paid to the working poor by the Internal Revenue Service
C) a very minor form of government aid to the poor
D) opposed by both liberals and conservatives

Question 46

The superrich get most of their income from _________________

A) rent, interest, and profits
B) wages
C) illegal transactions
D) real estate investments

Question 47

The richest fifth of all American families receives ___________ percent of our total income.

A) almost 35
B) about 50
C) more than 60
D) more than 75

Question 48

Which of the following is the most accurate statement? ___________

A) The standard of living of poor American children is very low compared to that of middle-class American children.
B) Poor children in the United States are much worse off than poor children in virtually all other OECD countries.
C) Poor children in the United States are much better off than poor children in virtually all other OECD countries.
D) There is no way to compare the degree of child poverty in the United States with the degree of child poverty in other economically advanced countries.

Question 49

Between 1968 and 2011, the percentage share of total income grew for _______

A) lowest two quintiles
B) the middle three quintiles
C) the highest quintile
D) the highest quintile and the lowest quintile

Question 50

Between 1968 and 2011, our income distribution ________

A) became more equal
B) stayed about the same
C) became less equal

Question 51

Real median family income in the U.S. has__________

A) grown each year since 2000
B) declined each year since 2000
C) risen by about 20 percent since the late 1960s
D) become lower today than it was in 1975

Question 52

Which of the following statements is the most accurate?

A) The welfare rolls today are much lower than they were in 1996.
B) About 1 in 8 Americans lives below the poverty line.
C) Without Social Security benefits, at least 75 percent of all senior citizens would be poor.
D) The Welfare Reform Act of 1996 has cut the poverty rate by almost 60 percent.

Question 53

Which statement is true?

A) All of the 10 richest Americans inherited their fortunes.
B) In order to make the top ten list of American billionaires, you need a fortune of over $15 billion.
C) The two richest families in the United States today are the Rockefellers and the Fords.
D) Most of the 10 richest Americans own large manufacturing companies.

Question 54

Which is the most accurate statement?

A) Although there are poor children in the U.S., our child poverty problem is not nearly as bad as that of most other rich countries.
B) The reason so many people in poor countries still don't have safe drinking water is that it would cost at least $50 billion a year to provide it.
C) Poor people in the U.S. spend more than double their reported incomes.
D) Although some war veterans are poor, virtually none is homeless because of the efforts of the Veteran's Administration to find them housing.

Question 55

Which statement is true?

A) If we redistributed income every year so that everyone would get the same amount, this would hurt the efficiency of our economy.
B) Virtually everyone agrees that we should redistribute most of the income received by the rich to the poor.
C) The poor get a great deal more satisfaction from each additional dollar of income than the rich.
D) There is no relationship between the distribution of income and economic incentives.

Question 56

The largest government program aimed exclusively at helping the poor is________________

A) the earned income tax credit
B) public assistance
C) food stamps
D) Social Security

Question 57

Which one of the following people would most likely experience at least a year of poverty after her or his 20th birthday?

A) A high school dropout
B) A black person
C) A white person
D) A college dropout

Question 58

Which statement is true?

A) Most of the nation's poor receive welfare benefits.
B) Since the Welfare Reform Act of 1996, no new welfare cases have been accepted.
C) More people than ever are receiving welfare benefits.
D) Most single mothers who have recently left the welfare rolls remain poor.

Question 59

Which statement is true?

A) Over 90 percent of the families receiving public assistance are headed by people who are employed.
B) Nearly 90 percent of those in the workforce earn at least $10 an hour.
C) The welfare rolls are much lower today than they were in 1994.
D) If every adult on welfare were willing to work, we could cut the number of welfare families by over 75 percent.

Question 60

Which one of the following is the most accurate statement?

A) Our poverty rate is somewhat higher today than it was in 1999.
B) Our poverty rate is over 15 percent.
C) If it were not for the 2007-2009 recession, our poverty rate would probably be below 10 percent.
D) Our poverty rate is currently at an all-time low.

Question 61

What would be the most effective way of raising people out of poverty?

A) Cut off welfare payments to every family with at least one adult member between the ages of 18 and 64.
B) Raise the minimum hourly wage.
C) Eliminate the earned income tax credit.
D) Have the government put welfare recipients to work at minimum wage jobs.

Question 62

Which one of the following statements is the most accurate?

A) Our nation provides cradle-to-grave security for our military personnel and their families.
B) Because of the relative high pay and benefits provided by the military, very few military families run into financial problems.
C) No military family lives below the poverty line.
D) Some military families depend on food pantries.

Question 63

Which one of these is the most accurate statement about real median family income?

A) It has declined steadily over the last five years.
B) It has fallen during nearly every recession since the 1960s.
C) It is about twice as high as it was in 1970.
D) It increased steadily since 2000.

Question 64

Which is the most accurate statement?

A) Because of the efforts of the Veterans Administration, only a handful of veterans are homeless.
B) Most military families have to get by on food stamps and help from food pantries and soup kitchens.
C) Military pay is high enough to keep virtually all military families well above the official poverty line.
D) Although nearly all of our leading politicians wear American flag lapel pins, they do not provide enough economic support to our troops, so many military families are in severe financial difficulty.

Question 65

Who made this statement? "I still have the audacity to believe that people everywhere can have three meals a day."

A) Charles Murray
B) William Julius Wilson
C) Barbara Bush (mother of President George W. Bush)
D) Martin Luther King, Jr.
E) Lisbeth B. Schorr

Question 66

Which one of the following statements is false?

A) Nearly half of all poor Americans own their own homes.
B) A poor person today has roughly the same standard of living as a middle-income person 30 years ago.
C) The reported consumption spending of people in the lowest income quintile is about twice their reported income.
D) The standard of living of American's poor is comparable to that of most of the rest of the world's poor people.

Question 67

Who would most likely receive food stamps before the age of 20?

A) A white person
B) A black person
C) An Asian-American person
D) A person who grew up in a two-parent household

Question 68

Which is the most accurate statement?

A) Most poor people receive public assistance (formerly called welfare).
B) Public assistance has been discontinued.
C) The number of people receiving public assistance is less than one-third as high as it was in 1993.
D) Because of the 2007-2009 recession, the public assistance rolls have reached an all-time high.

Question 69

Which statement best reflects the views of Charles Murray?

A) The main cause of poverty can be traced to the heritage of slavery.
B) Poverty is caused largely by government antipoverty programs.
C) Poverty can be substantially reduced by providing government jobs to all who want to work.
D) The prime cause of poverty is that poor people are basically lazy.

Question 70

Which one of the following people would stand the least chance of being poor during her or his lifetime?

A) Someone with less than 12 years of education
B) Someone with more than 12 years of education
C) Someone white
D) Someone black

Question 71

Who would most likely be poor?

A) a person over 65
B) a black child
C) a Hispanic child
D) a college dropout

Question 72

The dividing line between the 1 percent and the 99 percent is an annual income of _______

A) $100,000
B) $400,000
C) $1 million
D) $5 million
E) $1 billion