Deck 18: The Distribution of Income

Question 1

Government programs that provide social insurance against the risk of hardship due to poverty, unemployment, retirement, and health care are known as _____ programs.

A) social insurance
B) federal conservation reserve
C) Habitat for Humanity
D) Peace Corps

Answer 1

A

Question 2

Government social insurance programs:

A) fund national parks.
B) provide education programs to learn about the environment, wildlife, and nature.
C) organize community social events in small towns.
D) protect against the risk of hardship due to poverty, unemployment, retirement, and health care.

Answer 2

D

Question 3

_____ is a government social insurance program.

A) Youth baseball
B) A city-sponsored movie night for senior citizens
C) Social security
D) A community-sponsored parents' night

Answer 3

C

Question 4

_____ is the minimum level of income, including certain government benefits, below which an individual, a family, or a household is considered poor.

A) Social insurance
B) The poverty line
C) Social income
D) The poverty rate

Question 5

_____ is the percentage of the population with incomes that are below the poverty line.

A) Social insurance
B) The poverty threshold
C) Social income
D) The poverty rate

Question 6

The poverty line is set at approximately _____ times the amount that is needed to buy an adequate amount of food.

A) one
B) two
C) three
D) four

Question 7

In 2016, the U.S. Census Bureau's poverty line for an adult living alone was _____, and for a typical family of four it was:

A) $9,122; $19,589.
B) $12,486; $24,339.
C) $16,213; $31,987.
D) $20,279; $39,879.

Question 8

The poverty threshold is based on the amount that is needed to buy an adequate:

A) home.
B) car.
C) amount of clothing.
D) amount of food.

Question 9

The official poverty rate in the United States _____ since 1970.

A) has fallen by 20%
B) has increased by 20%
C) has remained about the same
D) is no longer tracked

Question 10

In 2016, the poverty rate for Hispanics was greater than the poverty rate for:

A) blacks.
B) whites.
C) female households with no spouse.
D) those who do not work.

Question 11

In 2016, the poverty rate for African Americans was lower than the poverty rate for:

A) Hispanics.
B) Asians.
C) male households with no spouse present.
D) female households with no spouse present.

Question 12

Poverty rates are lowest for:

A) Hispanics.
B) Asians.
C) male households with no spouse present.
D) married couples.

Question 13

The _____ poverty rate accounts for in-kind benefit programs such as food stamps and housing subsidies.

A) federal
B) official
C) after-tax
D) consumption use of goods and services

Question 14

The consumption use of goods and services poverty rate:

A) adjusts income for taxes and subsidies.
B) accounts for in-kind benefit programs such as food stamps and housing subsidies.
C) accounts for inflation in the consumer market basket of goods.
D) suggests a budget for households.

Question 15

The _____ poverty rate adjusts income for taxes and subsidies.

A) federal
B) official
C) after-tax
D) consumption use of goods and services

Question 16

The after-tax poverty rate:

A) adjusts income for taxes and subsidies.
B) accounts for in-kind benefit programs such as food stamps and housing subsidies.
C) accounts for inflation in the consumer market basket of goods.
D) suggests a budget for households.

Question 17

The _____ poverty rate provides a measure of the money available for spending.

A) federal
B) official
C) after-tax
D) consumption use of goods and services

Question 18

In the official measurement of poverty, _____ that is received from government programs is included as part of income.

A) cash
B) a food stamp benefit
C) health insurance
D) public housing

Question 19

In 2015, extreme poverty rates had fallen worldwide to about _____%, a decrease from _____% in 1970.

A) 10; 50
B) 10; 60
C) 60; 10
D) 60; 50

Question 20

_____ is the unequal distribution of income among members of society that occurs when some individuals or households earn more than others.

A) Financial inequality
B) Income inequality
C) Pay scale
D) Scaled income

Question 21

Income inequality is the:

A) unequal income distribution that occurs as some individuals and households earn more than others.
B) equal income distribution occurring as some individuals and households earn less than others.
C) idea that members of certain professions should be paid equally.
D) situation where competing professions are paid unequally.

Question 22

The _____ is a graphical presentation of the cumulative distribution of income or wealth.

A) Gini-Lorenz coefficient
B) income quintile
C) Gini coefficient
D) Lorenz curve

Question 23

The Lorenz curve is:

A) another name for the Gini-Lorenz coefficient.
B) another name for the Gini coefficient.
C) a graphical presentation of the cumulative distribution of income or wealth.
D) a method of studying quintiles.

Question 24

The _____ is a summary measurement of relative income or wealth inequality. It is perhaps the most widely used measure of income inequality.

A) Gini-Lorenz coefficient
B) income quintile
C) Gini coefficient
D) Lorenz curve

Question 25

The Gini coefficient is:

A) another name for the Gini-Lorenz coefficient.
B) another name for the Lorenz curve.
C) a measurement of relative income or wealth inequality.
D) a method of studying quintiles.

Question 26

The Gini coefficient is:

A) another name for the Gini-Lorenz coefficient.
B) another name for the Lorenz curve.
C) perhaps the most widely used measure of income inequality.
D) a method of studying quintiles.

Question 27

A _____ is a statistical unit that represents one fifth (20%) of a given population.

A) Gini-Lorenz coefficient
B) quintile
C) Gini coefficient
D) Lorenz curve

Question 28

A quintile is

A) equal to 25%.
B) a method of dividing a sample population into equal portions.
C) a Gini coefficient.
D) a statistical unit that represents one fifth (20%) of a given population.

Question 29

The lowest quintile is the bottom ____% of households.

A) 50
B) 25
C) 20
D) 10

Question 30

The highest quintile is the top ____% of households.

A) 50
B) 25
C) 20
D) 10

Question 31

In 2016, the lowest quintile of households received _____% of income, and the highest quintile received _____% of income.

A) 11.4; 37.1
B) 3.1; 37.1
C) 11.4; 51.5
D) 3.1; 51.5

Question 32

In 2016, the Gini coefficient in the United States was:

A) 0.
B) .464.
C) .5.
D) 1.

Question 33

A Gini coefficient of _____ means perfect income equality.

A) 0
B) .464
C) .5
D) 1

Question 34

Perfect income equality can be expressed with a:

A) Gini coefficient of 0.
B) Lorenz coefficient of 0.
C) Gini coefficient of 1.
D) Lorenz coefficient of 1.

Question 35

A Gini coefficient of _____ means maximum income inequality.

A) 0
B) .464
C) .5
D) 1

Question 36

Maximum income inequality can be expressed with a:

A) Gini coefficient of 0.
B) Lorenz coefficient of 0.
C) Gini coefficient of 1.
D) Lorenz coefficient of 1.

Question 37

The Gini coefficient representing the highest level of equality is:

A) .136.
B) .235.
C) .536.
D) .963.

Question 38

The Gini coefficient representing the highest level of inequality is:

A) .136.
B) .235.
C) .536.
D) .963.

Question 39

(Figure: Lorenz Curve) In the figure, the Lorenz curve representing perfect income equality is:

A) A.
B) B.
C) C.
D) D.

Question 40

(Figure: Lorenz Curve) In the figure, the Lorenz curve representing the deviation from perfect income equality is:

A) A.
B) B.
C) C.
D) D.

Question 41

(Figure: Lorenz Curve 0) In the figure, the Gini coefficient is calculated by:

A) Area A / Area B.
B) Area A / Area A + Area B.
C) Area B / Area C.
D) Area B / Area B + Area C.

Question 42

(Figure: Lorenz Curve 0) In the figure, income inequality decreases if area _____ gets _____.

A) A; larger
B) B; larger
C) C: smaller
D) B; smaller

Question 43

(Figure: Lorenz Curve 0) In the figure, income inequality increases if area _____ gets _____.

A) A; larger
B) B; larger
C) C: larger
D) A; smaller

Question 44

(Figure: Lorenz Curve 0) In the figure, income equality increases if area _____ gets _____.

A) A; larger
B) B; larger
C) C: larger
D) C; smaller

Question 45

(Figure: Lorenz Curve 0) In the figure, income equality increases if area _____ gets _____.

A) A; larger
B) B; smaller
C) C: smaller
D) A; smaller

Question 46

_____ occurs when one household receives all the income in a society.

A) Maximum income inequality
B) Perfect income equality
C) Equal income equality
D) Unequal income equality

Question 47

Maximum income inequality occurs when:

A) no one household receives all the income in a society.
B) one household receives all the income in a society.
C) all households receive equal income in a society.
D) all households receive unequal income in a society.

Question 48

_____ occurs when all households receive equal income in a society.

A) Maximum income inequality
B) Perfect income equality
C) Equal income equality
D) Unequal income equality

Question 49

Perfect income equality occurs when:

A) no one household receives all the income in a society.
B) one household receives all the income in a society.
C) all households receive equal income in a society.
D) all households receive unequal income in a society.

Question 50

_____ is the net value of all assets less any debts owed.

A) Net income
B) Money
C) Wealth
D) Disposable income

Question 51

Wealth is:

A) net income minus liabilities.
B) the net value of all assets minus any debts owed.
C) the total value of all cash assets.
D) disposable income minus liabilities.

Question 52

_____ measures money that is received from employment or other activities.

A) Income
B) Benefits
C) Wealth
D) Disposable wealth

Question 53

Income is:

A) the net value of all assets less any debts owed.
B) the total value of all cash assets.
C) assets minus liabilities.
D) money received from employment or other activities.

Question 54

The United States has a slightly _____ poverty rate and _____ income inequality than other large, highly developed economies such as Germany and Japan.

A) higher; higher
B) higher; lower
C) lower; lower
D) lower; higher

Question 55

_____ is a factor in the widening income inequality gap due in part to the likelihood that high-income people are more likely to marry and to marry others with high levels of education.

A) Technology
B) The single-parent household
C) The dual-income household
D) Globalization

Question 56

_____ is a factor in the widening income inequality gap due in part to the increase in demand for highly skilled workers worldwide.

A) Construction
B) The single-parent household
C) The dual-income household
D) Globalization

Question 57

_____ is a factor in the widening income inequality gap due in part to the increasing importance of workers (human capital) who possess highly specialized ability and talent.

A) A skills-based economy
B) The single-parent household
C) The dual-income household
D) Globalization

Question 58

High-income households are increasingly likely to be families with two earners, according to the _____ factor, influencing the widening income inequality gap.

A) skills-based economy
B) single-parent household
C) dual-income household
D) globalization

Question 59

_____ is the ability of individuals or households to alter their economic status.

A) Income inequality
B) Income mobility
C) Social equality
D) Social mobility

Question 60

Income mobility is the ability of individuals or households to:

A) move from one geographic location to another.
B) enlarge households.
C) change social classes.
D) alter their economic status.

Question 61

Several studies show that over half the families in the bottom quintile during a given year move up to a higher quintile _____ years later.

A) five
B) 10
C) 15
D) 20

Question 62

A reason that people in the bottom quintile may fail to move to a higher quintile is that they:

A) are in dual-income households.
B) have specialized skills.
C) have a college degree.
D) are in single-parent households.

Question 63

A reason that people in the bottom quintile may fail to move to a higher quintile is that they:

A) are unable to work.
B) have specialized skills.
C) have a college degree.
D) are in dual-income households.

Question 64

The _____ is designed to supplement the earnings of low-income workers by providing a subsidy for working.

A) Supplemental Nutrition Assistance Program
B) earned income tax credit
C) Temporary Assistance for Needy Families program
D) housing assistance program

Question 65

The earned income tax credit is designed to:

A) assist low-income workers with purchasing food.
B) supplement the earnings of low-income workers by providing a subsidy for working.
C) temporarily assist pregnant women and families with children.
D) make home ownership possible.

Question 66

The earned income tax credit:

A) assists low-income workers with purchasing food.
B) is a housing subsidy.
C) temporarily assists pregnant women and families with children.
D) reduces the amount of tax owed by low-income workers.

Question 67

_____ is the amount of additional taxes that one pays from an additional dollar of income.

A) Marginal analysis
B) Implicit marginal analysis
C) The implicit marginal tax rate
D) The marginal tax rate

Question 68

The marginal tax rate is:

A) the amount of additional tax that is paid from an additional dollar of income.
B) designed to supplement the earnings of low-income workers with a subsidy for working.
C) used to evaluate the economic efficiency of antipoverty programs.
D) a decision-making tool that is used by firms to maximize profits.

Question 69

To understand the tradeoffs between equity and efficiency in evaluating antipoverty programs, _____ is often used.

A) marginal analysis
B) implicit marginal analysis
C) marginal income
D) income

Question 70

If the marginal tax rate is _____, then the incentive to work harder is:

A) high; high.
B) high; reduced.
C) low; reduced.
D) low; low.

Question 71

_____ tax rates on labor or products generate a _____ deadweight loss.

A) High; large
B) High; insignificant
C) Low; large
D) Low; insignificant

Question 72

_____ is the amount of additional taxes that are paid and benefits that are forgone from an additional dollar in income.

A) Marginal analysis
B) Implicit marginal analysis
C) The implicit marginal tax rate
D) The marginal tax rate

Question 73

The implicit marginal tax rate is:

A) only the amount of additional taxes paid on an additional dollar of income.
B) a supplement on the earnings of low-income workers.
C) the amount of additional taxes paid and benefits that are forgone on an additional dollar of income.
D) used to evaluate the economic efficiency of antipoverty programs.

Question 74

Bart, a low-income worker, is asked by his supervisor to work extra hours and earn an extra $125 a week. His taxes will increase by $30, and his government benefits will be reduced by $40. How much better off will Bart be with this extra income?

A) $125
B) $95
C) $85
D) $55

Question 75

Bart, a low-income worker, is asked by his supervisor to work extra hours and earn an extra $125 a week. His taxes will increase by $30, and his government benefits will be reduced by $40. What is Bart's implicit marginal tax rate?

A) 30%
B) 44%
C) 56%
D) 122%

Question 76

Sally, a low-income worker, is asked by her supervisor to work extra hours and earn an extra $75 a week. Her taxes will increase by $10, and her government benefits will be reduced by $40. How much better off will Sally be with this extra income?

A) $75
B) $65
C) $35
D) $25

Question 77

Sally, a low-income worker, is asked by her supervisor to work extra hours and earn an extra $75 a week. Her taxes will increase by $10, and her government benefits will be reduced by $40. What is Sally's implicit marginal tax rate?

A) 10%
B) 33%
C) 67%
D) 98%

Question 78

When implicit marginal tax rates are excessively _____, the marginal benefit from working additional hours is:

A) high; high.
B) high; low.
C) low; low.
D) low; high.

Question 79

When implicit marginal tax rates are excessively _____, the incentive to work additional hours is:

A) high; low.
B) high; high.
C) low; low.
D) low; marginal.

Question 80

When the marginal benefit from working additional hours is _____, the incentive to work additional hours is:

A) high; low.
B) high; marginal.
C) low; low.
D) low; high.