Question 1

Which of the following represents a problem in measuring inequality?

Accepted Answer

A)   Measurements of income distributions typically include in-kind transfers, which distort the measure of inequality.
B)   A normal life-cycle pattern causes inequality in the income distribution but may not reflect inequality in living standards.
C)   Transitory income is a better measure of inequality than permanent income.
D)   Both a and b are correct.E) None of the above
F) C) and D)

Question 2

Based on U.S.income data from 2008,the top fifth of all families received

Accepted Answer

A)   the same share of income as the bottom fifth.
B)   twice as much income as the bottom fifth.
C)   approximately 5 times more income than the bottom fifth.
D)   more than 10 times more income than the bottom fifth.E) A) and B)
F) All of the above

Question 3

Which of the following statements is correct?

Accepted Answer

A)   The distribution of annual income accurately reflects the distribution of living standards.
B)   Permanent incomes are more equally distributed than annual incomes.
C)   Transitory changes in income generally have a significant impact on a family's standard of living.
D)   Annual income is more equally distributed than permanent income.E) A) and B)
F) A) and C)

Question 4

Table 20-3
The Distribution of Income in Hapland
 
-Refer to Table 20-3.According to the table,what percent of families in Hapland have income levels below $90,000?

Accepted Answer

A)   20 percent.
B)   40 percent.
C)   60 percent.
D)   80 percent.E) All of the above
F) A) and C)

Question 5

If the value of in-kind transfers are taken into account,the number of families living in poverty in the United States would

Accepted Answer

A)   increase by about 1 percent.
B)   decrease by about 1 percent.
C)   decrease by about 5 percent.
D)   decrease by about 10 percent.E) A) and B)
F) All of the above

Question 6

Table 20-6
 
-Refer to Table 20-6.A person who is concerned that income inequality has worsened between 2007 and 2008 would cite which of the following statistics to support her position?

Accepted Answer

A)   The percentage of people earning less than $25,000 decreased from 2007 to 2008.
B)   The percentage of people earning more than $100,000 increased from 2007 to 2008.
C)   The percentage of people earning between $50,000 and $100,000 stayed virtually constant from 2007 to 2008.
D)   Both a)  and b)  are correct.E) All of the above
F) A) and B)

Question 7

The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin.An economic recession reduces the number of tourists for one summer,which reduces the family's income for that year.For the Callaway family,their

Accepted Answer

A)   transitory income for the year of the recession likely exceeds their permanent income.
B)   permanent income likely exceeds their transitory income for the year of the recession.
C)   permanent income will be more affected by the recession than their transitory income.
D)   Both a and c are correct.E) None of the above
F) A) and D)

Question 8

When the government taxes income as part of a redistribution program,

Accepted Answer

A)   the poor pay higher taxes.
B)   the rich always benefit more than the poor.
C)   the poor are encouraged to work.
D)   incentives to earn income are diminished.E) B) and D)
F) A) and C)

Question 9

The top 5 percent of U.S.annual family income in 2008 was $200,000 or more.

Accepted Answer

A) True 
 B)False

Question 10

Measuring poverty using an absolute income scale like the poverty line can be misleading because

Accepted Answer

A)   income measures do not include the value of in-kind transfers.
B)   money is more highly valued by the rich than by the poor.
C)   the poor are not likely to participate in the labor market.
D)   income measures are not adjusted for the effects of labor-market discrimination.E) A) and D)
F) C) and D)

Question 11

Which of the following statements is not correct?

Accepted Answer

A)   Two key elements of welfare reform are work requirements and limiting the time that recipients can receive benefits.
B)   The Earned Income Tax Credit (EIT
C)   is very similar to a negative income tax.
C)   Minimum wage laws will likely increase unemployment.
D)   The elderly are more likely to be poor than single mothers.E) None of the above
F) A) and C)

Question 12

A disadvantage of the Earned Income Tax Credit (EITC)program is that it does not help alleviate poverty due to unemployment,sickness,or other inability to work.

Accepted Answer

A) True 
 B)False

Question 13

According to utilitarians,the ultimate objective of public actions should be to

Accepted Answer

A)   enhance the income of the rich.
B)   ensure an egalitarian distribution of income.
C)   maximize the sum of individual utility.
D)   provide for the betterment of the poor.E) None of the above
F) B) and C)

Question 14

Which of the following statements is characteristic of utilitarianism?

Accepted Answer

A)   An extra dollar of income provides higher marginal utility to a poor person than to a rich person.
B)   Social policies should be created behind a "veil of ignorance."
C)   Society should strive to maximize the utility of its wealthiest member.
D)   Equality of opportunity is more important than equality of incomes.E) A) and B)
F) A) and C)

Question 15

An example of an in-kind transfer to the poor is

Accepted Answer

A)   the negative income tax.
B)   the Earned Income Tax Credit (EIT
C)  .
C)   Medicaid.
D)   Temporary Assistance for Needy Families (TANF) .E) A) and C)
F) A) and B)

Question 16

The poverty rate is an absolute level of income set by the federal government for each family size.A family with income below this rate is deemed to be in poverty.

Accepted Answer

A) True 
 B)False

Question 17

In the United States,long-term poverty,defined as a family having an income below the poverty line for eight or more years,is

Accepted Answer

A)   common, affecting approximately 25 percent of all American families.
B)   common, affecting approximately 15 percent of all American families.
C)   uncommon, affecting approximately 8 percent of all American families.
D)   rare, affecting approximately 3 percent of all American families.E) A) and D)
F) A) and C)

Question 18

In 2008,what percentage of U.S.families had income levels above $113,205?

Accepted Answer

A)   5 percent
B)   20 percent
C)   80 percent
D)   95 percentE) A) and B)
F) A) and C)

Question 19

The 2008 U.S.distribution of income shows that the top 5 percent of families earn approximately how much income per year?

Accepted Answer

A)   $175,000 and over
B)   $200,000 and over
C)   $225,000 and over
D)   $250,000 and overE) A) and D)
F) None of the above

Question 20

"The government should choose policies to maximize the total utility of society." This statement is most closely associated with which political philosophy?

Accepted Answer

A)   liberalism
B)   utilitarianism
C)   libertarianism
D)   welfarismE) None of the above
F) B) and D)

Exam 20: Income Inequality and Poverty.

Based on U.S.income data from 2008,the top fifth of all families received

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An example of an in-kind transfer to the poor is

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The 2008 U.S.distribution of income shows that the top 5 percent of families earn approximately how much income per year?

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When the government taxes income as part of a redistribution program,

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Which of the following represents a problem in measuring inequality?

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A disadvantage of the Earned Income Tax Credit (EITC)program is that it does not help alleviate poverty due to unemployment,sickness,or other inability to work.

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The poverty rate is an absolute level of income set by the federal government for each family size.A family with income below this rate is deemed to be in poverty.

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Which of the following statements is not correct?

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In 2008,what percentage of U.S.families had income levels above $113,205?

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In the United States,long-term poverty,defined as a family having an income below the poverty line for eight or more years,is

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Which of the following statements is correct?

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The top 5 percent of U.S.annual family income in 2008 was $200,000 or more.

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If the value of in-kind transfers are taken into account,the number of families living in poverty in the United States would

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"The government should choose policies to maximize the total utility of society." This statement is most closely associated with which political philosophy?

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Table 20-6 -Refer to Table 20-6.A person who is concerned that income inequality has worsened between 2007 and 2008 would cite which of the following statistics to support her position?

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Which of the following statements is characteristic of utilitarianism?

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According to utilitarians,the ultimate objective of public actions should be to

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Measuring poverty using an absolute income scale like the poverty line can be misleading because

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The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin.An economic recession reduces the number of tourists for one summer,which reduces the family's income for that year.For the Callaway family,their

Correct AnswerverifiedShow Answer

Table 20-3 The Distribution of Income in Hapland -Refer to Table 20-3.According to the table,what percent of families in Hapland have income levels below $90,000?

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