Question 1

The regular pattern of income variation over a person's life is called the .

Accepted Answer

The answer of The regular pattern of income variation over...

Question 2

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Accepted Answer

A)  lifetime income rather than annual income.
B)  aggregate income rather than annual personal income.
C)  annual extended-family income rather than annual personal income.
D)  income averaged across seasons rather than across years.E) None of the above
F) A) and D)

Question 3

Winston Churchill once said

Accepted Answer

A)  "The inherent virtue of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries."
B)  "The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries."
C)  "The inherent vice of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries."
D)  "The inherent virtue of capitalism is the unequal sharing of blessings. The inherent vice of socialism is the equal sharing of miseries."E) None of the above
F) B) and D)

Question 4

Table 20-14
Income Inequality in the United States
The values in the table reflect the percentages of pre-tax-and transfer income.  Source: US Census Bureau
-Refer to Table 20-14. In percentage terms, how much less income did the bottom 40% of families have in 2010 than in 1980?

Accepted Answer

The answer of Table 20-14
Income Inequality in the United States
The...

Question 5

Which of the following is not an example of a welfare program?

Accepted Answer

A)  Supplemental Security Income (SSI) 
B)  Temporary Assistance for Needy Families (TANF) 
C)  food stamps
D)  minimum wage lawsE) B) and C)
F) C) and D)

Question 6

Which of the three political philosophies discussed in the textbook, if any, view the total income of society as a shared resource that a social planner can freely redistribute to achieve some social goal?

Accepted Answer

utilitaria...

Question 7

One way of expressing the tradeoff between income equality and efficiency is to say the more equally the pie is divided, the .

Accepted Answer

smaller th...

Question 8

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.E) A) and B)
F) B) and C)

Question 9

A utilitarian government must

Accepted Answer

A)  calculate the utility of each individual in society.
B)  avoid enacting any policies that redistribute income from the rich to the poor.
C)  balance the gains from greater equality against the losses from distorted incentives.
D)  pursue policies that do not affect the middle class.E) A) and C)
F) All of the above

Question 10

Libertarians believe that the government should enforce individual rights to ensure that all people have the same opportunities to use their talents to achieve success.

Accepted Answer

A) True 
 B)False

Question 11

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

Accepted Answer

A)  in-kind transfers
B)  economic life cycle
C)  transitory versus permanent income
D)  economic mobilityE) C) and D)
F) All of the above

Question 12

Miguel is a 20 year old college student who works part-time and earns an annual income of $12,000. To smooth out his life cycle changes in income, Miguel can

Accepted Answer

A)  save his earnings to use when he is middle-aged.
B)  lend money to a friend to purchase a new car.
C)  borrow money to pay for college, which he will later repay when his income rises.
D)  attempt to pay for college from his current earnings.E) A) and B)
F) None of the above

Question 13

When considering a person's standard of living, data on the income distribution and the poverty rate may provide an incomplete picture because the poor may

Accepted Answer

A)  receive in-kind transfers.
B)  be lending to smooth their income over their life cycle.
C)  be saving to smooth their income due to a drop in transitory income.
D)  under-report their income.E) B) and C)
F) C) and D)

Question 14

Which of the following is not correct?

Accepted Answer

A)  Many measures of inequality are based on income, which may not reflect a person's standard of living.
B)  Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income.
C)  Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living.
D)  A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.E) None of the above
F) A) and C)

Question 15

Which of the following pholitical philosophies would support redistribution of income that makes society fully egalitarian?

Accepted Answer

A)  Liberals, because they believe in the maximin criterion.
B)  Libertarians, because they believe in evaluating the process by which economic outcomes arise.
C)  Utilitarians, because they believe in diminishing marginal utility.
D)  None of the above would support completely egalitarian redistribution of income.E) C) and D)
F) A) and D)

Question 16

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 17

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

Accepted Answer

The answer of If greater equality is the benefit of...

Question 18

The poverty rate is a measure of the percentage of people whose incomes fall below

Accepted Answer

A)  a relative level of income.
B)  an absolute level of income.
C)  the median income for a family of three.
D)  the bottom 20 percent of the income distribution.E) A) and B)
F) A) and C)

Question 19

Table 20-1
The following table shows the distribution of income in Marysville. 
-Refer to Table 20-1. If the poverty line was $31,852, what would be the poverty rate?

Accepted Answer

A)  less than 25%
B)  between 25% and 50%
C)  between 50% and 75%
D)  There is insufficient information to answer this question.E) None of the above
F) All of the above

Question 20

The poverty rate is the percentage of the population that have a family income level below the

Accepted Answer

A)  income maintenance threshold.
B)  poverty line.
C)  bottom quintile of the income distribution.
D)  minimum wage.E) A) and B)
F) A) and C)

Exam 20: Income Inequality and Poverty

Which of the following is not an example of a welfare program?

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A utilitarian government must

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Miguel is a 20 year old college student who works part-time and earns an annual income of $12,000. To smooth out his life cycle changes in income, Miguel can

Correct AnswerverifiedShow Answer

The poverty rate is the percentage of the population that have a family income level below the

Correct AnswerverifiedShow Answer

Which of the following pholitical philosophies would support redistribution of income that makes society fully egalitarian?

Correct AnswerverifiedShow Answer

Comparing the US to other countries ranked by inequality,

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The regular pattern of income variation over a person's life is called the .

Correct AnswerverifiedShow Answer

The statement that "measures of the distribution of income are based on money income" relates to which problem in measuring inequality?

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Which of the following is not correct?

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Winston Churchill once said

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Libertarians believe that the government should enforce individual rights to ensure that all people have the same opportunities to use their talents to achieve success.

Correct AnswerverifiedShow Answer

One way of expressing the tradeoff between income equality and efficiency is to say the more equally the pie is divided, the .

Correct Answerverifiedsmaller th...View AnswerShow Answer

Table 20-14 Income Inequality in the United States The values in the table reflect the percentages of pre-tax-and transfer income. Source: US Census Bureau -Refer to Table 20-14. In percentage terms, how much less income did the bottom 40% of families have in 2010 than in 1980?

Correct AnswerverifiedShow Answer

The poverty rate is a measure of the percentage of people whose incomes fall below

Correct AnswerverifiedShow Answer

When considering a person's standard of living, data on the income distribution and the poverty rate may provide an incomplete picture because the poor may

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If greater equality is the benefit of government intervention into the allocation of society's resources, what is the cost?

Correct AnswerverifiedShow Answer

Because people can borrow when they are young, the life cycle theory would suggest that one's standard of living depends on

Correct AnswerverifiedShow Answer

Which of the three political philosophies discussed in the textbook, if any, view the total income of society as a shared resource that a social planner can freely redistribute to achieve some social goal?

Correct Answerverifiedutilitaria...View AnswerShow Answer

Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. If the poverty line was $31,852, what would be the poverty rate?

Correct AnswerverifiedShow Answer

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smaller th...
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utilitaria...
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