Question 1

The utilitarian case for redistributing income is based on the assumption of

Accepted Answer

A)  collective consensus.
B)  a notion of fairness engendered by equality.
C)  diminishing marginal utility.
D)  rising marginal utility.E) All of the above
F) B) and C)

Question 2

The concept of diminishing marginal utility is embedded in the utilitarian rationale for

Accepted Answer

A)  trickle-down effects.
B)  enhancing market efficiency.
C)  redistributing income.
D)  maintaining the status quo income distribution.E) B) and C)
F) A) and B)

Question 3

Which of the following groups has the highest poverty rate?

Accepted Answer

A)  blacks
B)  Asians, Pacific Islanders
C)  children (under age 18) 
D)  female-headed householdsE) B) and C)
F) A) and D)

Question 4

Libertarians believe that in considering economic fairness,one should primarily consider the

Accepted Answer

A)  outcome of the system.
B)  process by which outcomes arise.
C)  maximin criterion.
D)  maximizing total social utility.E) B) and C)
F) All of the above

Question 5

A negative income tax system was designed to

Accepted Answer

A)  provide in-kind benefits to the poor.
B)  provide a minimum income to the poor.
C)  reduce taxes on the rich when their incomes surpass the maximum income tax bracket.
D)  subsidize food consumption in poor families.E) A) and B)
F) B) and D)

Question 6

The political philosophy that views the redistribution of income as a form of social insurance is

Accepted Answer

A)  utilitarianism.
B)  liberalism.
C)  libertarianism.
D)  None of the above is correct.E) C) and D)
F) B) and C)

Question 7

Social security and unemployment insurance benefits are examples of

Accepted Answer

A)  in-kind transfers.
B)  negative income tax payments.
C)  property income.
D)  welfare payments.E) None of the above
F) B) and D)

Question 8

According to the maximin criterion,income should be transferred from the rich to the poor as long as it

Accepted Answer

A)  raises the well-being of the least fortunate.
B)  does not alter incentives to work and save.
C)  promotes an equal distribution of income.
D)  does not lower the welfare of the elderly.E) None of the above
F) All of the above

Question 9

Figure 20-2
Poverty Rates by Age
 
-Refer to Figure 20-2.In 2001,the percent of adults between aged 18 and 64 in poverty is

Accepted Answer

A)  higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty.
B)  higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty.
C)  is lower than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty.
D)  is lower than the percentage of children under age 18 and is equal to the percentage of elderly aged 65 and over in poverty.E) B) and D)
F) None of the above

Question 10

Ms.Spring currently earns $100,000 a year,while her junior partner,Mr.Fall,earns $55,000 a year.From the perspective of a utilitarian,if both of their incomes are subject to diminishing marginal utility,taking a dollar from Ms.Spring and giving it to Mr.Fall will

Accepted Answer

A)  increase society's total utility.
B)  lower Ms.Spring's marginal utility of income.
C)  increase Mr.Fall's marginal utility of income.
D)  None of the above is correct.E) C) and D)
F) A) and B)

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) A) and B)
F) A) and C)

Question 12

In 2003,the poverty line for a family of four in the U.S.was approximately

Accepted Answer

A)  $56,680.
B)  $24,400.
C)  $18,810.
D)  $12,603.E) B) and D)
F) None of the above

Question 13

The poverty line in the country of Equalia is $10,000.The distribution of income for Equalia is as follows: 
The poverty rate in Equalia is

Accepted Answer

A)  11.1 percent.
B)  16.7 percent.
C)  27.8 percent.
D)  55.5 percent.E) A) and D)
F) C) and D)

Question 14

The poverty rate is

Accepted Answer

A)  a measure of income inequality across families.
B)  the percentage of the population whose family income falls below a specified level.
C)  an absolute level of income set by the federal government for each family size.
D)  measured by the number of in-kind transfers that a family receives.E) All of the above
F) None of the above

Question 15

maximin criterion suggests that social policy should

Accepted Answer

A)  expropriate the factors of production from the capitalist class.
B)  ensure an equal distribution of income.
C)  elevate the well-being of those at the bottom of the income distribution.
D)  elevate the well-being of all workers.E) None of the above
F) C) and D)

Question 16

Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits.What is the foundation of your critique?

Accepted Answer

The critique is based on the premise tha...

Question 17

According to a libertarian,if income were to be distributed equally,

Accepted Answer

A)  productivity would increase.
B)  social utility would increase.
C)  the marginal productivity of the poor would fall, whereas the marginal productivity of the rich would rise.
D)  productivity would decrease.E) A) and B)
F) A) and C)

Question 18

Over the past 50 years,the U.S.poverty rate was at its lowest level in

Accepted Answer

A)  1973.
B)  1983.
C)  1993.
D)  2003.E) B) and C)
F) A) and D)

Question 19

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 poor than by the rich.
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) None of the above
F) A) and D)

Question 20

Many economists believe that a family bases its spending decisions on its average income rather than on transitory income.

Accepted Answer

A) True 
 B)False

Exam 20: Income Inequality and Poverty

According to the maximin criterion,income should be transferred from the rich to the poor as long as it

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Many economists believe that a family bases its spending decisions on its average income rather than on transitory income.

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Ms.Spring currently earns $100,000 a year,while her junior partner,Mr.Fall,earns $55,000 a year.From the perspective of a utilitarian,if both of their incomes are subject to diminishing marginal utility,taking a dollar from Ms.Spring and giving it to Mr.Fall will

Correct AnswerverifiedShow Answer

The poverty line in the country of Equalia is $10,000.The distribution of income for Equalia is as follows: The poverty rate in Equalia is

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A negative income tax system was designed to

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The utilitarian case for redistributing income is based on the assumption of

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Over the past 50 years,the U.S.poverty rate was at its lowest level in

Correct AnswerverifiedShow Answer

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

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Social security and unemployment insurance benefits are examples of

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Libertarians believe that in considering economic fairness,one should primarily consider the

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In 2003,the poverty line for a family of four in the U.S.was approximately

Correct AnswerverifiedShow Answer

The poverty rate is

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The concept of diminishing marginal utility is embedded in the utilitarian rationale for

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Which of the following groups has the highest poverty rate?

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The political philosophy that views the redistribution of income as a form of social insurance is

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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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Assume you are a critic of welfare reforms that impose a time limit on the number of years a person is eligible for welfare benefits.What is the foundation of your critique?

Correct AnswerverifiedThe critique is based on the premise tha...View AnswerShow Answer

maximin criterion suggests that social policy should

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Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.In 2001,the percent of adults between aged 18 and 64 in poverty is

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According to a libertarian,if income were to be distributed equally,

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The critique is based on the premise tha...
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