Question 1

Libertarians believe that

Accepted Answer

A)  it is more important to evaluate the process by which economic outcomes are produced than the outcomes themselves.
B)  government should attempt to redistribute income from the rich to the poor when the gap between rich and poor is more than 20%.
C)  equality of income is more important than equality of opportunity.
D)  it is more important to evaluate economic outcomes first and then the process that produced them.E) C) and D)
F) None of the above

Question 2

The federal government sets the poverty line at roughly

Accepted Answer

A)  five times the cost of providing an adequate diet.
B)  four times the cost of providing an adequate diet.
C)  three times the cost of providing an adequate diet.
D)  two times the cost of providing an adequate diet.E) B) and D)
F) C) and D)

Question 3

The concept of utility is fundamental to utilitarianism and describes the

Accepted Answer

A)  optimal distribution of wealth in society.
B)  level of satisfaction derived from a person's circumstances.
C)  method by which society chooses to allocate resources.
D)  method whereby wealth is stored.E) B) and C)
F) A) and B)

Question 4

If the imposition of a binding minimum wage results in much higher unemployment among workers seeking minimum wage jobs,

Accepted Answer

A)  firms will respond by demanding more labor.
B)  those workers who are employed will be worse off than before the minimum wage law.
C)  labor demand is relatively elastic.
D)  labor demand is relatively inelastic.E) B) and C)
F) All of the above

Question 5

When we compare the income distribution of the United States to those of other countries, we find that the U.S. has

Accepted Answer

A)  an income distribution similar to Japan's.
B)  an income distribution similar to South Africa's.
C)  one of the most unequal income distributions.
D)  a bit more inequality than the typical country.E) B) and D)
F) A) and B)

Question 6

Scenario 20-8
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $14,000
​
​
-Refer to Scenario 20-8. A family earning $40,000 before taxes will owe tax.​

Accepted Answer

A) True 
 B)False

Question 7

The poverty line is based on the percentage of people who cannot afford an adequate diet.

Accepted Answer

A) True 
 B)False

Question 8

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) All of the above
F) None of the above

Question 9

The poverty rate is based on a family's

Accepted Answer

A)  income, in-kind transfers, and other government aid.
B)  income and in-kind transfers.
C)  in-kind transfers only.
D)  income only.E) A) and C)
F) All of the above

Question 10

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

Accepted Answer

A) True 
 B)False

Question 11

A government policy aimed at protecting people against the risk of adverse events is called .

Accepted Answer

The answer of A government policy aimed at protecting people...

Question 12

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

Accepted Answer

A)  ensure the poor can afford an adequate diet.
B)  distribute income uniformly.
C)  maximize the sum of individual utility.
D)  prevent all people from experiencing diminishing marginal utility.E) C) and D)
F) B) and D)

Question 13

Table 20-1
The following table shows the distribution of income in Marysville. 
-Refer to Table 20-1. Seventy-five percent of all families have incomes above what level?

Accepted Answer

A)  $30,000
B)  $60,000
C)  $90,000
D)  There is insufficient information to answer this question.E) B) and D)
F) A) and D)

Question 14

Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

Accepted Answer

The answer of Of the following countries, which has the...

Question 15

Government vouchers to purchase food, also known as food stamps, are an example of

Accepted Answer

A)  an in-kind transfer.
B)  life-cycle income.
C)  a negative income tax.
D)  permanent income.E) All of the above
F) A) and B)

Question 16

Marco earns more than Antonio. A legislator proposes taxing Marco to supplement Antonio's income. A libertarian would view this proposal as

Accepted Answer

A)  a way to improve the welfare of all in society.
B)  a way to enhance Antonio's income in a socially responsible way.
C)  validation of the role of diminishing marginal utility over the maximin criterion.
D)  an inappropriate role for government, since government should not redistribute income.E) A) and B)
F) A) and C)

Question 17

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> If income were equally distributed acro...

Question 18

Table 20-13
The following table shows the distribution of income in Widgetapolis.  ​
-Refer to Table 20-13. Eighty percent of all families have incomes below what level?

Accepted Answer

A)  $39,000
B)  $60,000
C)  $82,000
D)  $110,000E) A) and D)
F) A) and B)

Question 19

Outline the possible work disincentives created by anti-poverty programs. Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Accepted Answer

A high marginal tax rate exists on welfa...

Question 20

In 2011, the poverty rate in the United States was 15 percent. This means that 15 percent

Accepted Answer

A)  of the population had a total family income that fell below the poverty line.
B)  of the population had a total family income that was above the poverty line.
C)  of the population had a total family income below $10,000.
D)  of the population had a total family income above $50,000.E) A) and D)
F) All of the above

Exam 20: Income Inequality and Poverty

The poverty line is based on the percentage of people who cannot afford an adequate diet.

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The poverty rate is based on a family's

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Of the following countries, which has the most equal distribution of income? United States, Brazil, Mexico, China, Japan, Germany, United Kingdom, Russia

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Government vouchers to purchase food, also known as food stamps, are an example of

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Libertarians believe that

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

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Table 20-1 The following table shows the distribution of income in Marysville. -Refer to Table 20-1. Seventy-five percent of all families have incomes above what level?

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The concept of utility is fundamental to utilitarianism and describes the

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In 2011, the poverty rate in the United States was 15 percent. This means that 15 percent

Correct AnswerverifiedShow Answer

A government policy aimed at protecting people against the risk of adverse events is called .

Correct AnswerverifiedShow Answer

Outline the possible work disincentives created by anti-poverty programs. Is there a way to solve this problem without causing other forms of inefficiency to arise? Explain your answer.

Correct AnswerverifiedA high marginal tax rate exists on welfa...View AnswerShow Answer

The poverty line is set by the government so that 10 percent of all families fall below that line and are thereby classified as "poor."

Correct AnswerverifiedShow Answer

If the imposition of a binding minimum wage results in much higher unemployment among workers seeking minimum wage jobs,

Correct AnswerverifiedShow Answer

When we compare the income distribution of the United States to those of other countries, we find that the U.S. has

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

What is meant by a perfectly equal distribution of income? Use a graph to depict such a situation.

Correct Answerverified If income were equally distributed acro...View AnswerShow Answer

Table 20-13 The following table shows the distribution of income in Widgetapolis. ​ -Refer to Table 20-13. Eighty percent of all families have incomes below what level?

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Marco earns more than Antonio. A legislator proposes taxing Marco to supplement Antonio's income. A libertarian would view this proposal as

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Scenario 20-8 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $14,000 ​ ​ -Refer to Scenario 20-8. A family earning $40,000 before taxes will owe tax.​

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The federal government sets the poverty line at roughly

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A high marginal tax rate exists on welfa...
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If income were equally distributed acro...
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Table 20-13 The following table shows the distribution of income in Widgetapolis. -Refer to Table 20-13. Eighty percent of all families have incomes below what level?

Correct Answer
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Scenario 20-8 Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $14,000 -Refer to Scenario 20-8. A family earning $40,000 before taxes will owe tax.

Correct Answer
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