Question 1

Table 20-4
Poverty Thresholds in 2002,by Size of Family and Number of Related Children Under 18 Years
[Dollars]
  Source: U.S.Bureau of the Census,Current Population Survey.
-Refer to Table 20-4.What is the poverty line for a family of eight with two children?

Accepted Answer

A)   $14,494
B)   $32,812
C)   $33,121
D)   $34,780E) C) and D)
F) A) and D)

Question 2

Robert Nozick criticizes Rawls' concept of justice by using an example of

Accepted Answer

A)   minimum wage laws.
B)   the grade distribution in an economics class.
C)   a leaky bucket.
D)   the price of tea in China.E) C) and D)
F) All of the above

Question 3

Figure 20-1
Number of Poor 
-Refer to Figure 20-1.Between 1959 and 2001 the poverty rate has

Accepted Answer

A)   increased.
B)   decreased.
C)   stayed the same.
D)   moved in the opposite direction of the number of people in poverty.E) All of the above
F) B) and C)

Question 4

The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

Economists who study economic mobility have found that the income of a grandfather and his grandson's income are

Accepted Answer

A)   not closely related.
B)   negatively related.
C)   directly related.
D)   equal.E) A) and D)
F) All of the above

Question 7

The invisible hand of the marketplace acts to allocate resources

Accepted Answer

A)   efficiently but does not necessarily ensure that resources are allocated fairly.
B)   both fairly and efficiently.
C)   fairly but does not necessarily ensure that resources are allocated efficiently.
D)   neither fairly nor efficiently.E) A) and B)
F) None of the above

Question 8

"The government should choose policies deemed to be just,as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

Accepted Answer

A)   Liberalism.
B)   Utilitarianism.
C)   Libertarianism.
D)   Welfarism.E) A) and D)
F) B) and C)

Question 9

One existing government program that works much like a negative income tax is Medicaid.

Accepted Answer

A) True 
 B)False

Question 10

The study by economists Cox and Alm found

Accepted Answer

A)   inequality in consumption is much smaller than inequality in annual income.
B)   inequality in consumption is slightly smaller than inequality in annual income.
C)   inequality in consumption is slightly larger than inequality in annual income.
D)   inequality in consumption is much larger than inequality in annual income.E) None of the above
F) A) and D)

Question 11

Which of the following statements is not correct?

Accepted Answer

A)   When most Americans picture child labor,they think of young children working in factories.In fact,many young children in poor countries work on family farms.
B)   Many young children work in poor countries rather than attend school because education is not valued in those countries.
C)   An increase in income for families in poor countries is often associated with an increase in the number of children attending school.
D)   In the past,most policies aimed at deterring child labor focused on educating the parents about why their children should not work.E) A) and B)
F) C) and D)

Question 12

When the government enacts policies to make the distribution of income more equitable,it distorts incentives,alters behavior,and makes the allocation of resources less efficient.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is most likely to explain why young children in developing countries often work?

Accepted Answer

A)   Their parents want them to gain valuable work experience.
B)   Their parents do not view education as important.
C)   Their families are poor.
D)   Their families' religious practices encourage child labor.E) All of the above
F) C) and D)

Question 14

The income distribution in the United States shows that the income share of the top fifth of all families is

Accepted Answer

A)   over 50 percent.
B)   around 25 percent.
C)   more than 10 times the income of the bottom fifth.
D)   not much different from the income of the top 5 percent.E) A) and D)
F) A) and B)

Question 15

In the United States approximately 80 percent of millionaires did not inherit their wealth.This statement is an example of

Accepted Answer

A)   transitory income.
B)   the effectiveness of government anti-poverty programs.
C)   economic mobility.
D)   permanent income.E) All of the above
F) B) and D)

Question 16

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 D)
F) A) and C)

Question 17

Figure 20-2
Poverty Rates by Age 
-Refer to Figure 20-2.In 2001,the percent of elderly aged 65 and over in poverty is

Accepted Answer

A)   higher than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.
B)   higher than the percentage of adults aged 18 to 64 but is lower than the percentage of children under age 18 in poverty.
C)   lower than both the percentage of adults aged 18 to 64 and the percentage of children under age 18 in poverty.
D)   lower than the percentage of children under age 18 but is equal to the percentage of adults aged 18 to 64 in poverty.E) None of the above
F) B) and C)

Question 18

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 in order to smooth their income over their life cycle.
C)   be saving in order to smooth their income due to a drop in transitory income.
D)   under-report their income.E) None of the above
F) All of the above

Question 19

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Accepted Answer

Utilitarians reject complete equalizatio...

Question 20

Eric V.Edmonds,an economist who has studied child labor issues,asserts that

Accepted Answer

A)   international trade has led to more children working in agriculture in Vietnam.
B)   culture,not poverty,leads families to put their children to work.
C)   policies to curb child labor have the effect of "liberating millions of children from dismal lives working in factories."
D)   policies to curb child labor have the effect of "punishing the poorest for being poor."E) A) and B)
F) B) and C)

Exam 20: Income Inequality and Poverty

One existing government program that works much like a negative income tax is Medicaid.

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Eric V.Edmonds,an economist who has studied child labor issues,asserts that

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The study by economists Cox and Alm found

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In the United States approximately 80 percent of millionaires did not inherit their wealth.This statement is an example of

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The concept of utility is fundamental to utilitarianism and describes the

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Table 20-4 Poverty Thresholds in 2002,by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U.S.Bureau of the Census,Current Population Survey. -Refer to Table 20-4.What is the poverty line for a family of eight with two children?

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The invisible hand of the marketplace acts to allocate resources

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Figure 20-1 Number of Poor -Refer to Figure 20-1.Between 1959 and 2001 the poverty rate has

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Which of the following is most likely to explain why young children in developing countries often work?

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The income distribution in the United States shows that the income share of the top fifth of all families is

Correct AnswerverifiedShow Answer

Economists who study economic mobility have found that the income of a grandfather and his grandson's income are

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Figure 20-2 Poverty Rates by Age -Refer to Figure 20-2.In 2001,the percent of elderly aged 65 and over in poverty is

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The poverty line is an absolute standard and is based on the cost of providing an adequate diet.

Correct AnswerverifiedShow Answer

When the government enacts policies to make the distribution of income more equitable,it distorts incentives,alters behavior,and makes the allocation of resources less efficient.

Correct AnswerverifiedShow Answer

Explain how a "leaky bucket" can be used to illustrate the utilitarian argument that governments should not attempt to completely equalize individual incomes.

Correct AnswerverifiedUtilitarians reject complete equalizatio...View AnswerShow 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

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The poverty rate is based on a family's

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"The government should choose policies deemed to be just,as evaluated by an impartial observer behind a 'veil of ignorance.'" This statement is most closely associated with which political philosophy?

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Which of the following statements is not correct?

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Robert Nozick criticizes Rawls' concept of justice by using an example of

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Utilitarians reject complete equalizatio...
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