Question 1

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 C)
F) B) and C)

Question 2

If society chose to maximize total utility rather than minimum utility,

Accepted Answer

A)   society would achieve perfect income equality.
B)   society would achieve the maximin objective.
C)   its justice would be more utilitarian than Rawlsian.
D)   its justice would be more Rawlsian than utilitarian.E) All of the above
F) None of the above

Question 3

Suppose the government used the following formula to compute a family's tax liability:
Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 4

Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

Accepted Answer

A)   Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on transitory income.
B)   Angelo's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Sonia's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income.
C)   Angelo's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Sonia's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income.
D)   Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on permanent income.E) A) and B)
F) None of the above

Question 5

If a father earns 20% above his generation's average income, his son will most likely earn what percent above his generation's average income? What does this statistic indicate?

Accepted Answer

8% Persistence of economic suc...

Question 6

Figure 20-3 
-Refer to Figure 20-3. In 1968, the percent of adults aged 18 to 64 years 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)   lower than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty.
D)   lower than the percentage of children under age 18 but is higher than the percentage of elderly aged 65 and over in poverty.E) B) and C)
F) None of the above

Question 7

Many Democrats support raising the U.S. minimum wage. Critics of raising the minimum wage argue that minimum-wage laws are

Accepted Answer

A)   too expensive for local governments to fund.
B)   too expensive for local governments to administer.
C)   imprecise in their ability to help the working poor.
D)   easy for businesses to pay.E) All of the above
F) C) and D)

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)   welfarismE) A) and D)
F) A) and C)

Question 9

Economic mobility refers to the

Accepted Answer

A)   government's attempt to distribute monetary assistance to areas most in need.
B)   ability of families to freely relocate to find good jobs.
C)   movement of people among income classes.
D)   movement of resources from one country to another.E) A) and C)
F) B) and C)

Question 10

Since about 1970 in the U.S.,

Accepted Answer

A)   decreases in the wages of unskilled workers, relative to skilled workers, have led to increased inequality in family incomes.
B)   increases in the wages of unskilled workers, relative to skilled workers, have led to increased equality in family incomes.
C)   inequality in family incomes has increased, despite increases in the wages of unskilled workers relative to skilled workers.
D)   inequality in family incomes has decreased, despite increases in the wages of skilled workers relative to unskilled workers.E) B) and C)
F) C) and D)

Question 11

The income level below which families are said to be poor is known as the

Accepted Answer

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

Question 12

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) None of the above

Question 13

Table 20-9
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 20-9. In 2010, the top fifth of the US population had

Accepted Answer

A)   50.2% more income than the remainder of the population.
B)   a lower share of income than the top fifth in 1980.
C)   about 15 times as much income as the bottom fifth.
D)   about 6 times as much income as the middle fifth.E) A) and B)
F) B) and D)

Question 14

The maximin criterion for government policies is associated with

Accepted Answer

A)   the school of thought called utilitarianism.
B)   the school of thought called liberalism.
C)   the school of thought called libertarianism.
D)   the school of thought called stoicism.E) All of the above
F) A) and D)

Question 15

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 16

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)   lower society's total utility.E) B) and C)
F) A) and B)

Question 17

Utilitarianism is

Accepted Answer

A)   a liberal religion that focuses on individual rights.
B)   a political philosophy that believes the government should choose policies deemed to be just by an impartial observer.
C)   a political philosophy that believes the government should not redistribute income.
D)   a political philosophy that believes the government should choose policies to maximize the total utility of society.E) B) and C)
F) A) and D)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

Which of the following statements is not correct?

Accepted Answer

A)   The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States.
B)   Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income.
C)   The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old.
D)   Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income.E) B) and D)
F) A) and D)

Exam 20: Income Inequality and Poverty

The invisible hand of the marketplace acts to allocate resources

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Utilitarianism is

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The maximin criterion for government policies is associated with

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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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The income level below which families are said to be poor is known as the

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

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Figure 20-3 -Refer to Figure 20-3. In 1968, the percent of adults aged 18 to 64 years in poverty is

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If a father earns 20% above his generation's average income, his son will most likely earn what percent above his generation's average income? What does this statistic indicate?

Correct Answerverified8% Persistence of economic suc...View AnswerShow Answer

If society chose to maximize total utility rather than minimum utility,

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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

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Since about 1970 in the U.S.,

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

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Table 20-9 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 20-9. In 2010, the top fifth of the US population had

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

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

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Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?

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Many Democrats support raising the U.S. minimum wage. Critics of raising the minimum wage argue that minimum-wage laws are

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

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Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $75,000 owe?

Correct AnswerverifiedShow Answer

Economic mobility refers to the

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8% Persistence of economic suc...
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