Question 1

Government programs that take money from high-income people and give it to low-income people typically

Accepted Answer

A)  improve economic efficiency because they reducing poverty.
B)  reduce economic efficiency because they distort incentives.
C)  have no effect on economic efficiency because they both reduce poverty and distort incentives.
D)  sometimes improve,sometimes reduce,and sometimes have no effect on economic efficiency.

Question 2

Income inequality exists in the United States.Is this necessarily a bad thing? Explain how our assessment of income inequality depends crucially on the source of that inequality.

Accepted Answer

In a market economy,the distribution of ...

Question 3

It would be more reasonable to use annual income data as an index of economic inequality if all of the households

Accepted Answer

A)  filed tax returns and thus all their income were known.
B)  were different with regard to their age and size characteristics.
C)  were more similar with regard to size,age,education,and other major factors that are linked to income.
D)  were more similar with regard to their hair color,height,and weight.

Question 4

In 2009,the proportion of all poverty-level families headed by a female was

Accepted Answer

A)  approximately one-fourth.
B)  approximately one-third.
C)  approximately half.
D)  more than three-fourths.

Question 5

The idea that transfer benefits to the poor encourage behavior that increases the risk of poverty is known as the

Accepted Answer

A)  Samaritan's dilemma.
B)  rule of inverse benefits.
C)  implicit marginal tax law.
D)  Smith paradox.

Question 6

As the War on Poverty programs were instituted and transfer payments expanded in the last half of the 1960s,what happened to the poverty rate?

Accepted Answer

A)  After rising for several decades,the official poverty rate has been declining since 1968.
B)  After falling for several decades,the official poverty rate leveled off in the 1970s,and it has been relatively stable since that time.
C)  The poverty rate declined prior to the War on Poverty period,and it has continued to decline.
D)  The poverty rate rose prior to the War on Poverty period and has continued to rise.

Question 7

Some people inherit money and wealth that they did nothing to earn.Why don't we tax inheritance at 100 percent?

Accepted Answer

The people who create the wealth must de...

Question 8

Use the following two statements to answer this question.
(I) In a market system,resource prices both provide incentives for the efficient allocation of resources and determine income distribution.
(II) Income and wealth are neither created nor destroyed,they are just fixed-sized pies to be allocated among individuals.

Accepted Answer

A)  Both I and II are true.
B)  Both I and II are false.
C)  I is true;II is false.
D)  I is false;II is true.

Question 9

The phenomenon that describes how transfer programs,which significantly reduce the adversities of poverty,also reduce the opportunity cost of choices that often lead to poverty is known as

Accepted Answer

A)  the implicit marginal tax rate.
B)  Gibson's paradox.
C)  the Phillips curve
D)  the Samaritan's dilemma.

Question 10

Since 1970,income inequality in the United States has

Accepted Answer

A)  decreased.
B)  increased.
C)  remained the same.
D)  increased throughout the 1970s and 1980s but fell during the 1990s.

Question 11

This year Bill earned $3,000 more than last year.As a result,he received $2,500 less in government transfers.Therefore,Bill's implicit marginal tax rate is about

Accepted Answer

A)  16 percent
B)  25 percent
C)  66 percent
D)  83 percent

Question 12

When a person who receives welfare benefits earns income,those benefits are reduced as earned income rises.This is referred to as

Accepted Answer

A)  an implicit marginal tax.
B)  the opportunity cost of income.
C)  the work-leisure trade-off.
D)  reverse discrimination.

Question 13

If a family earned $10,000 and,as a consequence,sustained a reduction of $4,000 in government benefits,the family's implicit marginal tax rate would be

Accepted Answer

A)  10 percent.
B)  40 percent.
C)  60 percent.
D)  75 percent.

Question 14

Income is created when

Accepted Answer

A)  individuals supply others with productive resources that they value.
B)  the government levies taxes on some and transfers the revenues to others.
C)  the general level of prices increases.
D)  shares of stock are sold from their current owner to another party.

Question 15

The Earned Income Tax Credit

Accepted Answer

A)  tends to increase income inequality.
B)  is a program that provides additional income to workers with above-average incomes.
C)  tends to reduce income inequality.
D)  is both a and b.

Question 16

The Samaritan's dilemma describes the problem that exists when transfer programs,designed to help the poor,encourage choices that can promote or perpetuate

Accepted Answer

A)  poverty.
B)  healthier lifestyles.
C)  reduced birth rates.
D)  increased life expectancy.

Question 17

Imagine two countries,Lebos and Egap,that have identical average annual incomes.In Lebos,the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that.In Egap,however,the poor remain poor and rich remain rich.Which of the following is true about the two countries?

Accepted Answer

A)  The measured distribution of annual income in any given year is more equal in Lebos than in Egap.
B)  The measured distribution of annual income in any given year is more equal in Egap than in Lebos.
C)  The measured distribution of annual income in any given year will be the same in Lebos and Egap.
D)  The distribution of lifetime income is more equal in Egap than in Lebos.

Question 18

Which of the following is not counted as income when the official poverty rate is calculated?

Accepted Answer

A)  Medicaid benefits
B)  dividends derived from the ownership of stock
C)  earnings derived from a part-time job
D)  money income derived from transfer payments

Question 19

How do the high implicit marginal tax rates that often occur when transfer payments are inversely linked to earnings affect the incentive of poor people to work and earn?

Accepted Answer

A)  A poor person's incentive to earn is increased.
B)  A poor person's incentive to earn is reduced.
C)  The incentive of the poor to earn is unaffected.
D)  The incentive of the poor to earn reported income is increased,but the incentive to earn unreported income is reduced.

Question 20

Assume that Peter is a single parent who is in poverty.He receives food stamps and Medicaid.For every $100 that he earns,Peter loses $35 of his food stamp benefits and $20 in his Medicaid benefits.Also,Peter's income is taxed at a rate of 10 percent.Then,Peter's effective marginal tax rate is

Accepted Answer

A)  45 percent.
B)  55 percent.
C)  65 percent.
D)  70 percent.

Exam 28: Income Inequality and Poverty

As the War on Poverty programs were instituted and transfer payments expanded in the last half of the 1960s,what happened to the poverty rate?

Correct Answer
verified

Correct Answer
verified

When a person who receives welfare benefits earns income,those benefits are reduced as earned income rises.This is referred to as

Correct Answer
verified

In 2009,the proportion of all poverty-level families headed by a female was

Correct Answer
verified

The idea that transfer benefits to the poor encourage behavior that increases the risk of poverty is known as the

Correct Answer
verified

How do the high implicit marginal tax rates that often occur when transfer payments are inversely linked to earnings affect the incentive of poor people to work and earn?

Correct Answer
verified

Which of the following is not counted as income when the official poverty rate is calculated?

Correct Answer
verified

Some people inherit money and wealth that they did nothing to earn.Why don't we tax inheritance at 100 percent?

Correct Answer
verified
The people who create the wealth must de...
View Answer

It would be more reasonable to use annual income data as an index of economic inequality if all of the households

Correct Answer
verified

Since 1970,income inequality in the United States has

Correct Answer
verified

The phenomenon that describes how transfer programs,which significantly reduce the adversities of poverty,also reduce the opportunity cost of choices that often lead to poverty is known as

Correct Answer
verified

The Samaritan's dilemma describes the problem that exists when transfer programs,designed to help the poor,encourage choices that can promote or perpetuate

Correct Answer
verified

Income inequality exists in the United States.Is this necessarily a bad thing? Explain how our assessment of income inequality depends crucially on the source of that inequality.

Correct Answer
verified
In a market economy,the distribution of ...
View Answer

This year Bill earned $3,000 more than last year.As a result,he received $2,500 less in government transfers.Therefore,Bill's implicit marginal tax rate is about

Correct Answer
verified

The Earned Income Tax Credit

Correct Answer
verified

Correct Answer
verified

Income is created when

Correct Answer
verified

Government programs that take money from high-income people and give it to low-income people typically

Correct Answer
verified

Assume that Peter is a single parent who is in poverty.He receives food stamps and Medicaid.For every $100 that he earns,Peter loses $35 of his food stamp benefits and $20 in his Medicaid benefits.Also,Peter's income is taxed at a rate of 10 percent.Then,Peter's effective marginal tax rate is

Correct Answer
verified

If a family earned $10,000 and,as a consequence,sustained a reduction of $4,000 in government benefits,the family's implicit marginal tax rate would be

Correct Answer
verified

Exam 28: Income Inequality and Poverty

As the War on Poverty programs were instituted and transfer payments expanded in the last half of the 1960s,what happened to the poverty rate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a person who receives welfare benefits earns income,those benefits are reduced as earned income rises.This is referred to as

Correct AnswerverifiedShow Answer

In 2009,the proportion of all poverty-level families headed by a female was

Correct AnswerverifiedShow Answer

The idea that transfer benefits to the poor encourage behavior that increases the risk of poverty is known as the

Correct AnswerverifiedShow Answer

How do the high implicit marginal tax rates that often occur when transfer payments are inversely linked to earnings affect the incentive of poor people to work and earn?

Correct AnswerverifiedShow Answer

Which of the following is not counted as income when the official poverty rate is calculated?

Correct AnswerverifiedShow Answer

Some people inherit money and wealth that they did nothing to earn.Why don't we tax inheritance at 100 percent?

Correct AnswerverifiedThe people who create the wealth must de...View AnswerShow Answer

It would be more reasonable to use annual income data as an index of economic inequality if all of the households

Correct AnswerverifiedShow Answer

Since 1970,income inequality in the United States has

Correct AnswerverifiedShow Answer

The phenomenon that describes how transfer programs,which significantly reduce the adversities of poverty,also reduce the opportunity cost of choices that often lead to poverty is known as

Correct AnswerverifiedShow Answer

The Samaritan's dilemma describes the problem that exists when transfer programs,designed to help the poor,encourage choices that can promote or perpetuate

Correct AnswerverifiedShow Answer

Income inequality exists in the United States.Is this necessarily a bad thing? Explain how our assessment of income inequality depends crucially on the source of that inequality.

Correct AnswerverifiedIn a market economy,the distribution of ...View AnswerShow Answer

This year Bill earned $3,000 more than last year.As a result,he received $2,500 less in government transfers.Therefore,Bill's implicit marginal tax rate is about

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Income is created when

Correct AnswerverifiedShow Answer

Government programs that take money from high-income people and give it to low-income people typically

Correct AnswerverifiedShow Answer

Assume that Peter is a single parent who is in poverty.He receives food stamps and Medicaid.For every $100 that he earns,Peter loses $35 of his food stamp benefits and $20 in his Medicaid benefits.Also,Peter's income is taxed at a rate of 10 percent.Then,Peter's effective marginal tax rate is

Correct AnswerverifiedShow Answer

If a family earned $10,000 and,as a consequence,sustained a reduction of $4,000 in government benefits,the family's implicit marginal tax rate would be

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The people who create the wealth must de...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In a market economy,the distribution of ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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