Question 1

Which would be evidence of more income inequality over time in the United States?

Accepted Answer

A)   An increase in the percentage of total personal income received by the lowest quintile
B)   An increase in the percentage of total personal income received by the highest quintile
C)   An increase in the percentage of total personal income received by the four lowest quintiles
D)   A decrease in the percentage of total personal income received by the highest quintileE) A) and B)
F) A) and C)

Question 2

Using the data in the above table,what percentage of households made $100,000 or more?

Accepted Answer

A)   13 percent
B)   15 percent
C)   72 percent
D)   85 percentE) None of the above
F) All of the above

Question 3

Which of the following is not one of the causes of the unequal distribution of income in the United States?

Accepted Answer

A)   Ability differences
B)   Job preferences and job risks
C)   Education and training
D)   The dispersion of market powerE) A) and D)
F) B) and C)

Question 4

Which would be a significant cause of income inequality in the United States?

Accepted Answer

A)   Housing
B)   Discrimination
C)   In-kind transfers
D)   Social SecurityE) B) and C)
F) A) and B) B

Question 5

The debate over income distribution focuses on the trade-off between:

Accepted Answer

A)   unemployment and economic freedom.
B)   equality and economic growth.
C)   economic efficiency and equality.
D)   unemployment and economic growth.E) All of the above
F) A) and D)

Question 6

The basic economic argument for greater income equality is that:

Accepted Answer

A)   an equal distribution of income is the logical outcome of any tax-transfer program.
B)   because citizens enjoy political equality,they are also entitled to economic equality.
C)   a more equal distribution of income will tend to maximize incentives to work,invest,and assume risk.
D)   a more equal distribution of a given amount of income will increase the total utility of consumers.E) All of the above
F) A) and D)

Question 7

Suppose that Jennifer earns $10,000 in year 1 and $40,000 in year 2,while Shawna earns $40,000 in year 1 and only $10,000 in year 2.Is there income inequality for the two individuals?

Accepted Answer

A)   The yearly data and the data over the two years indicate equality.
B)   The yearly data and the data over the two years indicate inequality.
C)   The yearly data indicate equality,but the data over the two years indicate inequality.
D)   The yearly data indicate inequality,but the data over the two years indicate equality.E) A) and D)
F) A) and C)

Question 8

What would be an example of how pure luck contributes to income inequality?

Accepted Answer

A)   Approval to receive unemployment benefits
B)   Receipt of a government grant for housing
C)   Selection as winner of a state lottery
D)   Admission to a state universityE) None of the above
F) A) and B)

Question 9

From 1993 to 2000,the poverty rate:

Accepted Answer

A)   increased from 4 percent to 11.3 percent.
B)   increased from 11.3 percent to 15 percent.
C)   decreased from 11.3 percent to about 4 percent.
D)   decreased from 15 percent to 11.3 percent.E) A) and B)
F) All of the above

Question 10

The percentage of the population living in poverty during the 1959 to 1969 period:

Accepted Answer

A)   decreased.
B)   increased.
C)   remained relatively constant.
D)   both increased and decreased.E) A) and B)
F) A) and C)

Question 11

The data on the distribution of personal income by households in the United States indicates that there is considerable income equality.

Accepted Answer

A) True 
 B)False

Question 12

The equality-efficiency trade-off suggests that:

Accepted Answer

A)   welfare programs stimulate incentives to work.
B)   inefficiencies result when income is transferred from rich to poor.
C)   noncash transfers are superior to cash transfers.
D)   economic growth is the best means of reducing poverty.E) All of the above
F) B) and C)

Question 13

The incidence of poverty is very high among the elderly.

Accepted Answer

A) True 
 B)False

Question 14

The distribution of personal income in the United States is significantly more equal after taxes and transfer payments are taken into account.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the above graph.If a curve shifted from (b) to (d) ,then the Gini ratio would:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   become negative.E) A) and C)
F) All of the above A

Question 16

Benefits under social insurance programs are paid on the basis of need.

Accepted Answer

A) True 
 B)False  False

Question 17

Which is one cause of the unequal distribution of income in the United States?

Accepted Answer

A)   Income mobility over time
B)   Differences in preferences for work and leisure
C)   The high levels of noncash transfers
D)   The low benefit-reduction rateE) None of the above
F) A) and C)

Question 18

A Lorenz curve shows:

Accepted Answer

A)   the tax and transfer trade-off.
B)   how many households are living in poverty.
C)   perfect income equality.
D)   the distribution of income.E) All of the above
F) None of the above

Question 19

The TANF program:

Accepted Answer

A)   is a form of social insurance.
B)   has been found to be unconstitutional by the Supreme Court.
C)   limits total lifetime welfare benefits to five years and requires people to work after receiving benefits for two years.
D)   perpetuates the so-called culture of poverty.E) A) and B)
F) None of the above

Question 20

Social Security payments are primarily made to:

Accepted Answer

A)   families with dependent children.
B)   families affected by natural disasters.
C)   retired and disabled workers.
D)   unemployed workers.E) B) and C)
F) A) and D)

Exam 11: Income Inequality and Poverty

Which would be evidence of more income inequality over time in the United States?

Correct AnswerverifiedShow Answer

Using the data in the above table,what percentage of households made $100,000 or more?

Correct AnswerverifiedShow Answer

Which of the following is not one of the causes of the unequal distribution of income in the United States?

Correct AnswerverifiedShow Answer

Which would be a significant cause of income inequality in the United States?

Correct AnswerverifiedB

The debate over income distribution focuses on the trade-off between:

Correct AnswerverifiedShow Answer

The basic economic argument for greater income equality is that:

Correct AnswerverifiedShow Answer

Suppose that Jennifer earns $10,000 in year 1 and $40,000 in year 2,while Shawna earns $40,000 in year 1 and only $10,000 in year 2.Is there income inequality for the two individuals?

Correct AnswerverifiedShow Answer

What would be an example of how pure luck contributes to income inequality?

Correct AnswerverifiedShow Answer

From 1993 to 2000,the poverty rate:

Correct AnswerverifiedShow Answer

The percentage of the population living in poverty during the 1959 to 1969 period:

Correct AnswerverifiedShow Answer

The data on the distribution of personal income by households in the United States indicates that there is considerable income equality.

Correct AnswerverifiedShow Answer

The equality-efficiency trade-off suggests that:

Correct AnswerverifiedShow Answer

The incidence of poverty is very high among the elderly.

Correct AnswerverifiedShow Answer

The distribution of personal income in the United States is significantly more equal after taxes and transfer payments are taken into account.

Correct AnswerverifiedShow Answer

Refer to the above graph.If a curve shifted from (b) to (d) ,then the Gini ratio would:

Correct AnswerverifiedA

Benefits under social insurance programs are paid on the basis of need.

Correct AnswerverifiedFalse

Which is one cause of the unequal distribution of income in the United States?

Correct AnswerverifiedShow Answer

A Lorenz curve shows:

Correct AnswerverifiedShow Answer

The TANF program:

Correct AnswerverifiedShow Answer

Social Security payments are primarily made to:

Correct AnswerverifiedShow Answer

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B

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A

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False

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