Question 1

The ownership of wealth is unequally distributed across households in the United States.

Accepted Answer

A) True 
 B)False

Question 2

The equality-efficiency trade-off refers to:

Accepted Answer

A)   the conflict between risk averters and risk takers.
B)   the willingness of Congress to abandon existing welfare programs in favor of a comprehensive plan to increase education and training for low-income persons.
C)   possible conflicts between the goals of economic efficiency and greater income equality.
D)   the difference between the goals of income equality and equality of economic opportunity.E) A) and C)
F) C) and D)

Question 3

During the past 35 years,the degree of income inequality in the United States has decreased considerably.

Accepted Answer

A) True 
 B)False

Question 4

What is a major reason for growing income inequality in the United States?

Accepted Answer

A)   Higher marginal tax rates
B)   Unemployment benefits
C)   More skilled workers
D)   Import competitionE) A) and C)
F) A) and B)

Question 5

The TANF program is designed to:

Accepted Answer

A)   increase the minimum wage.
B)   shift people from welfare to employment.
C)   provide medical insurance to poverty level workers.
D)   provide income to the blind and disabled.E) B) and D)
F) A) and C)

Question 6

One of the provisions of the Temporary Assistance for Needy Families funds was to:

Accepted Answer

A)   guarantee cash assistance for poor families.
B)   set a five-year lifelong limit on welfare benefits.
C)   get the federal government to pay more of the cost of welfare.
D)   make welfare benefits more equitable among those receiving them.E) A) and C)
F) B) and C)

Question 7

Refer to the above graph.The Gini ratio would be greatest for which curve?

Accepted Answer

A)   a
B)   b
C)   c
D)   dE) A) and B)
F) A) and C)

Question 8

Which contributes more to the reduction of income inequality?

Accepted Answer

A)   Taxes
B)   Wealth
C)   Transfer payments
D)   Earned income tax creditsE) B) and D)
F) A) and C)

Question 9

Differences in "job preferences" and "job risks":

Accepted Answer

A)   illustrate the trade-off between equality and efficiency.
B)   can be used to broaden the concept of income.
C)   result from government transfer programs.
D)   are a cause of income inequality.E) A) and B)
F) None of the above

Question 10

When the distribution of income is adjusted for noncash transfers,the income distribution shows:

Accepted Answer

A)   perfect equality.
B)   greater equality.
C)   greater inequality.
D)   little,if any,change.E) A) and C)
F) None of the above

Question 11

A reduction in the redistribution of income:

Accepted Answer

A)   lowers the poverty rate for people.
B)   raises people's standard of living.
C)   results in more income inequality.
D)   results in less income inequality.E) C) and D)
F) All of the above

Question 12

As the area between the Lorenz curve and diagonal gets larger,the Gini ratio:

Accepted Answer

A)   rises to reflect greater equality.
B)   rises to reflect greater inequality.
C)   falls to reflect greater inequality.
D)   falls to reflect greater equality.E) C) and D)
F) A) and D)

Question 13

About what percentage of Hispanics lived in poverty in 2009?

Accepted Answer

A)   9 percent
B)   18 percent
C)   25 percent
D)   44 percentE) None of the above
F) A) and B)

Question 14

Refer to the above graph.Venezuela has a very small number of extremely wealthy households and an extremely large number of very poor households.If the United States is represented by Lorenz curve (C) above,which curve would represent Venezuela?

Accepted Answer

A)   a
B)   b
C)   c
D)   dE) All of the above
F) C) and D)

Question 15

The percentage of total before-tax income received by the highest 20 percent of households in 2009 was about:

Accepted Answer

A)   21 percent.
B)   50 percent.
C)   61 percent.
D)   82 percent.E) B) and D)
F) B) and C)

Question 16

One main complaint about the official income thresholds for defining poverty is that they:

Accepted Answer

A)   fail to account for the effects of the minimum wage.
B)   have remained fixed for over the past two decades.
C)   include noncash benefits such as food stamps and rent subsidies.
D)   are inadequate to meet basic needs in major metropolitan areas.E) B) and C)
F) A) and D)

Question 17

Refer to the above diagrams that show identical marginal utility from income curves for Singer and Catalano.The marginal utility from income curves are drawn on the assumption that:

Accepted Answer

A)   Singer buys more inferior goods than does Catalano.
B)   Singer and Catalano have identical capacities to enjoy income.
C)   Catalano has a greater capacity to enjoy income than does Singer.
D)   Singer has a greater capacity to enjoy income than does Catalano.E) All of the above
F) B) and D)

Question 18

The degree of inequality in the distribution of annual income is:

Accepted Answer

A)   understated because it does not take into account wages and salaries.
B)   overstated because it does not take into account how income changes over time.
C)   understated because it does not take into account how income changes over time.
D)   overstated because it does not take into account wages and salaries.E) A) and B)
F) C) and D)

Question 19

Which would best be considered part of income?

Accepted Answer

A)   Wages and salaries
B)   The value of one's home
C)   Corporate stock holdings
D)   Money in a bank accountE) None of the above
F) A) and B)

Question 20

As the area between the Lorenz curve and diagonal gets smaller,the Gini ratio:

Accepted Answer

A)   rises to reflect greater equality.
B)   rises to reflect greater inequality.
C)   falls to reflect greater inequality.
D)   falls to reflect greater equality.E) All of the above
F) B) and C)

Exam 11: Income Inequality and Poverty

One of the provisions of the Temporary Assistance for Needy Families funds was to:

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During the past 35 years,the degree of income inequality in the United States has decreased considerably.

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As the area between the Lorenz curve and diagonal gets larger,the Gini ratio:

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The equality-efficiency trade-off refers to:

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As the area between the Lorenz curve and diagonal gets smaller,the Gini ratio:

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About what percentage of Hispanics lived in poverty in 2009?

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The ownership of wealth is unequally distributed across households in the United States.

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The percentage of total before-tax income received by the highest 20 percent of households in 2009 was about:

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Refer to the above diagrams that show identical marginal utility from income curves for Singer and Catalano.The marginal utility from income curves are drawn on the assumption that:

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Refer to the above graph.The Gini ratio would be greatest for which curve?

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The TANF program is designed to:

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When the distribution of income is adjusted for noncash transfers,the income distribution shows:

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A reduction in the redistribution of income:

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One main complaint about the official income thresholds for defining poverty is that they:

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What is a major reason for growing income inequality in the United States?

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Refer to the above graph.Venezuela has a very small number of extremely wealthy households and an extremely large number of very poor households.If the United States is represented by Lorenz curve (C) above,which curve would represent Venezuela?

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Which would best be considered part of income?

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Differences in "job preferences" and "job risks":

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The degree of inequality in the distribution of annual income is:

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Which contributes more to the reduction of income inequality?

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