Question 1

A negative income tax system would provide all households, including the poor, with:

Accepted Answer

A)   cash payments.
B)   incentives to earn income.
C)   higher income levels.
D)   medical assistance.E) A) and D)
F) B) and C)

Question 2

Exhibit 12-9 Negative Income Tax

​
As shown in Exhibit 12-9, a family of four with an income of $20,000 receives ____ from the government:

Accepted Answer

A)   zero payment
B)   the break-even income of $20,000
C)   a $10,000 payment
D)   a $10,000 tax defermentE) None of the above
F) B) and C)

Question 3

Statistics on families below the poverty line may be overstated because:

Accepted Answer

A)   the poor are primarily children who soon will move out of poverty.
B)   poverty in the United States is rich compared to poverty in other nations.
C)   the income levels used to measure poverty do not include in-kind transfers.
D)   unemployment compensation is a program closed to the poor.E) None of the above
F) A) and B)

Question 4

"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:

Accepted Answer

A)   a trade off between interest rates and unemployment.
B)   a form of discrimination.
C)   a conflict between equity and efficiency.
D)   a conflict between full employment and economic growth.E) A) and C)
F) C) and D)

Question 5

Which of the following statements is true ?

Accepted Answer

A)   All people in poverty are on welfare.
B)   Unemployment compensation is an example of an in-kind transfer.
C)   Temporary Assistance to Needy Families (TANF)  is an example of a cash payment made by government to the impoverished.
D)   After cash assistance and in-kind transfers are considered the distribution of income in the United States is more unequal.E) A) and B)
F) B) and D)

Question 6

Medicaid and SNAP (food stamps)  are:

Accepted Answer

A)   available only to families, not to individuals.
B)   counterproductive.
C)   forms of in-kind assistance.
D)   forms of cash assistance.E) B) and C)
F) B) and D)

Question 7

In a Lorenz curve diagram, the 45 ° line represents:

Accepted Answer

A)   perfect income equality.
B)   zero inflation.
C)   a negative income tax.
D)   an extremely unequal distribution of income.E) A) and B)
F) A) and C)

Question 8

The revenue in the Social Security Trust Fund first fell below the benefits it paid out in 2010. If this trend continues, the Trust Fund will be depleted. What change(s)  occurred to cause the revenue to fall below the benefits?

Accepted Answer

A)   The U.S. Treasury Securities in which the Trust Fund is invested began paying out less interest.
B)   Life expectancy is rising and a larger number of people are retiring.
C)   The age at which retired individuals could start collecting benefits was lowered.
D)   People were allowed to start privately investing some of their money in stocks and lost money through risky investments.E) A) and D)
F) A) and C)

Question 9

Which of the following statements is true ?

Accepted Answer

A)   Income distribution in the United States has gotten progressively more unequal since 1929.
B)   The Lorenz curve indicates the degree of discrimination in an economy.
C)   The Lorenz curve indicates the degree of income inequality in an economy.
D)   The richest 5% of Americans earn approximately half of the nation's income.E) A) and B)
F) A) and C)

Question 10

Consider a labor market in which employers discriminate against African Americans. Comparing the labor market equilibrium with no discrimination to the equilibrium with discrimination,

Accepted Answer

A)   The African American wage rate is higher without discrimination than with discrimination.
B)   The number of African American workers hired is lower without discrimination than with discrimination.
C)   The white wage rate is higher without discrimination than with discrimination.
D)   The African American wage rate and the white wage rate are equal with and without discrimination; only the number of workers differs.E) None of the above
F) A) and B)

Question 11

The official poverty rate for all persons declined sharply between 1959 and:

Accepted Answer

A)   the 2000s.
B)   the 1970s.
C)   the 1980s.
D)   the 1990s.E) B) and C)
F) B) and D)

Question 12

The poverty line equals the:

Accepted Answer

A)   average income of the bottom one-tenth of all income recipients.
B)   cost of an economical and nutritional food plan for a family multiplied by six.
C)   cost of an economical and nutritional food plan for a family multiplied by three.
D)   average income of a family headed by a worker who has been unemployed for six months or more.E) All of the above
F) None of the above

Question 13

Exhibit 12-8 Negative income tax for a family

In Exhibit 12-8, consider a family that earns less than the break-even income level. For each $1 of earned income, this family's government payment will be reduced by:

Accepted Answer

A)   $0.10.
B)   $0.25.
C)   $0.33.
D)   $0.50.E) A) and B)
F) None of the above

Question 14

Which of the following is an in-kind transfer payment?

Accepted Answer

A)   Medicaid.
B)   Social Security.
C)   unemployment insurance.
D)   Temporary Assistance to Needy Families.E) A) and B)
F) All of the above

Question 15

Exhibit 12-1 Income distribution for three countries

Exhibit 12-1 shows the percentage of income received by each population quintile. In Country I we can conclude that the:

Accepted Answer

A)   richest 20 percent of the population received 25 percent of the economy's income.
B)   richest 20 percent of the population received 40 percent of the economy's income.
C)   richest 20 percent of the population received 80 percent of the economy's income.
D)   least-wealthy 20 percent of the population received 40 percent of the economy's income.E) A) and C)
F) A) and D)

Question 16

SNAP (food stamps)  and Medicaid are examples of:

Accepted Answer

A)   money transfers
B)   resource earnings
C)   in-kind transfers
D)   tax expendituresE) B) and C)
F) A) and D)

Question 17

Which of the following statements is correct ?

Accepted Answer

A)   About 25 percent of the U.S. population earns an income below the poverty line.
B)   About 50 percent of blacks earn an income below the poverty line.
C)   Since 1980 the fraction of persons below the poverty level has risen sharply.
D)   The area of the United States with the highest percentage of the population below the poverty line is the south.E) C) and D)
F) B) and D)

Question 18

Which of the following is not an in-kind subsidy?

Accepted Answer

A)   unemployment compensation
B)   low-cost rental housing
C)   Medicare
D)   MedicaidE) C) and D)
F) B) and C)

Question 19

Exhibit 12-7 Negative income tax

Under the negative income tax scheme in Exhibit 12-7, families earning between $10,000 and $40,000 would:

Accepted Answer

A)   receive the maximum negative income tax payment of $20,000.
B)   receive payments under the negative income tax.
C)   pay no income taxes, but receive no payments.
D)   pay taxes of $5,000.E) B) and C)
F) A) and D)

Question 20

Because the benefits distributed under TANF and Medicaid are essentially controlled by the states, critics argue that

Accepted Answer

A)   recipients can receive benefits for a longer time period than if the programs were controlled by the federal government.
B)   people receiving benefits have greater incentive to work more.
C)   poor people with equal needs receive unequal benefits.
D)   a negative income tax controlled by the federal government is less efficient.E) None of the above
F) B) and C)

Exam 12: Income Distribution Poverty and Discrimination

Medicaid and SNAP (food stamps) are:

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The revenue in the Social Security Trust Fund first fell below the benefits it paid out in 2010. If this trend continues, the Trust Fund will be depleted. What change(s) occurred to cause the revenue to fall below the benefits?

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Which of the following statements is true ?

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The official poverty rate for all persons declined sharply between 1959 and:

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Which of the following statements is correct ?

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Exhibit 12-8 Negative income tax for a family In Exhibit 12-8, consider a family that earns less than the break-even income level. For each $1 of earned income, this family's government payment will be reduced by:

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The poverty line equals the:

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Exhibit 12-1 Income distribution for three countries Exhibit 12-1 shows the percentage of income received by each population quintile. In Country I we can conclude that the:

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Exhibit 12-7 Negative income tax Under the negative income tax scheme in Exhibit 12-7, families earning between $10,000 and $40,000 would:

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"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:

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Which of the following is an in-kind transfer payment?

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In a Lorenz curve diagram, the 45 ° line represents:

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Which of the following is not an in-kind subsidy?

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Because the benefits distributed under TANF and Medicaid are essentially controlled by the states, critics argue that

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Exhibit 12-9 Negative Income Tax ​ As shown in Exhibit 12-9, a family of four with an income of $20,000 receives ____ from the government:

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SNAP (food stamps) and Medicaid are examples of:

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Statistics on families below the poverty line may be overstated because:

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Consider a labor market in which employers discriminate against African Americans. Comparing the labor market equilibrium with no discrimination to the equilibrium with discrimination,

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Which of the following statements is true ?

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A negative income tax system would provide all households, including the poor, with:

Correct AnswerverifiedShow Answer

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Exhibit 12-9 Negative Income Tax As shown in Exhibit 12-9, a family of four with an income of $20,000 receives ____ from the government:

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