Ch14 Poverty Economic Inequality Multiple Choice Questions 1
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| Ch14 Poverty - Economic Inequality
Multiple Choice Questions 1. When reference is made to the ____________, it means the specific amount of income needed for a basic standard of living. A. poverty trap B. income line C. income gap D. poverty line Answer: D Reference: Explanation: Type: Multiple Choice 2. A situation of __________ arises when one group receives a higher share of total income or wealth than others. A. poverty B. inequality C. poverty entrapment D. quintiles Answer: B Reference: Explanation: Type: Multiple Choice 3. Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create ______________. A. a poverty trap B. an income inequity C. a poverty line D. a safety net Answer: A Reference: Explanation: Type: Multiple Choice 4. An individual whose income level is just above the poverty line would most likely be classified as being a member of the _____________ . A. working poor B. poverty trapped C. near-poor D. illiterate poor Answer: C Reference: Explanation: Type: Multiple Choice 5. The group of government programs that provide assistance to the poor and the near-poor is synonymous with which of the following? A. safety net B. safety quintiles C. poverty net D. antipoverty net Answer: A Reference: Explanation: Type: Multiple Choice 6. A method often used by economists to look at distribution of income in a society's economy involves A. programs for wealth redistribution. B. quintiles, or dividing a whole group into fifths. C. imposing taxes to redistribute wealth. D. quads, or dividing a whole group into fourths. Answer: B Reference: Explanation: Type: Multiple Choice 7. A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ . A. left quintile; right quintile B. right quintile; left quintile C. horizontal axis; vertical axis D. vertical axis; horizontal axis Answer: C Reference: Explanation: Type: Multiple Choice 8. In circumstances dealing with poverty, the term ______________ means taking income from those with higher incomes and providing income to those with lower incomes. A. safety net B. estate tax C. minimum wage D. redistribution Answer: D Reference: Explanation: Type: Multiple Choice 9. ______________ allows the government to collect wealth for redistribution based on the amount of stored wealth that is being passed on in the form of an inheritance. A. An inheritance tax B. A redistribution tax C. An estate tax D. A death tax Answer: C Reference: Explanation: Type: Multiple Choice 10. With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement? A. labor markets consider how much a family needs for health care B. market forces consider what happens to families in their business decisions C. labor markets consider how much a family needs for necessities D. labor markets create considerable inequalities relating to income Answer: D Reference: Explanation: Type: Multiple Choice 11. _________________ is the level where half of all families had more than that level and half had less. A. The first quintile B. The third quintile C. The median D. The quintile Answer: C Reference: Explanation: Type: Multiple Choice 12. In the U.S., comparisons of high and low incomes raise issues of economic ______________________. A. inequality and poverty B. equality and wealth distribution C. wealth distribution and poverty D. equality and inequality Answer: A Reference: Explanation: Type: Multiple Choice 13. Poverty is measured by the number of people who fall below A. a certain level of income. B. the income needed for a basic standard of living. C. the nation's economic poverty line. D. all the above are correct. Answer: D Reference: Explanation: 14. Economic inequality compares the share of the ____________ in society that is received by different groups; such as comparing the share of income received by the _________ to the share of income received by the _____________ . A. total wealth; top 10%; bottom 10% B. answers a and c are correct. C. total income; bottom 10%; top 10% D. none of the above are correct. Answer: B Reference: Explanation: 15. In the United States, the official definition of the poverty line traces back to a single person: ___________________, whose idea was to ___________________________. A. Mollie Orshansky; define a poverty line based on the cost of a healthy diet B. Lawrence Ellison; define a range of government policies to reduce poverty C. Molly Orshansky; define a range of government policies to reduce poverty D. Max Lorenz; define the Lorenz curve to illustrate the poverty line Answer: A Reference: Explanation: 16. In the U.S., poverty rates are relatively low A. for the elderly B. for the well-educated C. for the male-headed households D. for whites and all of the above Answer: D Reference: Explanation: 17. The concept of a poverty line raises a number of complex questions. Which of the following represents such a question? A. Should the poverty line be adjusted to take income equality into account? B. Do antipoverty programs belong in a command economy? C. Should the national poverty line be applied in all states? D. Why give cash and not just food stamps to the poor? Answer: C Reference: Explanation: Category: Analyze 18. If the 2014 poverty line is based on the amount of money an individual has earned as income, then A. the poverty line will be adjusted to take the value of non-cash government assistance into account. B. government programs that provide non-cash assistance to the poor are not considered. C. the concept of what poverty means in the 21st century should be rethought from scratch. D. it will be difficult to compare poverty rates over time in a market-driven economy. Answer: B Reference: Explanation: Category: Analyze 19. If Congress voted every few years to redefine completely what poverty means, A. it will be useful to have a poverty line whose basic definition changes a lot. B. then it will set two poverty lines that it applies to welfare and the near-poor. C. then a substantial share of the U.S. population will subsist in dire poverty. D. then it would be difficult to compare poverty rates over time. Answer: D Reference: Explanation: Category: Analyze 20. If incomes rise for both low-income and high-income workers, but rise less for the high-income workers, A. then poverty will rise and inequality will fall B. then poverty will fall and inequality will rise. C. then poverty will rise and inequality will rise. D. then poverty will fall and inequality will fall. Answer: D Reference: Explanation: 21. If a rise in incomes for both low-income and high-income workers is higher for the high-income workers, A. then poverty will fall and inequality will rise. B. then poverty will rise and inequality will rise. C. then poverty will fall and inequality will fall. D. then poverty will rise and inequality will rise. Answer: A Reference: Explanation: 22. If a rise in incomes is the same proportion for both low-income and high-income workers, A. then poverty will rise and inequality will remain unchanged. B. then poverty will rise and inequality will rise. C. then poverty will fall and inequality will remain unchanged. D. then poverty will fall and inequality will fall. Answer: C Reference: Explanation: 23. If the income level falls for low-income workers, but remains unchanged for high-income workers, A. then poverty will rise and inequality will fall. B. then poverty will fall and inequality will fall. C. then poverty will fall and inequality will rise. D. then poverty will rise and inequality will rise. Answer: D Reference: Explanation: 24. If the level of incomes rises for high-income workers but doesn’t change for low-income workers, A. then poverty will not change and inequality will fall. B. then poverty will not change and inequality will rise. C. then poverty will rise and inequality will fall. D. then poverty will fall and inequality will rise. Answer: B Reference: Explanation: 25. If incomes rise for low-income workers but don’t change for high-income workers, A. then poverty will fall and inequality will fall. B. then poverty will rise and inequality will fall. C. then poverty will rise and inequality will rise. D. then poverty will fall and inequality will rise. Answer: A Reference: Explanation: 26. If the poverty trap were made even more difficult to overcome because a working mother will have extra expenses like transportation and child care that a nonworking mother will not face, then A. she will have a powerful incentive to work more than one job. B. the family better off than if she did not work at all. C. her economic gains from working will be even smaller. D. working now and in the future is even more attractive. Answer: C Reference: Explanation: 27. How does being caught in a poverty tap affect an individual's future job prospects? A. it causes working in the future even less attractive B. it causes a lack of job experience and contacts C. it creates a powerful incentive to acquire skills training D. it creates the outcomes presented in both a and b Answer: D Reference: Explanation: 28. A government program guarantees $18,000 in income, even for those who do not work at all. If the recipient earns income by working, then the $18,000 benefit is reduced by 50 cents for each $1 earned. Will this program eliminate the poverty trap? A. Yes, enacting such a program will eliminate the poverty trap. B. No, enacting such a program may still reduce the incentive to work. C. Yes, and enacting such a program will cost the government less money. D. Yes, enacting such a program will create adequate incentive to work. Answer: B Reference: Explanation: 29. A government has decided to phase out its antipoverty program support payments more slowly to help the near-poor become self-sufficient. One criticism about this policy is likely to be A. that this antipoverty program costs the government more money. B. that the near-poor will not be required to pay back benefits. C. that the near-poor may still lack skills for menial jobs. D. that antipoverty programs shift wealth from the rich to the poor. Answer: A Reference: Explanation: Category: Evaluate 30. In the U.S., government support programs that are focused specifically on the poor include which of the following? A. Medicaid credits B. welfare C. income stamps D. food credits Answer: B Reference: Explanation: Type: Multiple Choice 31. From the Great Depression of the 1930s until 1996, the United States’ most visible antipoverty program was Aid to Families with Dependent Children, which provided cash payments to A. married men with families who were below the poverty line. B. married women with families who were below the poverty line. C. all mothers with children who were below the poverty line. D. only those orphans who were living below the poverty line. Answer: C Reference: Explanation: Type: Multiple Choice 32. Under which of the following government programs would the federal government’s welfare spending rise or fall depending on the number of poor people, and on how each state set its own welfare contribution? A. ADFC B. TANF
C. TNAF D. AFDC
Explanation: 33. Under which of the following antipoverty programs does the federal government give a fixed amount of money to each state? A. ADFC B. TANF
C. AFDC D. TNAF
Explanation: Type: Multiple Choice 34. Which of the following is a key requirement imposed under the Welfare Reform Act's new antipoverty program? A. states receiving TANF grants must impose work or school attendance requirements B. no one can receive TNAF benefits for more than 3 years while attending school C. no one can receive AFDC benefits for more than 5 years over their lifetime D. states receiving ADFC benefits must impose work or school attendance requirements Answer: A Reference: Explanation: 35. There seems to be little evidence that poor families experienced _______________ as a result of ____________ . A. a tax refund; having earned income B. a tax break; having earned income C. an increased standard of living; EIC D. a reduced standard of living; TANF Answer: D Reference: Explanation: 36. Government developed a method called __________________ to assist the working poor through the tax system. The amount of the tax break ____________ with the amount of income earned, ________________ . A. eligible income credit; decreases; and by age of child B. earned income credit; increases; up to a point C. eligible income credit; increases; and by age of child D. earned income credit; decreases; up to a point Answer: B Reference: Explanation: 37. Robert is a widower raising 5 year old twin boys. In 2013, after the plant where he had worked for 10 years shut down, he was able to obtain part-time work that paid him $13,000.00 a year. He receives the earned income tax credit. If Robert receives a raise, so that he will earn $16,350, the earned income credit will be A. reduced by 21 cents per dollar. B. reduced by 25 cents per dollar. C. phased out completely. D. will not be reduced. Answer: D Reference: Explanation: Category: Analyze 38. One reason that the welfare reform bill TANF worked as well as it did is that A. the EIC was greatly expanded in the early 1990s. B. the EIC was greatly expanded in the late 1980s. C. it was able to generate an increase in the returns to work for the poor. D. its worth about $2,500 per family with children and all of the above. Answer: D Reference: Explanation: 39. The food stamp benefit A. is a state funded program started in 1984. B. does not contribute to the poverty trap from an economic viewpoint. C. has time limits and is not a complete disincentive to work. D. is reduced by $35 for every $100 earned and a and c above. Answer: C Reference: Explanation: 40. Medicaid is a federal-state joint program enacted in 1965 that provides medical insurance for A. the near-poor and the low-income elderly. B. all those below the poverty line. C. low-income mothers, but not their spouses. D. the disabled and all of the above. Answer: A Reference: Explanation: 41. To address a common poverty trap problem for many low-paid Americans whose jobs pay enough that a family could lose its eligibility for____________ , yet those jobs don’t offer ______________________ either, some states guaranteed that children would not loose their coverage if their parents worked. A. food stamps; retirement benefits B. Medicaid; health insurance benefits C. Medicaid; drug insurance benefits D. food stamps; Medicaid benefits Answer: B Reference: Explanation: 42. Which of the following is a safety net that could provide a decent standard of living and/or incentives to work? A. government-subsidized school lunches and breakfasts B. Low Income Home Energy Assistance Program C. the Special Supplemental Food Program for WIC D. Supplemental Security Income and the above Answer: D Reference: Explanation: Category: Analyze 43. Measuring economic inequality involves comparing those with ________________ . A. high incomes and those below the poverty line B. high incomes and those with low incomes C. high incomes middle incomes, and low incomes D. high incomes and those near the poverty line Answer: C Reference: Explanation: Type: Multiple Choice 44. One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then A. to divide all households into quintiles. B. comparing the groups. C. to divide all households by size. D. comparing the share of the population. Answer: A Reference: Explanation: Type: Multiple Choice 45. A Lorenz curve graphs the _________________ received by everyone up to a certain quintile. A. unequal distribution over time B. normative shares of income C. cumulative shares of income D. total share of income Answer: C Reference: Explanation: Type: Multiple Choice 46. Every Lorenz curve diagram begins with a line __________________ . A. sloping down at a 45-degree angle B. sloping up at a 45-degree angle C. upward sloping U-shape D. downward sloping hump shape Answer: B Reference: Explanation: Type: Multiple Choice 47. The trick in graphing a Lorenz curve is that you must transform the shares of income ________________, which are shown in the first column of numbers in the table, into ___________, shown in the ________ column of numbers. A. for each distribution; total income; third B. for each distribution; total income; second C. for each specific quintile; cumulative income, third D. for each specific quintile; cumulative income; second Answer: D Reference: Explanation: 48. In the framework of a Lorenz curve, the final entry in the cumulative income column needs to be _________. A. total income B. cumulative income C. 100% D. 45%
Explanation: Type: Multiple Choice 49. Why did inequality of household income increase in the United States in recent decades? A. growth of single-parent families at the top end of the income distribution B. higher-earner couples near the top end of the income distribution C. increase in earnings received by high-skilled labor relative to low-skilled labor D. demand for high-skilled labor at higher wages increased and b and c Answer: D Reference: Explanation: 50. The greater inequality of wages can be viewed as a sign that A. demand for skilled labor is increasing faster than supply. B. supply for skilled labor is decreasing faster than demand. C. demand for skilled labor is decreasing faster than supply. D. supply for skilled labor is increasing faster than demand. Answer: A Reference: Explanation: Type: Multiple Choice 51. If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use? A. a tax imposed on the value of inheritances B. redistribution from those with high incomes to those with low incomes C. trying to assure that a ladder of opportunity is widely available D. the three mains sets of tools it can use include all of the above Answer: D Reference: Explanation: Category: Analyze 52. Crystal is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Crystal’s labor-leisure opportunity set A. has doubled B. is smaller with the government support program C. is not affected by the government support program D. is larger with the government support program Answer: D Reference: Explanation: 53. Lesley is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Lesley A. has no monetary incentive to work, though she may still choose to work B. has a monetary incentive to work and will maximize her income if she works for 300 hours C. has a monetary incentive to work and will maximize her income if she works for 600 hours D. has a monetary incentive to work and will maximize her income if she works for 900 hours Answer: A Reference: Explanation: 54. Bruce is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Bruce works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. With this policy in place, if Bruce works 600 hours, his income will be A. $3,600 B. $16,440 C. $15,000 D. $12,840 Answer: B Reference: Explanation: 55. Tim is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Tim works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. This government policy provides a monetary incentive to work, because A. it pays the same amount, regardless of how much Tim works D. benefits are not phased out C. Tim receives a stipend regardless of whether he works or not D. Tim’s income level increases the more he works Answer: D Reference: Explanation: 56. Lance is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Lance works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. When Lance works 1,200 hours, he receives _______ in government support and his total income is _______. A. $10,680, $15,000 B. $7,800, $15,000 C. $10,680, $17,880 D. $7,800, $17,880 Answer: C Reference: Explanation: 56. A group of 10 golfing buddies have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the bottom quintile of this income distribution is A. 3.5% B. 5.5%
C. 7.5% D. 9.5%
Explanation: 57. A group of 10 golfing buddies have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the third quintile of this income distribution is A. 13.1% B. 13.9%
C. 14.1% D. 14.9%
Explanation: 58. A group of 10 golfing buddies have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the lowest quintile of this income distribution is _______ than that for the bottom quintile of the U.S. income distribution in 2005. The share of income received by the highest quintile of this income distribution is _______ than that for the highest quintile of the U.S. income distribution in 2005. A. lower, lower B. lower, higher C. higher, higher D. higher, lower Answer: D Reference: Explanation: 59. Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the second-to-bottom quintile of this income distribution is A. 11.6% B. 12.6%
C. 13.6% D. 14.6%
Explanation: 60. Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the bottom quintile of this income distribution is _____, which is ______ than that for the bottom quintile of the U.S. income distribution in 2005. A. 2.6%, lower B. 4.6%, lower C. 4.6%, higher D. 2.6%, higher Answer: C Reference: Explanation: 61. Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the highest quintile of this income distribution is ______, which is _____ than that for the highest quintile of the U.S. income distribution in 2005. A. 37.9%, lower B. 39.7%, lower C. 37.9%, higher D. 39.7%, higher Answer: A Reference: Explanation: 62. Suppose that new high-technology farming equipment is developed. These new machines are substitutes for low-income workers such as farm laborers, but they are complements for high-income workers such as farm technicians and farm owners. This new technology will shift the demand curve for low-income workers to the ______ while shifting the demand curve for high-income workers to the _____. A. left, left B. left, right C. right, left D. right, right Answer: B Reference: Explanation: 63. Suppose that new high-technology farming equipment is developed. These new machines are substitutes for low-income workers such as farm laborers, but they are complements for high-income workers such as farm technicians and farm owners. This new technology will _____ wages in for low-income workers and _____ income inequality. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase Answer: D Reference: Explanation: 64. Suppose that new high-technology farming equipment is developed. These new machines are substitutes for low-income workers such as farm laborers, but they are complements for high-income workers such as farm technicians and farm owners. This new technology will ______ employment and _____ wages for high-income workers. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase Answer: B Reference: Explanation: 65. Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will ______ the supply of low-skilled workers and ______ the supply of high-skilled workers. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase Answer: D Reference: Explanation: Essay Questions 1. Briefly explain how markets determine wages and where this can lead. Reference: Explanation: Labor markets will determine wages according to demand and supply, which can lead to very low incomes for some people and very high incomes for others. Type: Essay 2. Briefly compare and contrast poverty and economic inequality. Reference: Explanation: Poverty and economic inequality are not the same thing. Poverty applies to the condition of people who cannot afford the necessities of life. Economic inequality refers to the disparity between those with higher and lower incomes. Type: Essay 3. Briefly discuss what the poverty rate, including what it is, how it is determined, and how this relates to the near poor. Reference: Explanation: The poverty rate is what percentage of the population lives below the poverty line, which is determined by the amount of income that it takes to purchase the necessities of life. Choosing a poverty line will always be somewhat controversial. The near-poor are those with low incomes who are just above the poverty line. Type: Essay 4. Briefly discuss the various aspects of the poverty trap. Reference: Explanation: A poverty trap occurs when government-support payments for the poor decline as the poor earn more income. As a result, the poor do not end up with much more income when they work, because the loss of government support largely or completely offsets any income that is earned by working. The bite of the poverty trap can be reduced by phasing out government benefits more slowly, as well as by imposing requirements for work as a condition of receiving benefits and a time limit on benefits. Type: Essay 5. Identify what the groups of government programs that assist the poor are called and provide examples of the prominent programs that are provided in the U.S.. Reference: Explanation: The groups of government programs that assist the poor are called the safety net. In the United States, prominent safety net programs include Temporary Assistance to Needy Families (TANF), the earned income credit (EIC), Medicaid, and Food Stamps. Type: Essay 6. Briefly discuss what measuring inequality involves, and provide two examples for doing so. Reference: Explanation: Measuring inequality involves making comparisons across the entire distribution of income, not just the poor. One way of doing this is to divide the population into groups, like quintiles, and then calculate what share of income is received by each group. An alternative approach is to draw Lorenz curves, which compare the cumulative income actually received to a perfectly equal distribution of income. Type: Essay 7. Briefly discuss how income inequality in the U.S. has increased from the 1970s into the 2000s, as well as the two most common explanations cited by economists for this change. Reference: Explanation: Income inequality in the United States increased substantially from the late 1970s or early 1980s into the 2000s. The two most common explanation cited by economists are changes in the structure of households that have led to more two-earner couples and single-parent families, and the effect of new information and communications technology on wages. Type: Essay 8. List at least 5 plausible reasons for a degree of income inequality. Reference: Explanation: There are a number of plausible reasons for a degree of income inequality: for example, differences in age, differences in preferences, a need for incentives, year-to-year fluctuations, inheritances and luck. Type: Essay 9. List three policies that can affect the level of economic inequality. Reference: Explanation: Policies that can affect the level of economic inequality include redistribution between rich and poor, making it easier for people to climb the ladder of opportunity; and estate taxes, which are taxes on inheritances. Type: Essay 10. Briefly compare and contrast the effects and outcomes of pushing too aggressively and pushing moderately for economic equality. Reference: Explanation: Pushing too aggressively for economic equality can run the risk of decreasing economic incentives. However, a moderate push for economic equality can increase economic output, both through methods like improved education and by building a base of political support for market forces. Type: Essay Directory: economie -> Introduction-to-Economy economie -> The environment and corporate culture Introduction-to-Economy -> Ch28 Monetary Policy and Bank Regulation Multiple Choice Questions 1 economie -> The Basic Theory Using Demand and Supply Introduction-to-Economy -> Ch34 Globalization and Protectionism Multiple Choice Questions 1 Introduction-to-Economy -> Ch13 Positive Externalities Public Goods Multiple Choice Questions 1 economie -> Chapter 5 Market Power Does It Help or Hurt the Economy? What's in This Chapter and Why Download 155.38 Kb. Share with your friends:
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