Question 1

The Social Security system is financed through

Accepted Answer

A)   private insurance contributions.
B)   general revenues.
C)   the income tax.
D)   a payroll tax.E) B) and C)
F) All of the above D

Question 2

The demand for Alaskan fishermen is the same as the demand for deep-sea divers in Hawaii. The annual earnings of Alaskan fishermen is 30% higher than the earnings of Hawaiian deep-sea divers. What is a possible explanation for this?

Accepted Answer

A)   Alaskan fishermen can work only part of the year, but deep-sea divers can work year round in Hawaii.
B)   The amount of human capital needed to be a deep-sea diver must be greater than the amount of human capital necessary to be a fisherman in Alaska.
C)   Alaskan fishermen must face discrimination that is not encountered by Hawaiian deep-sea divers.
D)   Being a fisherman in Alaska must be more dangerous than being a deep-sea diver in Hawaii.E) A) and B)
F) A) and C)

Question 3

If the official poverty line for a family of four is $12,000, then the Department of Agriculture's minimum food bundle costs a family of four ________ per year.

Accepted Answer

A)   $1,000
B)   $3,000
C)   $4,000
D)   $12,000E) B) and D)
F) All of the above

Question 4

Proponents of income redistribution argue that redistribution

Accepted Answer

A)   increases the welfare of all members of society.
B)   will not take place absent government intervention as the market for charity, a private good, is imperfect.
C)   would be agreed to by all members of society if they were risk-loving and contracting from the "original position."
D)   helps those who, through no fault of their own, are unable to earn an adequate income.E) A) and D)
F) A) and B)

Question 5

The biggest single transfer program at the federal level is Social Security.

Accepted Answer

A) True 
 B)False

Question 6

The idea that a society as wealthy as the United States has a moral obligation to provide its members with the necessities of life is the argument most often used

Accepted Answer

A)   in favor of abolishing the minimum wage.
B)   in favor of an equal distribution of income.
C)   against income redistribution.
D)   in favor of income redistribution.E) None of the above
F) All of the above

Question 7

Human capital can be produced through on-the-job training.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an example of a compensating differential?

Accepted Answer

A)   A plastic surgeon must train for five more years than an internist and on average plastic surgeons earn 40% more per year than internists.
B)   A bank hires both men and women who have just graduated from college. The women are assigned positions as bank tellers, and the men are assigned to the management training program.
C)   It takes the same amount and type of training to be either a prison guard or a parole officer. Prison guards earn about 15% more than parole officers with the same amount of experience. About 3% of prison guards, but only 1% of parole officers, are injured on the job each year.
D)   Bill was injured on the job and as a result of his injuries he can no longer work. He now qualifies for $1,000 a month in disability payments.E) None of the above
F) A) and D)

Question 9

For most countries, the Gini coefficient of market income is lower than the Gini coefficient of disposable income.

Accepted Answer

A) True 
 B)False  False

Question 10

As income becomes more unequally distributed, the Lorenz curve ________ and ________.

Accepted Answer

A)   moves further down to the right; the shaded area increases
B)   moves further up to the left; the shaded area decreases
C)   moves further up to the left, rising above the 45 degree line; the shaded area increases
D)   moves further down to the right; the shaded area decreasesE) B) and C)
F) A) and D)

Question 11

The Gini coefficient is

Accepted Answer

A)   the most common way of representing the income distribution graphically.
B)   a commonly used measure of the degree of inequality in an income distribution.
C)   a commonly used measure of the degree of inequity in a property distribution.
D)   the ratio of the percentage of total income received by the top 20% of families to the percentage of total income received by the bottom 20% of families.E) A) and D)
F) A) and C) B

Question 12

Recent data suggests that the percentage of the population in poverty for African-American persons is approximately equal to that of Hispanic persons.

Accepted Answer

A) True 
 B)False

Question 13

Unemployment compensation is a ________ government transfer program.

Accepted Answer

A)   state
B)   federal
C)   local
D)   municipalE) A) and D)
F) None of the above

Question 14

Human capital is a combination of inborn and acquired skills, talent, and knowledge.

Accepted Answer

A) True 
 B)False

Question 15

________ is available only to low-income families with children.

Accepted Answer

A)   The Food Stamp program
B)   The Earned Income Tax Credit
C)   Medicaid
D)   MedicareE) All of the above
F) C) and D)

Question 16

Education is an investment in human capital.

Accepted Answer

A) True 
 B)False

Question 17

The first minimum wage law was adopted

Accepted Answer

A)   in the United States in 1938.
B)   in New Zealand in 1894.
C)   in England in 1876.
D)   in Germany in 1922.E) None of the above
F) C) and D)

Question 18

If the cost of the Department of Agriculture's minimum food budget for two people is $2,000 per year, the official poverty line for a family of two would be

Accepted Answer

A)   $667.
B)   $2,000.
C)   $6,000.
D)   $12,000.E) B) and C)
F) A) and B)

Question 19

According to the ideas behind utilitarian justice, income redistribution from the rich to the poor decreases total utility.

Accepted Answer

A) True 
 B)False

Question 20

Transfer payments tend to ________ when overall economic growth is ________.

Accepted Answer

A)   rise; high
B)   fall; low
C)   rise; low
D)   rise; either high or lowE) A) and C)
F) A) and D)

Exam 18: Income Distribution and Poverty

The Social Security system is financed through

Correct AnswerverifiedD

The demand for Alaskan fishermen is the same as the demand for deep-sea divers in Hawaii. The annual earnings of Alaskan fishermen is 30% higher than the earnings of Hawaiian deep-sea divers. What is a possible explanation for this?

Correct AnswerverifiedShow Answer

If the official poverty line for a family of four is $12,000, then the Department of Agriculture's minimum food bundle costs a family of four ________ per year.

Correct AnswerverifiedShow Answer

Proponents of income redistribution argue that redistribution

Correct AnswerverifiedShow Answer

The biggest single transfer program at the federal level is Social Security.

Correct AnswerverifiedShow Answer

The idea that a society as wealthy as the United States has a moral obligation to provide its members with the necessities of life is the argument most often used

Correct AnswerverifiedShow Answer

Human capital can be produced through on-the-job training.

Correct AnswerverifiedShow Answer

Which of the following is an example of a compensating differential?

Correct AnswerverifiedShow Answer

For most countries, the Gini coefficient of market income is lower than the Gini coefficient of disposable income.

Correct AnswerverifiedFalse

As income becomes more unequally distributed, the Lorenz curve ________ and ________.

Correct AnswerverifiedShow Answer

The Gini coefficient is

Correct AnswerverifiedB

Recent data suggests that the percentage of the population in poverty for African-American persons is approximately equal to that of Hispanic persons.

Correct AnswerverifiedShow Answer

Unemployment compensation is a ________ government transfer program.

Correct AnswerverifiedShow Answer

Human capital is a combination of inborn and acquired skills, talent, and knowledge.

Correct AnswerverifiedShow Answer

________ is available only to low-income families with children.

Correct AnswerverifiedShow Answer

Education is an investment in human capital.

Correct AnswerverifiedShow Answer

The first minimum wage law was adopted

Correct AnswerverifiedShow Answer

If the cost of the Department of Agriculture's minimum food budget for two people is $2,000 per year, the official poverty line for a family of two would be

Correct AnswerverifiedShow Answer

According to the ideas behind utilitarian justice, income redistribution from the rich to the poor decreases total utility.

Correct AnswerverifiedShow Answer

Transfer payments tend to ________ when overall economic growth is ________.

Correct AnswerverifiedShow Answer

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D

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False

As income becomes more unequally distributed, the Lorenz curve and .

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B

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Transfer payments tend to when overall economic growth is .

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