Deck 6: Income Distribution: Does America Have an Income Inequality Problem

Question 1

Conservatives object to government efforts at income redistribution because

A) taxes are immoral.
B) rich people are more effective at changing the tax laws.
C) it reduces incentives to save and invest.
D) None of the above.
E) All of the above.

Answer 1

C

Question 2

The most significant recent change in Federal welfare legislation was

A) immediate cessation of all benefits to single mothers and fathers.
B) nationalized health care for poor people.
C) a guaranteed minimum income scheme.
D) "block grants" to be administered by individual states.

Answer 2

D

Question 3

Public welfare as a right

A) is guaranteed in the Constitution.
B) was first introduced in the 1930s and expanded in the 1960s.
C) was first proposed by President Clinton.
D) has never existed in the United States.

Answer 3

B

Question 4

Income-based public assistance accounts for about what percent of Gross Domestic Product?

A) 3 percent
B) 5 percent
C) 7 percent
D) 9 percent
E) None of the above.

Question 5

Government measures of poverty rates since 1960 exhibit

A) a general decline.
B) steady 22 percent poverty rate.
C) a general increase.
D) no cyclical sensitivity.

Question 6

Since 1996, the number of families with children who receive cash compensation from public assistance has

A) increased about 50 percent.
B) decreased about 25 percent.
C) increased about 25 percent.
D) decreased about 50 percent.

Question 7

Which of the following policies do Liberals generally oppose?

A) Expanding the Earned Income Tax Credit.
B) Progressive taxation of income.
C) Elimination of the federal minimum wage.
D) Primary responsibility for the poor residing with local government.

Question 8

Liberals concede that the rise in income inequality was due to all except

A) technological unemployment.
B) foreign competition.
C) lower rates of unionization.
D) None of the above.
E) All of the above.

Question 9

The top one-tenth of households own about what share of outstanding bonds?

A) 65 percent
B) 75 percent
C) 85 percent
D) 95 percent

Question 10

Conservatives criticize Radical income and wealth redistribution policies primarily because

A) egalitarianism is not enumerated in the Constitution.
B) corporations already bear most social welfare costs.
C) they destroy work incentives and discipline and undermine risk taking and entrepreneurship.
D) None of the above.

Question 11

Social insurance programs are claimed by Liberals to

A) alleviate the temporary burden of unemployment.
B) be too burdensome on employers.
C) reduce incentives to get off welfare.
D) promote social unrest among young workers.

Question 12

A Gini coefficient of 1.00 would indicate

A) perfect inequality.
B) some inequality.
C) perfect equality.
D) some equality.
E) a perfect balance between equality and inequality.

Question 13

All of the following support the Conservative claim that "workfare works" except

A) a 50 percent decline in welfare rolls since 1996.
B) an increase in the labor force participation rate by female-headed households.
C) rising income for the bottom 40 percent of households.
D) an increase in the minimum wage.

Question 14

Liberals claim that the current welfare system is basically sound, while both Conservatives and Radicals agree that it is a "mess."

Question 15

Prior to the Personal Responsibility and Work Opportunity Act of 1996, welfare was a right that could be exercised by all citizens.

Question 16

Public welfare expenditures exceeded 25 percent of GDP at the height of the Great Depression in 1934.

Question 17

Conservatives believe that the root cause of poverty is the displacement of unskilled work by machines.

Question 18

According to Conservatives, Franklin D. Roosevelt's social welfare and "make work" programs laid the foundation for future welfare dependency.

Question 19

Liberals find that the current welfare system failed to close the income gap between rich and poor.

Question 20

Income inequality increased between the 1940s and the mid-1970s.

Question 21

Liberals believe that income equality has been a long-term problem in the United States.

Question 22

For Liberals, "market failure" is rarely a cause of poverty.

Question 23

Wealth, as measured by net worth, is more equally distributed than income.

Question 24

To alleviate poverty, Radicals would pay parents to stay home to raise their children.

Question 25

Radicals view growing income inequality as a result of insufficient labor demand.

Question 26

The inflation-adjusted minimum wage is currently higher than its 1968 value.

Question 27

The Earned Income Tax Credit (EITC) reduces the after-tax wages of minimum-wage earners with children

Question 28

Liberals would view as a positive development the significant decline in the number of families with children who receive cash compensation from public assistance.