Deck 18: Poverty and Redistribution

Question 1

In the United States,the dramatic increase in government social spending since the mid-1960s has _____

A)made the distribution of income more unequal in the economy.
B)brought about equality in the distribution of income in the economy.
C)not greatly increased the money income share of the poorest fraction of the population.
D)greatly increased the money income share of the richest fraction of the population.
E)decreased the percentage of families in the lowest fifth.

Answer 1

C

Question 2

A Lorenz curve shows the _____

A)functional distribution of income.
B)personal distribution of income.
C)relative percentage of income going to each of the resources used in the production process.
D)demand for unskilled labor versus unskilled labor in an economy.
E)cumulative percentages of income received by cumulative percentages of households.

Answer 2

E

Question 3

According to census data households in the lowest,or poorest,fifth of the population received only _____ of the income in 1980,whereas households in the highest,or richest,fifth received _____of the income.

A)4.3 percent; 43.7 percent
B)3.9 percent; 46.6 percent
C)3.6 percent; 49.8 percent
D)3.1 percent; 51.1 percent
E)15.8 percent; 22.1 percent

Answer 3

A

Question 4

According to census data,approximately what percent of income in the United States did the third quintile of all households receive in 2015?

A)3.1 percent
B)8.2 percent
C)23.2 percent
D)14.3 percent
E)51.1 percent

Question 5

Which of the following is not true about income quintiles in the United States?

A)Only one in seven households in the bottom quintile has anybody working full time.
B)Only one in three households in the top quintile has anybody working at all.
C)A primary contributor to the smaller share of income going to the bottom quintile has been the growth of single-parent households.
D)Three out of four households in the top quintile have two or more working members.
E)A primary contributor to the larger share of income going to the top quintile has been the growth of two-earner households.

Question 6

If the marginal productivity of labor was the sole determinant of household income in the United States,then _____

A)no households would be poor according to the official definition of poverty.
B)no households would be poor according to the relative definition of poverty.
C)the distribution of income would be unequal.
D)every household would have sufficient income to meet the basic needs.
E)there would be no need for government programs to redistribute income.

Question 7

In a market economy,income depends mostly on _____

A)inflation.
B)economic growth.
C)government policies.
D)earnings.
E)household quintiles.

Question 8

The share of the bottom fifth of the population in total income in the last two decades has _____

A)decreased in the United States because of the growth of single-parent households.
B)increased in the United States because of an increase in the employment opportunities available to them.
C)decreased in the United States because of a decrease in their marginal productivity.
D)increased in the United States because of an improvement in their level of education.
E)decreased in the United States because of an increase in income tax rates.

Question 9

According to census data,approximately what percent of income in the United States did the highest quintile of all households receive in 2015?

A)3.1 percent
B)8.2 percent
C)23.2 percent
D)14.3 percent
E)51.1 percent

Question 10

Census data on the income distribution among families in the United States from 1980 to 2015 show _____

A)a rising share earned by the top fifth and a declining share earned by the bottom fifth.
B)a rising share earned by the bottom fifth and a declining share earned by the top fifth.
C)that the share earned by both the top fifth and the bottom fifth are rising.
D)that the share earned by both the top fifth and the bottom fifth are falling.
E)a decrease in the total income earned by the top fifth of the population.

Question 11

In the United States,most income comes from _____

A)capital gains.
B)owning stocks and bonds of firms.
C)providing labor resources.
D)illegal transactions.
E)government transfer payments.

Question 12

According to census data,approximately what percent of income in the United States did the second quintile of all households receive in 2015?

A)3.1 percent
B)8.2 percent
C)23.2 percent
D)14.3 percent
E)51.1 percent

Question 13

Identify the correct statement about the distribution of income in the United States in the last two decades.

A)The share of income of the highest fifth quintile has increased in the last two decades because of an increase in the number of double-income households.
B)The share of income of the lowest fifth quintile has increased in the last two decades because of an increase in the number of double-income households.
C)The share of income of the highest fifth quintile has decreased in the last two decades because of an increase in the number of single-parent households.
D)The share of income of the lowest fifth quintile has decreased in the last two decades because of a decrease in in-kind transfers.
E)The share of income of the highest fifth quintile has increased in the last two decades because of an increase in transfer payments.

Question 14

According to census data,approximately what percent of income in the United States did the fourth quintile of all households receive in 2015?

A)3.1 percent
B)8.2 percent
C)23.2 percent
D)14.3 percent
E)51.1 percent

Question 15

In a market economy,the level of earnings is primarily determined by _____

A)the productivity of resources.
B)the level of transfer payments.
C)monetary policy and fiscal policy.
D)the geographic distribution of resources.
E)the amount of financial assets owned by households.

Question 16

In a market economy,income depends mostly on _____

A)productivity.
B)luck.
C)age.
D)sex.
E)government policies.

Question 17

In the bottom fifth of the population only about ____ households has anybody working,and only about _____ has anybody working full time.

A)one in three; one in seven
B)one in three; one in six
C)one in three; one in five
D)one in two; one in seven
E)one in two; one in six

Question 18

One of the main tools used by economists to measure the actual distribution of income in an economy is _____

A)the Lorenz curve.
B)the Golden Rule.
C)the MR = MC rule.
D)the MRP = MRC rule.
E)the capital/labor ratio.

Question 19

If income were distributed solely according to marginal productivity,_____

A)every family would be above the poverty level.
B)it would be distributed evenly.
C)it would be distributed normally.
D)workers in capital-intensive industries would earn less than workers in labor-intensive industries.
E)some individuals would not receive any income.

Question 20

According to census data,approximately what percent of income in the United States did the second quintile of all households receive in 2015?

A)3.1 percent
B)8.2 percent
C)23.2 percent
D)14.3 percent
E)51.1 percent

Question 21

Focusing on the share of income going to each income quintile overlooks the fact that most households in the bottom quintile consist of one person living alone,and _____

A)only 1 in 16 households in the top quintile consist of one person living alone.
B)only 1 in 10 households in the top quintile consist of one person living alone.
C)only 1 in 5 households in the top quintile consist of one person living alone.
D)only 1 in 3 households in the top quintile consist of one person living alone.
E)only 1 in 2 households in the top quintile consist of one person living alone.

Question 22

If the definition of income were broadened to include changes in capital gains,_____

A)the observed growth in inequality would be higher.
B)the observed growth in inequality would be lower.
C)the unemployment rate would be lower.
D)the unemployment rate would be higher.
E)the top 10 percent of the population would be wealthier.

Question 23

Identify the correct statement about the supply of labor in the U.S.economy.

A)The supply of less-educated workers has increased more than the supply of more-educated workers, thus increasing the rewards of education.
B)Immigration has decreased the supply of relatively less-educated workers, thus increasing wages.
C)Immigration has increased the supply of relatively less-educated workers, thus increasing the wage rates.
D)Computer-controlled machinery has substituted low-skilled workers in the manufacturing process, thus increasing their wages.
E)Technological change has benefited only low-skilled, less-educated workers, at the cost of highly skilled, highly educated workers.

Question 24

In the United States,_____

A)there is no relationship between income level and educational attainment.
B)those who have a professional degree earn almost five times more than those without a high school diploma.
C)average earnings are higher for those with more education but only if they are over the age of 60.
D)average earnings are lower for those with more education but only if they are under the age of 60.
E)income levels peak at a younger age for those with college educations than they do for those with only elementary educations.

Question 25

The normal life cycle pattern of income reflects differences in earnings based on _____

A)race and education.
B)gender and education.
C)age and education.
D)race.
E)household size.

Question 26

Who among the following would probably have the highest income?

A)a couple in which both partners have high school educations and work at Walmart
B)a husband who has a high school degree and a middle-management job and his wife who is a stay-at-home mother
C)a couple in which both partners have high school educations; he is a primary school teacher and she is a waitress
D)a husband who has a college degree and is a high school teacher and his wife who has an MBA and works as an insurance company executive
E)a couple in which both partners have college degrees and are pursuing higher studies

Question 27

If 15 percent of households receive 15 percent of the total income in an economy,_____

A)the Lorenz curve will lie above the line of equality.
B)the Lorenz curve will lie below the line of equality.
C)the slope of the Lorenz curve will be equal to zero.
D)the slope of the Lorenz curve will be equal to one.
E)the slope of the Lorenz curve will be equal to infinity.

Question 28

Families primarily receive income from _____

A)resource earnings and transfer payments.
B)transfers and subsidies.
C)only wages and rents.
D)transfers and gifts.
E)interests and dividends.

Question 29

When household incomes are ranked from lowest to highest,the middle income is known as the _____

A)median income.
B)mean income.
C)means-tested income.
D)official poverty level.
E)transfer income.

Question 30

If the official U.S.poverty statistics included the effect of in-kind transfer payments,_____

A)the poverty rate would be higher.
B)the poverty rate would be lower.
C)the unemployment rate would be lower.
D)the unemployment rate would be higher.
E)the top 10 percent of the population would be wealthier.

Question 31

The income earned by less-educated workers has decreased primarily because of _____

A)progressive taxation.
B)immigration.
C)free international trade.
D)marriage trends.
E)affirmative action.

Question 32

The same households do not necessarily remain rich or poor over time because _____

A)the normal life cycle pattern of income changes over time.
B)the productivity of workers varies with on-the-job training.
C)an economy experiences fluctuations in the level of economic activities.
D)an economy experiences changes in inflation rates over time.
E)technological changes influence the income earned by workers.

Question 33

Using the Lorenz curve,the degree of income inequality is measured by _____

A)the slope of the line connecting all points for which a given percentage of families receive exactly the cumulative percentage of income.
B)the distance of the Lorenz curve from the line of perfect equality.
C)the slope of the curve.
D)the number of times the Lorenz curve crosses the line of perfect equality.
E)dividing the number of people below the poverty line by the total population.

Question 34

The Lorenz curve for the United States economy has _____

A)shifted farther away from the line of equal distribution over the years.
B)shifted toward the line of perfect equality over the years.
C)coincided with the line of perfect equality in recent years.
D)become a vertical line in recent years.
E)become a horizontal line in recent years.

Question 35

Compared to the distribution of money income,the distribution of income that takes into consideration the effects of taxes and in-kind benefits _____

A)is less equal.
B)is the same.
C)is more equal.
D)focuses more on the average income earned by the richest five percent of the population.
E)ignores the effects of income redistribution on the poor.

Question 36

In the U.S.labor market,_____

A)the distribution of income based on labor productivity has increased the supply of low-skilled workers.
B)computers have decreased the demand for low-skilled workers and increased the demand for highly skilled workers.
C)the supply of highly educated workers has increased at a higher rate than the supply of less-educated workers.
D)the supply of highly educated workers has increased at a higher rate than the demand for highly educated workers.
E)technological changes have benefited workers with low level of skills.

Question 37

An increasing fraction of jobs in the U.S.labor market _____

A)pay workers on the basis of the bargaining power of labor unions.
B)are designed to employ retired people.
C)are reserved for widows with young children.
D)pay workers for their productivity using bonus pay and commissions.
E)reward workers on the basis of the number of years they work in a company.

Question 38

Industrial deregulation and a decline in the unionization of the labor force in the United States have _____

A)decreased the pay for workers who have limited education.
B)increased the pay for all workers in the industrial sector.
C)increased the pay for all workers who are employed in the service sector.
D)decreased the pay for workers who are highly educated.
E)decreased the pay for African-American workers.

Question 39

A fair distribution of income for the U.S.economy is _____

A)not an economic issue.
B)defined by the Department of Agriculture.
C)a positive economic question.
D)a normative economic question.
E)a state and local issue but not a national one.

Question 40

Identify the correct statement about workers.

A)Their contribution to the productive process remains constant as they grow older, and they earn less.
B)They acquire job experience, and their earnings increase with an increase in their ages.
C)Industrial deregulation has increased the pay for workers with less education.
D)Declining unionization has increased the pay for workers with less education.
E)Migration of workers has increased the pay for workers with less education.

Question 41

Social Security was established in the _____

A)1930s to provide retirement income to those with a work history.
B)1930s to provide jobs for the unemployed.
C)1930s to provide low-income households with redeemable food vouchers.
D)1960s to provide medical care to low-income families.
E)1960s to provide cash transfers to the elderly and the poor with dependent children.

Question 42

A problem with official U.S.poverty data is that it _____

A)omits the rural poor.
B)does not account for inflation.
C)omits in-kind transfers such as food stamps.
D)does not reflect changes in the cost of living.
E)omits dividends and interest.

Question 43

The purpose of social insurance is to _____

A)encourage charitable donations.
B)provide money to the poor.
C)provide full-time jobs to the poor.
D)redistribute income from the old to the young.
E)supplement the incomes of those who have worked but are now retired.

Question 44

The best predictor of poverty is _____

A)whether someone has an education.
B)whether someone has a job.
C)whether someone has children.
D)whether someone is retired.
E)whether someone was born in another country.

Question 45

The official poverty level in the United States _____

A)has been the same since 1980.
B)is the same as in other developed countries because it is based on a United Nations definition.
C)was defined by the United Nations.
D)was defined by the Department of Agriculture and based on food costs.
E)has been adjusted for inflation but not for changes in family size.

Question 46

The _____ the unemployment rate,the _____ the likelihood that someone who wants a job can find one.

A)lower; higher
B)higher; lower
C)more stable; higher
D)more stable; lower
E)more stable; more stable

Question 47

A major social insurance program in the United States is _____

A)Social Security.
B)Temporary Assistance for Needy Families.
C)Supplemental Security Income.
D)Medicaid.
E)food stamps.

Question 48

Adults who did not work for at least one week during 2015 had a poverty rate of _____

A)1.0 percent.
B)2.4 percent.
C)10.7 percent.
D)25 percent.
E)31.8 percent.

Question 49

Adults with full-time jobs in 2015 had a poverty rate of _____

A)1.0 percent.
B)2.4 percent.
C)10.7 percent.
D)25.0 percent.
E)31.8 percent.

Question 50

Which of the following is true of antipoverty programs?

A)These programs never involve direct market intervention.
B)All antipoverty programs are controlled by the federal government.
C)All antipoverty programs are implemented by state governments.
D)All antipoverty programs are means-tested programs.
E)These programs redistribute income after the market has made an initial distribution.

Question 51

Which of the following is an assumption for the calculation of the poverty level in the United States?

A)The poor spend about half of their income on clothing.
B)The rich spend about half of their income on clothing.
C)The rich spend about one-third of their income on food.
D)The poor spend about one-third of their income on food.
E)The rich and the poor both spend an equal proportion of their income on food.

Question 52

About ____ of the world's population lives on ____ a day or less.

A)40 percent; $1
B)40 percent; $2
C)50 percent; $1
D)0 percent; $2
E)75 percent; $2

Question 53

An effective government policy for reducing poverty is to _____

A)increase discrimination in the job market based on gender and race.
B)abandon all government programs and rely on market forces.
C)reduce programs that promote education and training of the poor.
D)dramatically increase Medicare payments to the elderly.
E)promote economic growth and job creation.

Question 54

Poverty is _____

A)a relative concept.
B)an absolute concept.
C)more prevalent in North American countries than in other areas.
D)more prevalent in the northern states of the United States.
E)the same in all countries.

Question 55

The official poverty level in the United States _____

A)remains constant every year.
B)decreases every year, based on the annual average income of households.
C)increases every year, based on the annual average income of households.
D)changes based on family size and inflation.
E)changes based on the unemployment rate and the total income of households.

Question 56

The number of people in poverty in 2015 was _____,and the poverty rate was _____.

A)40 million; 5 percent
B)40 million; 10 percent
C)43.1 million; 13.5 percent
D)45.0 million; 13.5 percent
E)45.0 million; 15.5 percent

Question 57

Measurement of the official poverty level in the United States _____

A)includes all transfer payments.
B)excludes all transfers payments.
C)includes cash transfers but not in-kind transfers.
D)includes in-kind transfers but not cash transfers.
E)is always measured in real rather than nominal terms.

Question 58

Which of the following is included in the calculation of the official poverty level in the United States?

A)Medicare
B)Medicaid
C)pretax money income
D)food vouchers
E)employer-provided health insurance

Question 59

The official poverty level in the United States is defined as _____

A)the income earned by the bottom 10 percent of the population.
B)the income level of the poorest 2 million households.
C)income that is less than $15,000 annually.
D)income equal to three times the estimated cost of a nutritionally adequate diet.
E)the ratio of total annual income of households to the cost of a nutritionally adequate diet.

Question 60

When an economy experiences high rates of economic growth and the growth is inclusive is nature,_____

A)the number of families in the bottom 10 percent of the income distribution is likely to increase.
B)the income of the families in the bottom of the income distribution is likely to increase.
C)only the income of the families in the top of the income distribution is affected.
D)the accompanying inflation cancels out any change in income distribution.
E)the rich are no better off because taxes rise with income.

Question 61

A major difference between social insurance and income assistance programs is that _____

A)social insurance programs are run by the state governments, whereas income assistance programs are run by the federal government.
B)funding for social insurance programs comes exclusively from the federal government, whereas income assistance programs are funded by both the state and federal governments.
C)benefits from social insurance programs are related to a worker's work history, whereas benefits from income assistance programs are not.
D)social insurance programs are available only to households with children, whereas income assistance programs are available to all citizens above the age of 18 years.
E)income assistance programs are available only to households without children, whereas income assistance programs are available only to single mothers with children.

Question 62

Which of the following is true of income assistance programs?

A)They require that the recipient work and contribute to the program.
B)They are designed to replace lost income.
C)They include unemployment compensation and Medicare.
D)They are funded exclusively by the federal government.
E)They include both cash and in-kind transfer programs.

Question 63

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

A)Medicaid
B)Social Security
C)workers' compensation
D)unemployment insurance
E)Temporary Assistance to Needy Families

Question 64

The largest welfare program in the United States,costing more than all cash and other in-kind transfer programs combined,is _____

A)Social Security.
B)Medicaid.
C)Temporary Assistance for Needy Families.
D)unemployment insurance.
E)General Assistance.

Question 65

Temporary Assistance for Needy Families and Supplemental Security Income are _____

A)cash transfers for income assistance.
B)cash transfers for social insurance.
C)in-kind transfers for income assistance.
D)in-kind transfers for social insurance.
E)intended to provide health care for the poor.

Question 66

Mary can qualify for benefits under a means-tested transfer payment program if _____

A)she has worked and contributed to the program.
B)she is able to repay the cash transfer at a later date.
C)she is the head of her household and holds a job.
D)she is totally disabled.
E)her household income is below a certain level.

Question 67

The social insurance system generally redistributes income from _____

A)the rich to the poor and from old to young.
B)the rich to the poor and from young to old.
C)the poor to the rich and from old to young.
D)the producers to the consumers of a good.
E)the consumers to the producers of a good.

Question 68

In order to qualify for unemployment insurance and worker's compensation,a person must have _____

A)paid taxes the previous year.
B)an employment record.
C)a family of four.
D)proof of disability.
E)a work experience of at least ten years.

Question 69

Which of the following is not a form of social insurance?

A)Social Security
B)Temporary Assistance for Needy Families
C)Medicare
D)unemployment insurance
E)workers' compensation

Question 70

Most states offer _____ to those who are poor but do not qualify for Temporary Assistance for Needy Families (TANF)or Supplemental Security Income (SSI).

A)Medicare
B)Medicaid
C)General Assistance
D)Social Security
E)the earned-income tax credit

Question 71

Cash transfers made by the U.S.government _____

A)increase as family income from other sources rises.
B)decrease as family income from other sources rises.
C)are a part of social insurance programs.
D)are not a part of the means-tested programs of the federal government.
E)increase as the number of years a person has worked rises.

Question 72

In the United States,_____

A)insurance premiums are deducted from workers' pay to pay for social insurance programs.
B)anyone with children is entitled to receive the benefits of social insurance programs.
C)anyone over 65 is eligible to receive the benefits of social insurance programs.
D)all taxpayers are eligible to receive the benefits of social insurance programs.
E)all poor families with children are eligible to receive the benefits of social insurance programs.

Question 73

Medicare is a(n)_____

A)social insurance program that provides health insurance only to people who suffer from work-related injuries or disabilities.
B)income assistance program that provides cash benefits to the elderly and the poor.
C)social insurance program that provides health insurance to people aged 65 years and above, regardless of income.
D)income assistance program that supplements the wages of the working poor.
E)social insurance program that provides health insurance to the poor depending on their income level

Question 74

In a means-tested program,a household qualifies for welfare benefits only if _____

A)the household's income and assets are below a certain level.
B)the head of the household has a college degree.
C)the head of the household is a single mother.
D)the family has dependent children.
E)one of the members of the household is a war veteran.

Question 75

Which of the following is not a means-tested program?

A)Temporary Assistance for Needy Families (TANF)
B)Supplemental Security Income (SIS)
C)the food stamp program
D)Social Security payments to a retiree
E)free and reduced-price school lunches for the poor

Question 76

Under the earned-income tax credit program,______

A)a low-income family would receive free education for its children.
B)a low-income family would not have to pay federal income tax.
C)people whose income is above a certain level would receive tax exemptions.
D)the federal government taxes the rich at a higher rate than the poor.
E)the federal government taxes the poor at a rate higher than their earned income.

Question 77

One feature of the Temporary Assistance for Needy Families (TANF)program is that it _____

A)provides low-cost housing to needy and poor families.
B)provides free accommodation and food to needy families.
C)is controlled by state governments and does not carry any federal entitlement.
D)is a federal entitlement program.
E)is a part of Social Security and collects contributions from employed people.

Question 78

Which of the following is a social insurance program?

A)Medicaid
B)food stamps
C)unemployment compensation
D)Temporary Assistance for Needy Families
E)Supplemental Security Income

Question 79

Transfer programs that do not tie benefits to contributions are called _____

A)social insurance programs.
B)income assistance programs.
C)health aid programs.
D)health insurance programs.
E)compensation programs.

Question 80

The federal government's earned-income tax credit _____

A)provides support only for elderly and disabled poor.
B)represents a type of in-kind transfer program.
C)provides food assistance to the working poor.
D)reduces taxes if the poor buy housing.
E)offers cash transfers to the working poor by reducing their taxes.