Question 1

The poverty rate is defined as the percentage of the
A)labor force that is poor according to the federal government's definition of poverty.
B)population that is exempt from paying federal income taxes.
C)population who qualify to receive welfare payments and food stamps.
D)population that is poor according to the federal government's definition of poverty.

Accepted Answer

The poverty rate is defined as the percentage of the population that is poor according to the federal government's definition of poverty. This is typically based on an income level below a certain threshold, which is determined by factors such as family size and location. The poverty rate is an important metric for understanding the overall economic well-being of a population, and is often used to guide policy decisions related to poverty alleviation programs.

Question 2

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

Accepted Answer

The answer of If grocery stores were legally required to...

Question 3

When the demand for a product is less elastic than the supply,consumers pay the majority of the tax on the product.

Accepted Answer

This is because when demand is less elastic than supply, consumers will be willing to pay more for the product regardless of the tax imposed, so the burden of the tax falls more heavily on them than on the producers.

Question 4

Figure 18-3  Figure 18-3 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 18-3.The second lowest 20 percent of households
A)earn 12 percent of the society's total income.
B)earn 16 percent of the society's total income.
C)earn 28 percent of the society's total income.
D)earn 40 percent of the society's total income.

Accepted Answer

The answer of Figure 18-3  Figure 18-3 shows the...

Question 5

The federal government defines the poverty line as
A)a level of annual income equal to the amount necessary to purchase the minimal quantity of food required for adequate nutrition.
B)a level of annual income equal to three times the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition.
C)the average income level of welfare recipients.
D)an annual income of $11,800 for a family of four in 2011.

Accepted Answer

The federal government defines the poverty line as three times the cost of a minimum food diet in 1963, adjusted for family size and updated for inflation.

Question 6

Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States?
A)Reductions in income tax rates have favored high-income individuals more than low-income individuals.As a result,reductions in federal income tax rates have led to more income inequality.
B)Reductions in income tax rates have created greater incentives for low-income individuals to work,save and invest.As a result,reductions in federal income tax rates have led to less income inequality.
C)Reductions in income tax rates probably have had little impact on the distribution of income.
D)Reductions in income tax rates have been offset by increases in corporate income tax rates and payroll taxes.As a result,greater income inequality in the 1990s has been followed by a more equal distribution of income since 2001.

Accepted Answer

The answer of Which of the following statements best represents...

Question 7

Figure 18-2 -Refer to Figure 18-2.The figure above shows a demand curve and two supply curves,one more elastic than the other.Use Figure 18-2 to answer the following questions. a.Suppose the government imposes an excise tax of $1.00 on every unit sold.Use the graph to illustrate the impact of this tax. b.If the government imposes an excise tax of $1.00 on every unit sold,will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer. c.If an excise tax of $1.00 on every unit sold is imposed,will the revenue collected by the government be greater if the supply curve is S₁ or S₂? d.If the government imposes an excise tax of $1.00 on every unit sold,will the deadweight loss be greater if the supply curve is S₁ or S₂?

Accepted Answer

The answer of Figure 18-2 
-Refer to Figure 18-2.The figure...

Question 8

Figure 18-3  Figure 18-3 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 18-3.The second highest 20 percent of households
A)earn 24 percent of the society's total income.
B)earn 28 percent of the society's total income.
C)earn 42 percent of the society's total income.
D)earn 72 percent of the society's total income.

Accepted Answer

The second highest 20 percent of households typically earn around 24 percent of the society's total income, based on common income distribution patterns.

Question 9

What does a Lorenz curve illustrate?
A)a comparison of the distribution of income in two different countries
B)the distribution of income within a country in a given time period
C)the share of taxes paid by different groups of households
D)the change over time in the percentage of households with incomes that place them below the poverty line

Accepted Answer

A Lorenz curve illustrates the distribution of income within a country in a given time period. It is a graphical representation of the concentration of income or wealth in a population. The Lorenz curve plots the cumulative percentage of total income received against the cumulative percentage of the population, ranked by income.

Question 10

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Accepted Answer

The answer of Explain why it is more difficult to...

Question 11

As a group,people with high incomes are likely to have
A)greater-than-average family inheritances and greater than average SAT scores.
B)greater-than-average holdings of stocks and bonds and lower-than-average productivity.
C)greater-than-average productivity and greater-than-average amounts of capital.
D)a stable marriage and no children.

Accepted Answer

People with high incomes tend to have greater-than-average productivity and greater-than-average amounts of capital. This means they are likely to work hard and also have accumulated assets such as investments, property, and savings. Inheritances and SAT scores may play a small role in their wealth, but they are not the primary factors. Holding stocks and bonds may be part of their investment strategy, but their productivity is the main source of their income. Having a stable marriage and no children may or may not be true for some high-income earners, but it is not a defining characteristic of the group.

Question 12

All Gini coefficients must lie between 0 and 1.The lower the value,
A)the more unequal the income distribution.
B)the closer the income distribution is to being equal.
C)the greater the degree of poverty.
D)the lower the degree of poverty according to the federal government's definition of poverty.

Accepted Answer

The answer of All Gini coefficients must lie between 0...

Question 13

Which of the following summarizes the information provided by a Lorenz curve?
A)the Lorenz coefficient
B)the income distribution ratio
C)the Gini coefficient
D)the slope (the rise divided by the run)of the Lorenz curve at a particular point on the curve

Accepted Answer

The Lorenz curve shows the distribution of income or wealth within a population, and the Gini coefficient summarizes the information provided by the curve by measuring the degree of income inequality in a society. The Gini coefficient is a number between 0 and 1, where 0 represents perfect income equality and 1 represents perfect inequality.

Question 14

What is meant by "tax incidence"?

Accepted Answer

The answer of What is meant by "tax incidence"?...

Question 15

Income inequality in the United States has increased somewhat over the past 25 years.Two factors that appear to have contributed to this are
A)tax cuts on high income individuals and large increases in prices of stocks.
B)strong economic growth and low inflation.
C)rapid technological change and expanding international trade.
D)outsourcing of jobs by U.S.firms and cuts in taxes on capital gains.

Accepted Answer

Rapid technological change and expanding international trade have led to a globalized economy where certain industries and individuals can accrue much greater wealth and income. This has resulted in income inequality as some individuals and industries have benefitted greatly while others have not. The other options listed may have contributed to income inequality in certain ways, but the most significant factor is likely technological change and trade.

Question 16

Measures of poverty (for example,the poverty line)and the distribution of income (for example,the Lorenz curve and the Gini coefficient)are misleading for which of the following two reasons?
A)First,these measures do not take into account income mobility over time.Second,these measures ignore the effects of government programs meant to reduce poverty.
B)First,none of these measures are adjusted for inflation.Second,they do not measure income on a per capita basis.
C)First,these measures fail to include the income U.S.citizens earn working for foreign firms that have operations located in the United States.Second,these measures fail to include income foreign citizens earn working for U.S.firms that have operations in foreign countries.
D)First,these measures fail to include dividend and interest income earned on stocks and bonds.Second,these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets.

Accepted Answer

The measures of poverty and income distribution are misleading because they do not take into account income mobility over time and ignore the effects of government programs meant to reduce poverty.

Question 17

The person or firm that pays a tax bears the burden of the tax.

Accepted Answer

The answer of The person or firm that pays a...

Question 18

A Gini coefficient of ________ means that an income distribution is perfectly equal and a Gini coefficient of ________ means the income distribution is perfectly unequal.
A)0; 1
B)1; 0
C)0,100
D)100,0

Accepted Answer

A Gini coefficient of 0 means that every individual has the same income, resulting in a perfectly equal income distribution. A Gini coefficient of 1 means that all the income is concentrated in one person or group, resulting in a perfectly unequal income distribution. Therefore, option A is the best choice.

Question 19

Which of the following groups had the highest poverty rate in 2010 in the United States?
A)Asians
B)White males
C)Hispanics
D)Female heads of families

Accepted Answer

Female heads of families had the highest poverty rate in 2010 in the United States, with a rate of 31.6%. This is compared to 25.8% for Hispanics, 12.5% for Asians, and 9.9% for White males.

Question 20

Which of the following statements about the distribution of income in the United States is true?
A)The United States has the most unequal distribution of income of any high-income country in the world.
B)The United States has a more unequal distribution of income than Bolivia and Botswana.
C)The distribution of income in the United States is fairly equal and there have been no dramatic changes over time.
D)The distribution of income in the United States is unequal and has become significantly more unequal over time.

Accepted Answer

The answer of Which of the following statements about the...

Quiz 18: Public Choice, taxes, and the Distribution of Income

The poverty rate is defined as the percentage of the

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

When the demand for a product is less elastic than the supply,consumers pay the majority of the tax on the product.

Figure 18-3 Figure 18-3 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-3.The second lowest 20 percent of households

The federal government defines the poverty line as

Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States?

Figure 18-3 Figure 18-3 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-3.The second highest 20 percent of households

What does a Lorenz curve illustrate?

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

As a group,people with high incomes are likely to have

All Gini coefficients must lie between 0 and 1.The lower the value,

Which of the following summarizes the information provided by a Lorenz curve?

What is meant by "tax incidence"?

Income inequality in the United States has increased somewhat over the past 25 years.Two factors that appear to have contributed to this are

Measures of poverty (for example,the poverty line) and the distribution of income (for example,the Lorenz curve and the Gini coefficient) are misleading for which of the following two reasons?

The person or firm that pays a tax bears the burden of the tax.

A Gini coefficient of means that an income distribution is perfectly equal and a Gini coefficient of means the income distribution is perfectly unequal.

Which of the following groups had the highest poverty rate in 2010 in the United States?

Which of the following statements about the distribution of income in the United States is true?