ECS 4013 Test 2 Multiple Choice

About how many girls and women are said to be "missing" in LDCs?

100 million

According to diminishing marginal utility, which of the following people would gain the highest marginal benefit from an extra $100 of income?

Julia, a single mother of three young children with an annual household income of $18,000 -lowest annual household income so gains the most benefit

Which of the following statements is NOT correct for the United States?

People of color are less likely than others to experience poverty

Table: Average Income and Distribution of Income Data provides recent data from the World Bank on average income and the distribution of income in four countries. Based on the data in the table, those in the bottom quintile have the lowest average income in which country?

Uganda -lowest average income percent in bottom quintile among the 4 countries at 6.1%

Which of the following is a negative result of redistributing income toward equality?

Work incentives are reduced

The linear stages theory of economic growth fails to recognize that increased investment is

a necessary but not a sufficient condition

Implicit assumptions from which theories evolve are known as

a paradigm

Which of the following is a criticism of the neoclassical counter-revolution school's approach?

all of the above -markets are not competitive in developing countries -externalities are common in developing countries -inequality may worsen when interventions are removed in developing countries

When there is a high level of intergenerational mobility among the poor in a nation:

children of poor parents do not remain in poverty when they are adults

The number of people in the world who are absolutely poor is closest to

one and a half billion

Kuznets' inverted-U hypothesis

suggests that inequality will worsen and then improve as a country grows

The poverty rate is the:

the percent of people whose family income is below the poverty line

Assume that a country with total income of $160,000 has a population of 10 households whose incomes are listed in Table: Income of Households. What percentage of income is earned by the bottom quintile of the population?

2% -add up percentages of households 1 and 2, so 1%+1%= 2%

About what percent of the world's poorest people are female?

50

Assume that a country with total income of $160,000 has a population of 10 households whose incomes are listed in Table: Income of Households. What percentage of income is earned by the top quintile of the population?

69% -add up percentages of households 9 and 10, so 44%+25%= 69%

Data from the World Bank for the top and bottom quintiles of the distribution of income in Costa Rica for two years are presented in Table: Costa Rica Income Distribution, Top and Bottom Quintiles. Which of the following claims CANNOT be made conclusively for the time period based on the data in the table?

Average income in the bottom quintile was lower in 2016 than it was in 1986 -can't determine average based on data

Table: Income Distribution in Four Countries provides recent data from the World Bank on the distribution of income in four countries. Based on the data, the country with the distribution of income that is closest to equal is:

Bangladesh -most even distribution of percentages between top, middle, and bottom quintiles

Which of the following is NOT true of the incidence of poverty in the United States?

Elderly people are more likely than other age groups to be in poverty

What relationship exists between income and well-being in the well-being curve found in the figure?

a positive relationship with decreasing marginal gains in well-being as income rises

According to the theory of structural patterns of development, which of the following tends to occur as a country develops?

a shift from agriculture to industry and services

Which of the following groups is(are) more likely to be poor?

all of the above -minorities -indigenous people -women

The United Nations and the World Bank use poverty lines that are based on:

an absolute poverty measure

Permanent income is a person's:

average income over their lifetime

According to Kuznets, in the process of development inequality in an economy will normally

first rise and then fall

In Gini calculation, the population is divided into _____ groups based on income, and each group is called _____ when data on the distribution of income in a country are presented

five, a quintile

The underlying assumption of the Harrod-Domar growth model is that

growth is mainly determined by capital accumulation

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is:

in the bottom 10% of household incomes in the nation

The logic of income redistribution by the government is that it:

increases total utility in the population by placing income where it yields the highest marginal benefit

Use the World Bank data in Table: Costa Rica Distribution of Income, 1986 and 2016 to determine what happened to the distribution of income in Costa Rica over the time period 1986 to 2016.

it became more unequal -top quintile had IMMENSELY more percent of income in 2016 as compared to 1986, jumping from 39.6% to 54.0%

Differences in consumer spending tend to vary _____ differences in income

less than

One of the characteristics of the poor is that they are

more likely to live in a rural area

The distribution of wealth is _____ the distribution of income

more unequal than

The absolute poverty line

none of the above -decreases as real income grows -shows the average income of the lowest income group -can be measured with the Lorenz curve

Which of the following is an assumption of the Lewis two-sector model?

none of the above -surplus labor in industry -positive marginal product of labor in agriculture -and an upward sloping labor supply curve in industry

Assuming that the Gini coefficient for Egypt is 0.403 and the Gini coefficient for Australia is 0.404, it is possible to conclude that both Egypt and Australia have

none of the above -virtually the same number of households in absolute poverty -virtually the same percentage of households in absolute poverty -virtually the same level of the Human Development Index

When a poverty line is based on relative poverty, a household is poor if its income is less than:

one-half the median household income in the country

The poverty gap is the

percentage of a country's total consumption necessary to bring everyone in the country below the poverty line up to the line

In the field of economics, the observation that the living standard of a household is more stable than its income, because people think in terms of their long-term earnings as they spend, is known as:

permanent income versus current income

An income level below which a family is defined to be in poverty is known as the:

poverty line

If a poverty line is set at a third of the median household income in a country, the poverty line is based on a _____ poverty standard

relative

Which of the following is an assumption of the Lewis two-sector model?

surplus labor in the rural sector

Which of the following poverty standards uses a measure of relative poverty?

the bottom 10% of household incomes

Intergenerational mobility is the extent to which:

the economic status of children is independent of the economic status of their parents

The Gini coefficient provides a measure of

the level of relative inequality

The supply curve of labor to industry in the Lewis model is horizontal if there is surplus labor in agriculture. This condition persists as long as

the marginal product of labor in agriculture is zero

How has the U.S. poverty rate varied over the past 40 years?

the rate has been relatively stable

What conclusion can be reached from the following data on income shares? Percentage of Income Received by Lowest 40% Highest 20% Bangladesh 17.3 45.3 Indonesia 14.4 49.4

the size distribution of income is more unequal in Indonesia

What is the basis for the income level that the U.S. government uses as the poverty line?

the value of a low-cost food plan multiplied by three, updated annually for inflation

Across demographic groups in the U.S. population, the poverty rate:

varies by race/ethnicity, family structure, and employment

_____ is a stock that is more unequal across households than income, which is a flow

wealth