Microeconomics Exam Chapter 19,20,23

Public housing is an example of

In-Kind income.

If a women are not allowed to vote or inherit wealth bet men are, this is an example of

Inequality trap

Institutional barriers that impede human and physical capital investment are known as

Inequality trap

Which of the following is true about a payroll tax?

It reduces net wages of employees.

The percentage of the working-age population that is working or seeking work is the

Labor force participation rate

If an individual is taxed at 17% rate for each extra dollar earned, the reference is to the

Marginal tax rate

An assistance program that guarantees a minimum income, regardless of the family's earned income, has a

Marginal tax rate of zero percent

which of the following is an example of an in-kind transfer

Medicaid

In which of the following would the richest tenth of the population be most likely to receive the highest percentage of the country's income

Namibia

Suppose a taxpayer has an income of $90,000 and a taxable income of $75,000, and pays $7,500 in taxes. If the taxpayer says he is taxed at a 10 percent tax rate, he is referring to the

Nominal tax rate.

Which of the following countries meets or exceeds the UN's Millennium Aid Goal of 0.7% of donor country GDP

Norway

Which of the following is least likely to reduce poverty

Raising taxes within the poor nation

Which of the following is a critical key to reducing poverty in the poorest nations

Reduced population growth

A flat tax

Reduces the government's ability to alter the mix of output

A tax system in which tax rates fall as incomes rise is

Regressive.

Government failure

Results when government intervention fails to improve market outcomes

According to the World Bank, nearly 3 billion people are classified as being in __________ poverty

Severe

The size distribution of income

Tells how personal income is divided up among households or income classes

Almost every US household receives some form of income transfer payments

True

Refer to figure 34.3. If a welfare recipient did not work, he or she would relieve welfare benefits of

$10,000

Wealth is measured as

A stock only

If the marginal tax rate is too high, it can cause all of the following except

Businesses to produce more.

With a flat tax,

Decisions are based on economic considerations rather than tax incentives

If the tax elasticity of supply is 0.6 and tax rates increased by 10%, the quantity of labor supplied will

Decrease by 6%

Which of the following countries meets or exceeds the UN Millennium Aid Goal of 0.7% of donor country GDP

Denmark

If the Gini coefficient is greater for Zambia than for the Netherlands, we can conclude that the

Distribution of income in the Netherlands is closer to being equal than in Zambia.

An increase in output or real GDP is

Economic growth

Personal Income

income received by households before payment of personal taxes

Suppose a poverty program provides a basic benefit of $6,000, zero deductions, and a marginal tax rate of 0.6. The breakeven level of income is

$10,000

Assume the marginal tax rate is 10% for the first $30,000 of income, 15% for income between $30,000 and $70,000, and 20% for any income over $70,000. If Emily has taxable income equal to $80,000 for the year, what is her tax bill

$11,000

Assume the marginal tax rate is 10 percent for the first $30,000 of income, 15 percent for income between $30,000 and $70,000, and 20 percent for any income over $70,000. If Emily has taxable income equal to $80,000 for the year, what is her tax bill?

$11,000 Emily pays $3,000 on her first $30,000 in income, plus $6,000 on her next $40,000 in income, plus $3,000 on her last $10,000 in income.

Jarrett is retired and earns $10,000 per year working part-time. He is entitled to a max social security retirement benefit of $14,000. Social Security regulations allow him to earn $8,000 and still get max benefits. Jarrett's total income, including social security benefits is

$22,800

Which of the following is not and example of microfinance

A loan to a US owned electronics company to expand overseas

An annual income of less than $29,000 is

Below the poverty threshold

Suppose a taxpayer has an income of $50,000 and a taxable income of $45,000, and pays $5,000 in taxes. If the taxpayer talks of being taxed at a 10 percent tax rate, she is referring to the

Effective tax rate.

Taxes paid divided by total income is the

Effective tax rate.

Which of the following is not part of Hernando de Soto's The Other Path

Encouraging the "underground" economy

If a tax system has no deductions, exemptions, or other loopholes, then the effective tax rate will be

Equal to the nominal tax rate. Total income will equal taxable income with the absence of deductions that typically create a wedge between total and taxable income.

Well-established property rights and a pro-business climate are a step in the right direction, but ultimately they do little to encourage economic growth

False

social security is a welfare program

False

Figure 33.2 illustrates Lorenz curves for four different economies. For which economy would the lowest 20 percent of families receive the smallest share of total income?

In economy A, the Lorenz curve is lower than all the others in the cumulative 20 percent portion, indicating that the families in the lower 20 percent of income earners in that economy receive the least income.

The existence of income transfer programs can

Increase the wage rate as the labor supply decreases

Government attempts to create a more equitable income distribution by increasing marginal tax rates my do all of the following except

Increase work effort

In order to increase productivity and economic growth, poor nations need

Increased capital investment

According to Hernando de Soto, poor countries should focus their development policies on all of the following except

Increasing taxes on private companies

In-kind benefits are a way of correcting

Inequality

Which of the following is true about income inequality

Inequality tends to be greatest in the poorest countries

Which of the following does not contribute to an institutional structure that promotes economic growth

Policy uncertainty

The US tax system as a whole is basically

Proportional

According to the World View titled "Jeffery Sachs: Big Money, Big Plans," how does Columbia University economics professor Jeffrey Sachs expect global poverty rates to be reduced by half by 2015

Rich nations must double their foreign aid flows now and then double them again in 10 years, while poor nations must develop full-scale, comprehensive plans for poverty reduction

Which of the following programs is the largest federal income transfer program

Social Security

Suppose Mr. Lee has total income of $120,000, has taxable income of $90,000, and pays $30,000 in taxes. Considering the information, what is Mr. Lee's nominal tax rate?

The nominal tax rate is equal to taxes paid divided by taxable income, which is 30,000 ÷ 90,000 or 33.33 percent.

T/F

The official US poverty standard was set in 1963 at $3,000 per year for a family of four True.

For poor countries, a lack of capital and poorly developed infrastructure contribute to low farm productivity

True

The two general approaches to reducing global poverty include the redistribution of incomes and economic growth

True

Which of the following is not an example of in-kind income

Unemployment benefits

A tax that is designed to be progressive will improve

Vertical equity

The Bush tax cuts of 2001-2010 contained incentives for

Work, education, and savings

transfer payments include all of the following except

a church-run thrift store for the poor

Refer to Figure 34.4. If an individual does not work, she or he will receive welfare benefits of

$7,500

Refer to the labor market in figure 33.5. Suppose the go ernment imposes a payroll tax on employers. How much of the tax burden is passed on to workers

$8-$7 = $1 per hour

Suppose a poverty program has a basic benefit of $8,000 , and a family can earn up to $16,000 before losing all welfare benefits. The marginal tax rate is ______ percent

0.5

Suppose Ms. Sanchez has a total income of $200,000, has a taxable income of $120,000, and pays $40,000 in taxes. Considering the information, what is Ms. Sanchez effective tax rate

20%

Use the following formula to answer the indicated question: Welfare benefit = Maximum Benefit - 0.4 [Wages-(work expenses+ child care costs)] based on the information given the marginal tax rate is

40%

The imposition of a payroll tax

Shifts the labor supply curve to the left.

the poverty gap is the

shortfall between a household's actual income and the poverty threshold

Poverty is most likely to decrease when

Economic growth exceeds population growth

A person can have a great deal of wealth but have very little income

False

If all developed countries were willing to meet the UN Millennium Aid Goal for foreign aid, this would eliminate global poverty

False

Medicaid provides cash to the poor so that they may purchase medicine and doctors' services

False

The US inflation adjusted poverty threshold in 2014 was set at $35,000 per year for a family of four

False

The impact of a decrease I the marginal tax rate on labor supply will be larger as the tax elasticity of supply gets smaller

False

The social security payments received by retired persons are an in-kind transfer payment

False

The social security program is an income transfer program for retired workers only

False

What is not included in America's poverty count

In-Kind transfers

social insurance programs

are event-confidential

the social security program tends to

decrease work incentives for both older and young er workers

the official poverty index is based on

family size and income

The breakeven level of income is

the amount of income that can be earned without a loss of welfare benefits

Higher breakeven levels of income can be achieved by decreasing

the marginal tax rate

a transfer program that uses means testing to identify who is eligible for benefits is know as

welfare

A limit on the quantity of a good that may be imported in a given time period is

Ain import quota

In Figure 33.1, suppose that the Gini coefficient for Omega is 0.55. The Gini coefficient for Alpha must be

The Gini coefficient for Alpha will be less than 0.55 because in Alpha the income distribution is more equal than in Omega.

Figure 33.3 illustrate Lorenz curves for four different economies. Which economy will have a Gini coefficient of zero?

The Gini coefficient will be zero for economy A because economy A is represented by the line of perfect equality.

In the article "Obama Pitches Tax Hike on the Rich" all of the following are true except

The Republican Party proposed a lower tax increase on the top income groups to reduce the federal budget deficit

T/F

The argument for greater equality of income distribution in the United States hinges on the idea that low-income earners would be more willing and able participants in the economy if income were distributed more equally. True.

T/F

According to Rostow's stages of economic development, poor nations must increase their farm productivity so that some workers can leave farming and move into other industries. True

Which of the following student aid program is likely to have the highest target efficiency

Direct payment of tuition to the university

If the area between the diagonal line of absolute equality and the Lorenz curve is greater for China than for the US, we can conclude that the

Distribution of income in China is less equal than in the US

Suppose Ms. Sanchez has a total income of $200,000, has a taxable income of $120,000, and pays $40,000 in taxes. Considering the information, what is Ms. Sanchez's effective tax rate?

The effective tax rate is equal to taxes paid divided by total income, which is 40,000 ÷ 200,000 or 20 percent. 20%

T/F

The greater the area between the Lorenz curve and the diagonal line of absolute equality, the more inequality exists. True.

The taxation principle that says people with higher incomes should pay more in taxes than those with lower incomes is called

Vertical equity. Vertical equity is the idea that those who earn more should pay more.

Which of the following contributes to an institutional structure that promotes economic growth

Property Rights

Lucy is retired and earns $12,000 per year working part-time. She is entitled to a max social security retirement benefit of $14,000. Social Security regulations allow her to earn $9,000 and still get max benefits. Lucy's total income, including social security is

$24,800

Use the following formulate to answer the indicated question: Benefit amount = Max award - 0.6(wages in excess of ceiling) Raynoo is retired and earns $15,000 per year working part-time. She is entitled to a max social security retirement benefit of $14,000. Social Security regulations allow her to earn $9,000 and still get max benefits. Raynoo's total income, including social security benefits is

$25,400

T/F

A sales tax is a proportional tax. False. A sales tax is regressive because the poor pay a larger share of their income in taxes than do the rich.

Exemptions and deductions included in the tax laws

Are designed to encourage specific economic activities.

Flat tax critics

Believe it would creat additional vertical and horizontal inequities

A graphic illustration of the cumulative size distribution of income is known as the

Lorenz curve. The Lorenz curve gives a graphical representation of the cumulative share of income earned by the population compared to perfect equality, which is represented by a straight line.

According to Rostow's five stages of development, which of the following is characteristic of stage 1

Low Productivity