Econ Final

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It is estimated that 90 percent of the money that is being redistributed is lost to "leaks" such as administrative costs. If $25,000 is redistributed from a family in the highest quintile (earning $190,000) to a family in the lowest quintile (who earned only $15,000), how much money will actually be received by the lowest family?

$2,500

Which of the following studies would NOT offer a useful understanding of inequality?

A study of the highest family income across countries

_____ judges the adequacy of resources relative to an unchanging standard.

Absolute poverty

Which of the following is TRUE about a spell of poverty?

Around half of spells of poverty last less than a year.

The inequality in the United States can be measured by:

Income inequality

Which of the following is NOT considered an effect of income inequality?

Income inequality decreases the racial gap in learning

Which of the following is NOT true about the U.S. social insurance programs provided by the government?

Medicaid provides health insurance for people aged 65 and older.

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

Most spells of poverty are permanent and recurrent

What would happen if the government redistributed until we all got the same income no matter what?

People would have no incentive to work hard or start a new business

_____ refers to the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution

The social-safety net

Why is annual income NOT a good predictor of what you can afford to consume compared to your permanent income?

You can borrow and save money.

People in long-term poverty represent _____ of the poor at any point in time and they often _____.

a large share; return to poverty

Income refers to:

all the money you earn in a period of time, such as a year

Social Security, unemployment insurance, workers' compensation, and disability insurance payments all:

are based on your past earnings

When equality is measured in terms of outcomes, more equal outcomes:

are fairer

Inequality in living standards is measured by:

focusing on what people spend

According to diminishing marginal utility, your marginal utility may be _____ when you are poor, and it becomes _____ when you are richer

large; smaller

The U.S. official poverty rate calculation is based primarily on

market earnings

The government tries to raise total well-being by equalizing the distribution of income. However, it involves the equality-efficiency trade-off meaning that:

more equal incomes may come at the cost of lower average incomes.

There is _____ inequality in annual income than in measured permanent income because some of income inequality in annual income reflects _____

more; temporary ups and downs

Marginal utility refers to the additional utility you get from

one more dollar

The poverty rate in 2017 was 12.3 percent of the population, meaning that approximately:

one-in-eight people were living in poverty

Some income inequality reflects differences between younger and older people because

people tend to earn more as they get older and more experienced

_____ measures poverty by judging if you have the resources necessary to participate in your society

relative poverty

_____ measures poverty relative to the material living standards of your contemporary society.

relative poverty

Most governments take actions that help reduce _____, which would occur without government. They raise the money for _____

the inequality and poverty; the safety net through taxes

The idea that the government should try to maximize total utility in society is known as:

utilitarianism.

When you apply the cost-benefit principle to your decision to work, the benefit of work is _____ while the cost of work includes _____

wages; your time and loss of in-kind benefits

Which of the following is NOT considered an asset that contributes to your wealth?

your health

As you gain additional years of working experience, _____

your wages tend to rise


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