Test Bank Chapter 20 Poverty And The Distribution Of Income

c20; Chapter 20: Poverty and the Distribution of Income

Learning Objectives

1. Describe the distribution of income in the U.S. and the global distribution of income
2. Explain various measures of income inequality
3. Describe various measures of poverty
4. Summarize the issues surrounding global poverty and inequality
5. Describe some of the primary causes of poverty
6. Describe the impacts of various poverty policies

Multiple Choice

1. The total value of everything own less any debt owed is
   1. a flow of assets
   2. a stock of assets
   3. wealth
   4. capital

LO-1

Level: Easy

1. A tool used to show the levels of income in an economy and the percentage of individuals or households earning those income levels is a(n)
   1. income distribution
   2. income index
   3. Gini index
   4. Laffer curve

LO-1

Level: Easy

1. The income distribution in the United States is
   1. evenly distributed
   2. has a normal distribution
   3. skewed
   4. biased

LO-1

Level: Easy

1. The income distribution in the United States is
   1. considered evenly distributed because income has increased, on average, evenly for all wage earners
   2. has a normal distribution because the highest bracket of income earners is still at the medium wage
   3. considered skewed since a very small percentage of households can earn very high incomes and a large percentage of households earn low incomes.
   4. evenly proportioned as income is proportionate to skills.

LO-1

Level: Moderate

1. When considering the U.S. income distribution which of the following is correct?
   1. Since the 1960s the lowest earning quintile of the U.S. income distribution has earned a smaller share of the nation’s income.
   2. The highest earning quintile of the U.S. income distribution earned a smaller share of the nation’s income in 1969 than in 2009.
   3. The highest earning quintile of the income distribution earned a larger share of the nation’s income in 1969 than in 2009.
   4. The highest earning quintile of the U.S. income distribution earned a larger share of the nation’s income in 1969 than in 2009.

LO-1

Level: Moderate

1. The largest ____________ economies in the world earned roughly ___________ of the world’s income.
   1. 10; one-half
   2. 12; two-thirds
   3. 15; one-third
   4. 20; one-fourth

LO-1

Level: Easy

1. __________________ are a common measurement of income inequality.
   1. GNH indices
   2. Lorenz curves
   3. Income ratios
   4. Pay gaps

LO-2

Level: Easy

1. This measurement of income inequality compares the incomes of those in the upper end of an income distribution to the incomes of those in the lower end of the income distribution.
   1. GNH indices
   2. Lorenz curves
   3. income ratios
   4. pay gaps

LO-2

Level: Easy

1. The 85:15 ratio
   1. compares the income of household at the 85^th percentile with the income of households at the 15^th percentile and provides a coefficient of comparison
   2. compares the income of household at the 15^th percentile with the income of households at the 85^th percentile and provides an index of income comparison
   3. compares the income of household at the 85^th percentile with the income of households at the 15^th percentile and provides a multiplier for income
   4. compares the income of household at the 15^th percentile with the income of households at the 85^th percentile and provides a margin of income growth

LO-2

Level: Difficult

1. The income at the 90^th percentile for a hypothetical country is $120,000 and the income at the 10^th percentile is $15,000. The 90:10 income ratio is
   1. 0.111
   2. 0.125
   3. 8
   4. 10.50

LO-2

Level: Moderate

1. The income at the 85^th percentile for an Econogreat is $100,000 and the income at the 15^th percentile is $8,500. Which of the following is true?
   1. The incomes of those at the 85^th percentile of the income distribution for Econogreat are 8.l5 percent as large as the incomes of those at the 15^th percentile.
   2. The incomes of those at the 85^th percentile of the income distribution for Econogreat are 1.5 percent as large as the incomes of those at the 15^th percentile.
   3. The incomes of those at the 85^th percentile of the income distribution for Econogreat are 11.8 times as large as the incomes of those at the 15^th percentile.
   4. The incomes of those at the 85^th percentile of the income distribution for Econogreat are 1.5 times as large as the incomes of those at the 15^th percentile.

LO-2

Level: Difficult

1. A measurement of income inequality that compares the earnings of those at one point in the income distribution to the earnings of those at another point in the income distribution is a
   1. Laffer curves
   2. Lorenz curves
   3. income ratios
   4. Gini Coefficient

LO-2

Level: Easy

1. A commonly used measurement of income inequality that ranges from 0 to 1 is the
   1. Laffer curves
   2. Lorenz curves
   3. income ratios
   4. Gini Coefficient

LO-2

Level: Easy

1. A Gini coefficient of 0.9 indicates
   1. relatively high rates of income inequality
   2. High rates of income inequality
   3. Moderate rates of income inequality
   4. Low rates of income inequality

LO-2

Level: Easy

1. Consider Figure 8 from your text. Which of the listed countries has the highest level of income inequality, which has the lowest level of income equality?
   1. Mexico; India
   2. India; Mexico
   3. Brazil; Sweden
   4. Sweden; Brazil

LO-2

Level: Moderate

1. Traditionally, poverty has been measured using
   1. national income guidelines
   2. income guidelines
   3. consumption guidelines
   4. both income and consumption guidelines

LO-3

Level: Easy

1. The poverty line
   1. is the income threshold for a person to be classified as in poverty
   2. is the consumption threshold for a person to be classified as in poverty
   3. is the income or consumption threshold for a person to be classified as in poverty
   4. is the national income baseline for measuring global poverty

LO-3

Level: Easy

1. In 2011 the U.S. poverty guideline defined as a single household as ‘in poverty” if annual income was
   1. at $22, 350
   2. at $18, 500
   3. at $10, 890
   4. $1.25 per day

LO-3

Level: Easy

1. In 2011 the U.S. poverty guideline defined the poverty line for a family of four at
   1. at $22, 350
   2. at $18, 500
   3. at $10, 890
   4. $1.25 per day

LO-3

Level: Easy

1. The percentage of people with incomes below the poverty line is known as the
   1. Gini coefficient
   2. poverty rate
   3. pay gap
   4. GNH

LO-3

Level: Easy

1. Poverty rates are high for all of the following except
   1. people with low levels of education
   2. non-Hispanic whites
   3. households headed by single women
   4. people under 18

LO-3

Level: Easy

1. Global poverty rates generally are measured using a poverty line of
   1. at $22, 350
   2. at $18, 500
   3. at $10, 890
   4. $1.25 per day

LO-3

Level: Easy

1. An example of an absolute measure of poverty is
   1. 60% of national median
   2. the minimum level of income
   3. median household income
   4. standard of living

LO-3

Level: Moderate

1. An absolute measure of poverty
   1. uses position in the income distribution to determine the poverty line
   2. is a moderate measurement of poverty
   3. uses a fixed income or consumption level to set the poverty line
   4. similar to measuring income inequality

LO-3

Level: Moderate

1. Less than ______________ percent of population in North America, Australia, and Russia live on less than __________ per day.
   1. 2; $1.25
   2. 4; $1.75
   3. 10; $2.25
   4. 20; $10.5

LO-4

Level: Easy

1. Which of the following statements is true about global poverty?
   1. Eastern Asia and Western Asia has experience a slight decline in poverty since 1990
   2. most regions of the world have experienced a decline in poverty rates since 1990
   3. Northern Africa has seen an increase in poverty since 1990
   4. Southern Asia’s level of poverty has remained constant.

LO-4

Level: Easy

1. The MDG is
   1. An organization focusing on global cooperation to address global poverty introduced by the United States
   2. an effort established by the United Nations and other intergovernmental organizations and consist of a set of goals and targets to eliminate extreme poverty
   3. an organization established by the World Bank to address and enforce policies in place to address global poverty.
   4. a movement by developed countries to find solutions to global income inequality and poverty.

LO-4

Level: Moderate

1. Patterns of poverty can be characterized by
   1. demographics
   2. family
   3. educational characteristics
   4. all of the above

LO-5

Level: Easy

1. Demographics, family characteristics and educational characteristics are considered
   1. structural factors of poverty
   2. cyclical factors of poverty
   3. individual-level factors of poverty
   4. frictional factors of poverty

LO-5

Level: Moderate

1. Factors of the causes of poverty can be grouped as
   1. structural and cyclical factors
   2. structural and individual-level factors
   3. cyclical and frictional
   4. individual-level and cyclical

LO-5

Level: Moderate

1. Individual-level causes of poverty include all of the following except
   1. productivity
   2. government institutions
   3. restricted opportunities
   4. incentives and preferences

LO-5

Level: Easy

1. Structural causes of poverty income include all of the following except
   1. macroeconomic downturns
   2. resource availability and resource use
   3. government institutions
   4. discrimination

LO-5

Level: Moderate

1. The personal rate of productivity
   1. has a direct relationship with the demand for their labor and income
   2. has an inverse relationship with the demand for their labor and income
   3. has a direct relationship with the demand for their labor and an inverse relationship with income
   4. has an inverse relationship with the demand for their labor and a direct relationship with income

LO-5

Level: Difficulty

1. Which of the following would most likely have a higher rate of poverty?
   1. a person with four years of college or more
   2. married couples
   3. a person under 18
   4. a female head of household

LO-5

Level: Moderate

1. Which of the following would most likely have a lower rate of poverty?
   1. married couples
   2. a person under 18 years of age
   3. males head of household, no wife
   4. Asian

LO-5

Level: Moderate

1. All of the following except ____________ are included in the U.S. poverty policies.
   1. direct payments
   2. school lunch programs
   3. Head Start
   4. Unemployment benefits

LO-6

Level: Easy

1. A complicating issue for global poverty policies includes
   1. political unrest that directs priorities away from global cooperation efforts
   2. lack of labor and capital resources in undeveloped countries to build on poverty policies
   3. the crossing of geographical and governmental lines resulting in no institution that has the ability to set and enforce poverty policy
   4. the lack of support from governments for appropriate poverty policies

LO-6

Level: Moderate