Question : 18.4   Income Distribution and Poverty 1) What the United States government’s : 1388035

18.4   Income Distribution and Poverty

1) What is the United States government’s formal definition of the poverty line?

A) It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four.

B) It is a level of annual income equal to the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition.

C) It is the annual income level below which a household is exempt from taxes.

D) It is 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.

2) What is the poverty rate?

A) the rate at which the number of people relative to the size of the population fall below the poverty line

B) the percentage of the population earning an annual income below the poverty line, according to the federal government’s definition

C) the percentage of working adults whose annual income is sufficiently low as to be are exempt from paying income taxes

D) the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition

3) Between 1980 and 2011, income inequality in the United States has increased in part due to rapid technological change. How does technological change contribute to income inequality?

A) Advancements in technology displace skilled and unskilled workers in certain fields, leading to higher unemployment rates.

B) Technology complements the skills of the well-educated while rendering redundant the labor services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers.

C) The opportunity cost of investing in technology is investments in human capital. The resulting decrease in labor’s marginal productivity has led to lower wages.

D) Technological change favors the owners of capital and since high income individuals tend to own capital, income inequality is further exacerbated.

4) Between 1980 and 2011, income inequality in the United States has increased in part due to expanding international trade. How does expanding international trade contribute to income inequality?

A) It increases the demand for a wide array of products which in turn increases prices beyond the reach of average income individuals.

B) It allows producers to exploit workers and reduce the wages they are willing to pay workers.

C) Domestic firms can now hire low-skilled workers anywhere in the world, putting U.S. workers in competition with foreign workers. This has caused the wages of unskilled workers to be depressed relative to the wages of other workers.

D) It reduces the cost of producing goods and therefore lowers the value of labor’s services.

5) Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 percent is damaging to the country?

A) The higher incomes of the 1 percent may give them disproportionate political influence through campaign contributions.

B) Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income.

C) further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth.

D) Rising income inequality can lead to political unrest.

6) A statistical tool used to measure inequality is

A) the Lorenz curve.

B) the Gini coefficient.

C) the absolute poverty rate.

D) the relative poverty rate.

7) The Gini coefficient is measured by

A) summing up the cumulative income percentages on the Lorenz curve.

B) summing up the total income earned by the population and dividing by the size of the population.

C) using the formula: area between perfect inequality and Lorenz curve ÷ area between the line of perfect equality to the Lorenz curve.

D) using the formula: area between the line of perfect equality and the Lorenz curve ÷ the area under the line of perfect equality.

8) As the value of the Gini coefficient approaches zero,

A) income distribution becomes less unequal.

B) income distribution becomes more unequal.

C) the percentage of the population under the poverty line increases.

D) the percentage of the population under the poverty line decreases.

9) As the value of the Gini coefficient approaches one,

A) income distribution becomes less unequal.

B) income distribution becomes more unequal.

C) the percentage of the population under the poverty line increases.

D) the percentage of the population under the poverty line decreases.