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Economics 101 Practice Test: Income Inequality and Poverty
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Income inequality is the unequal distribution of income across a population. Poverty is a state where a person is unable to get the resources they need for their income.  Poverty can be measured in two ways: Absolute poverty: When people can't afford basic necessities like food, water, shelter, and education Relative poverty: When a household's income is below a certain percentage of the median income in a country  Income inequality can be measured by five indicators, such as the Gini coefficient and S90/S10. The Gini coefficient is a measure of income inequality among individuals. It... Show more
Economics 101 Practice Test: Income Inequality and Poverty
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25 Questions

1. Liberalism is founded on a premise that behind a “veil of ignorance”
2. The political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income is
3. Proponents of welfare reform claim that programs for the poor which do not establish a time limit on recipient benefits harm children by
4. Based on data from 1998, what percent of all income in the United States did the top fifth of all families receive?
5. Whether or not policymakers should try to make our society more egalitarian is largely a matter of
6. Opponents of the 1996 law that limits the time a family can receive welfare benefits believe that
7. According to utilitarians, the ultimate objective of private and public actions is to
8. A family’s ability to buy goods and services depends largely on its normal or average income which is its
9. Economic mobility refers to the
10. Transitory income refers to
11. The liberalism rule called the maximin criterion suggests that the focus of social policy would be to
12. Studies have shown that if a father earns 20 percent above his generation’s average income, his son will most likely earn
13. Minimum wage laws
14. Evidence suggests that
15. Three-fourths of total income in the U.S. economy comes from
16. The utilitarian case for redistributing income is based on the assumption of
17. In the United States the poverty rate is a measure of the
18. Assume that the government proposes a negative income tax that calculates taxes owed by the formula, TAXES OWED = (1/3  INCOME) – 10,000. A family that earns an income of $60,000 will
19. Government welfare programs are often criticized because
20. If income were equally distributed across all families,
21. The new formula being considered by the U.S. Census Bureau to compute the income threshold for the poverty line would
22. Over the past several decades, the women’s movement may be responsible for
23. The life cycle effect characterizes a life-time income profile in which income
24. A libertarian is likely to argue that
25. In-kind transfers

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