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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. Economic mobility refers to the
2. A libertarian is likely to argue that
3. In-kind transfers
4. Income and saving rates are highest for people who are
5. Measures of poverty that fail to account for the value of in-kind transfers
6. The political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income is
7. Over the past several decades, the women’s movement may be responsible for
8. Libertarians would condone government involvement in an economy to ensure
9. Evidence indicates that
10. Opponents of the 1996 law that limits the time a family can receive welfare benefits believe that
11. Liberalism is founded on a premise that behind a “veil of ignorance”
12. If income were equally distributed across all families,
13. Minimum wage laws
14. In the United States the poverty rate is a measure of the
15. The number of families living in poverty in the U.S. tends to be overstated by about
16. The annual adjustment to the poverty line reflects
17. Labor earnings make up what part of total income in the U.S. economy?
18. Over the past few years, growth in average income has
19. U.S. income data from 1998 show that the bottom one-fifth of all families received
20. A person’s earnings depends on
21. Whether or not policymakers should try to make our society more egalitarian is largely a matter of
22. The life cycle effect characterizes a life-time income profile in which income
23. Transitory income refers to
24. When the income distribution of the U.S. is compared to that of other countries, it shows that the U.S. has a
25. 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

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