Economics and Social Equity Final Exam - Fall 2024
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Questions and Answers

What was the approximate poverty line for a household with two people in 2023?

  • $18,700
  • $27,500
  • $20,404 (correct)
  • $38,000

    • What percentage of the U.S. population lived in poverty in 2023?

  • 20% to 24%
  • more than 30%
  • approximately 11% (correct)
  • 25% to 29%

    • Which U.S. welfare program is an in-kind benefit that is NOT means-tested?

  • Medicare (correct)
  • TANF (Temporary Assistance for Needy Families)
  • food stamps
  • Medicaid

    • Since World War II, in the United States, how has the distribution of income changed?

    <p>changed first toward greater equality and then toward greater inequality</p> Signup and view all the answers

    Compared with many other developed nations, the United States has what level of poverty?

    <p>an unusually high poverty rate</p> Signup and view all the answers

    What do economists believe is a better predictor of a person's current living standard than current income?

    <p>Average lifetime income.</p> Signup and view all the answers

    How do people's beliefs about the distribution of wealth in the United States differ from the actual distribution?

    <p>People think it is more equal than it is.</p> Signup and view all the answers

    Consumer spending differences tend to vary how in relation to income differences?

    <p>In proportion to</p> Signup and view all the answers

    What has been the trend of the U.S. poverty rate over the past 40 years?

    <p>Rose for 20 years and fell for the next 20 years.</p> Signup and view all the answers

    What does the poverty line represent?

    <p>An income level to define poverty determined by government.</p> Signup and view all the answers

    What is known as the percentage of the population whose income falls below the poverty line?

    <p>Poverty rate.</p> Signup and view all the answers

    What is the basis used by the U.S. government to determine the poverty line?

    <p>The value of a low-cost food plan multiplied by three.</p> Signup and view all the answers

    Which standard uses relative poverty measures?

    <p>Annual income below a specific percentage of the median.</p> Signup and view all the answers

    What is the result of inheriting a house and deciding to live in it?

    <p>Your wealth increases.</p> Signup and view all the answers

    Why were the Supplemental Nutrition Assistance Program and housing assistance no longer available when starting a new job?

    <p>They are means tested.</p> Signup and view all the answers

    How would you advise your friend regarding Social Security and earning potential?

    <p>&quot;Social Security benefits are connected to your earnings, so higher wages now benefit you later.&quot;</p> Signup and view all the answers

    What is the main distinction between Medicaid and Medicare?

    <p>Medicaid is a means-tested program; Medicare is available to anyone over 65 years old.</p> Signup and view all the answers

    When discussing permanent income, how is consumption affected compared to income?

    <p>Consumption is less volatile than income.</p> Signup and view all the answers

    Which of the following is NOT a reason permanent income is a better measure of living standards than annual income?

    <p>Permanent income considers short-term fluctuations exclusively.</p> Signup and view all the answers

    What might happen to your benefits when you begin earning a higher salary?

    <p>You may lose access to some means-tested benefits.</p> Signup and view all the answers

    Which statement best describes the relationship between utility and income?

    <p>Utility can remain stable even when income fluctuates.</p> Signup and view all the answers

    What tradeoff is illustrated when a grading system assigns the same grade based on the average of everyone's points?

    <p>Efficiency and equality</p> Signup and view all the answers

    What aspect of fairness do you focus on when considering the different outcomes of Frances and Francis's careers?

    <p>Opportunities</p> Signup and view all the answers

    In the parable of the vineyard workers, why do you consider the vineyard owner's payment method fair?

    <p>Outcomes</p> Signup and view all the answers

    What aspect of fairness do you believe ensures that the Fiscal Challenge competition is fair?

    <p>Process</p> Signup and view all the answers

    What type of program supports Pat, who cannot work due to an accident?

    <p>Social insurance program</p> Signup and view all the answers

    What factors would affect the value of the beach house you inherit?

    <p>Location and rental demand</p> Signup and view all the answers

    What type of inequality is highlighted by the difference in success between Frances and Francis?

    <p>Outcome inequality</p> Signup and view all the answers

    What underlying principle is ignored by those who believe all vineyard workers deserve equal pay based on effort?

    <p>Temporal contributions</p> Signup and view all the answers

    What type of program provides medical care to households below the poverty line and is funded through general tax revenues?

    <p>An income redistribution program</p> Signup and view all the answers

    Which of the following is an example of an in-kind transfer?

    <p>Housing provided by the government</p> Signup and view all the answers

    What defines a progressive tax system?

    <p>Higher incomes taxed at higher rates</p> Signup and view all the answers

    If Corinne pays a 10% tax on the first $10,000 she earns, what additional tax characterizes a progressive tax structure?

    <p>25% additional tax</p> Signup and view all the answers

    Which tax structure is considered regressive?

    <p>5% on additional earnings</p> Signup and view all the answers

    Given the unchanged definition of poverty despite rising average incomes, what would likely happen to the poverty percentage?

    <p>Decrease</p> Signup and view all the answers

    All the following are leading causes of poverty in the United States EXCEPT:

    <p>An effective social safety net</p> Signup and view all the answers

    What factor causes the poverty line to be adjusted each year?

    <p>Adjustments in the cost of living</p> Signup and view all the answers

    Which statement is NOT correct regarding poverty in the United States?

    <p>People of color are less likely than others to experience poverty.</p> Signup and view all the answers

    Which group has the LOWEST poverty rate in the United States?

    <p>Married couples</p> Signup and view all the answers

    How common is it for Americans to have a spell of poverty during their lifetime?

    <p>Over 50% will have a spell of poverty.</p> Signup and view all the answers

    Which statement about social insurance is correct?

    <p>It is government-provided financial funding for bad outcomes such as unemployment and illness.</p> Signup and view all the answers

    Which statement is NOT correct regarding the incidence of poverty in the United States?

    <p>Poverty tends to be a one-time event for most individuals.</p> Signup and view all the answers

    What do means-tested government programs require?

    <p>Verification of income and sometimes wealth for eligibility.</p> Signup and view all the answers

    Which program is NOT a means-tested social safety net program in the United States?

    <p>Social Security</p> Signup and view all the answers

    What is the minimum income level that covers basic needs?

    <p>Income sufficient for food, shelter, transportation, and medical care.</p> Signup and view all the answers

    Study Notes

    Practice Final Exam - Fall 2024

    • Question 1: Grading policy promoting class unity and cooperation by averaging student scores leads students to put less effort in the course, illustrating the tradeoff between efficiency and equality.
    • Question 2: Twins with similar aptitudes and education attained different socioeconomic outcomes highlighting the importance of opportunities.
    • Question 3: Parable of vineyard workers who were paid equally regardless of work hours, focuses on fairness of opportunities.
    • Question 4: Fiscal Challenge competition that prohibits using school colors, mascots, or slogans ensures fairness of opportunities and process.
    • Question 5: Social insurance program (disability insurance) prevents loss of income due to disability.
    • Question 6: Inheriting a rental property increases wealth but not necessarily yearly income.
    • Question 7: Inheriting a house only increases wealth, no change in income.
    • Question 8: Programs such as SNAP and housing assistance are "means-tested" and cease when a person secures employment.
    • Question 9: A friend rationalizes less pay for a closer job, believing retirement benefits will be unaffected. The friend is incorrect. Social Security benefits are based on wages, not current income
    • Question 10: Medicaid is a means-tested program, and Medicare is a taxpayer-funded program.
    • Question 11: Myrda's income is less volatile because permanent income is the average lifetime income.
    • Question 12: Annual income changes and varies based on life stage, not a good measure of living standards.
    • Question 13: Poverty rates in US compared to other developed countries are higher.
    • Question 14: Moving to Caribbean island and changing income quartile reflects a change in relative poverty.
    • Question 15: Population is divided into groups based on income; quintiles are groups for statistics on income distribution.
    • Question 16: Top quintile earns 43.8% of the total income.
    • Question 17: Bottom quintile of the population earns approximately 2.6 % of the total income.
    • Question 18: The share of income for top quintile increased from 1970 - 2014, while the share of the bottom quintile decreased.
    • Question 19: Average lifetime income is considered a better predictor of a person's living standard.
    • Question 20: People's beliefs about the wealth distribution in US tend to be more equal than actual distribution.
    • Question 21: Differences in consumer spending tends to be more than differences in income.
    • Question 22: US poverty rate has fluctuated over 40 years, not a clear upward or downward trend.
    • Question 23: Poverty line is an income threshold set by the government to determine poverty based on food and housing cost.
    • Question 24: The percentage of people below the poverty line is the poverty rate.
    • Question 25: Poverty line is the income level where people earn the very least.
    • Question 26: Annual income below $8,000 is a measure of relative poverty and considering the minimum amount required for basic needs.
    • Question 27: Most people will spend some time in poverty, but not necessarily their entire life in poverty. Children and single mothers are most likely to be in poverty.
    • Question 28: Married couples have the lowest poverty rate.
    • Question 29: People who are in poverty, some long-time, are a significant proportion of total number of poor.
    • Question 30: Over 50% of Americans experience poverty in their lifetime.
    • Question 31: Social insurance is government funded financial help for bad outcomes like illness.
    • Question 32: Government programs are means-tested when eligibility is determined by income.
    • Question 33: Social Security is NOT a means-tested program.
    • Question 34: Medical aid for low- income individuals is income redistribution.
    • Question 35: An in-kind transfer is an example of giving housing or resources rather than direct payments.
    • Question 36: Progressive tax systems have a higher proportion of taxes for those earning higher incomes.
    • Question 37: Corinne's tax structure is progressive.
    • Question 38: 10% tax on the first $10,000 is regressive.
    • Question 39: The percentage of population living below poverty line is likely to increase.
    • Question 40: The social safety net isn't a leading cause to poverty.
    • Question 41: Poverty line is adjusted due to changes in cost of living and average family size.
    • Question 42: Poverty line in 2023 for a household of two was $20,404.
    • Question 43: Approximately 11% of US population lived in poverty in 2023..
    • Question 44: The richest Americans saw a faster increase in share of income since 1980, compared to income of the poorest Americans.
    • Question 45: US income distribution has become more unequal.
    • Question 46: Medicare, an in-kind benefit, is not means-tested.
    • Question 47: Social Security is the largest program in the US.
    • Question 48: Temporary Assistance for Needy Families offers means tested, in-kind transfers.
    • Question 49: Employment based health insurance is an example of an in-kind transfer.
    • Question 50: US has a higher rate of poverty than many other developed countries.

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    ACE 100: Practice Final Exam - Fall 2024 PDF

    Description

    This practice final exam covers key concepts in economics and social equity, focusing on grading policies, socioeconomic outcomes, and fairness in opportunities. It challenges students to understand the implications of economic decisions and policies on equality and efficiency. Prepare for complex discussions on how wealth is transmitted and the role of social insurance programs.

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