QUESTION 1 A group of 10 teachers have the following annual incomes: $32,000, $1

Question

QUESTION 1

A group of 10 teachers have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the third quintile of this income distribution is ______ %.

QUESTION 2

Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will ______ the supply of low-skilled workers and ______ the supply of high-skilled workers.

increase, decrease

increase, increase

decrease, decrease

decrease, increase

QUESTION 3

The food stamp benefit

is a state funded program started in 1984.

does not contribute to the poverty trap from an economic viewpoint.

has time limits and is not a complete disincentive to work.

is reduced by $35 for every $100 earned and a and c above.

QUESTION 4

_______________ was created in 1965 to provide health care to families and individuals with low income and low resources.

QUESTION 5

The trick in graphing a Lorenz curve is that you must transform the shares of income ________________, which are shown in the first column of numbers in the table, into ___________, shown in the ________ column of numbers.

for each distribution; total income; third

for each distribution; total income; second

for each specific quintile; cumulative income, third

for each specific quintile; cumulative income; second

QUESTION 6

If the poverty trap were made even more difficult to overcome because a working mother will have extra expenses like transportation and child care that a nonworking mother will not face, then

she will have a powerful incentive to work more than one job.

the family better off than if she did not work at all.

her economic gains from working will be even smaller.

working now and in the future is even more attractive.

QUESTION 7

From the Great Depression of the 1930s until 1996, the United States’ most visible antipoverty program was Aid to Families with Dependent Children, which provided cash payments to

married men with families who were below the poverty line.

married women with families who were below the poverty line.

all mothers with children who were below the poverty line.

only those orphans who were living below the poverty line.

QUESTION 8

If incomes rise for both low-income and high-income workers, but rise less for the high-income workers,

then poverty will rise and inequality will fall

then poverty will fall and inequality will rise.

then poverty will rise and inequality will rise.

then poverty will fall and inequality will fall.

QUESTION 9

In the U.S., poverty rates are relatively low

for the elderly

for the well-educated

for the male-headed households

for whites and all of the above

QUESTION 10

In the framework of a Lorenz curve, the final entry in the cumulative income column needs to be _________.

total income

cumulative income

100%

45%

increase, decrease

increase, increase

decrease, decrease

decrease, increase

Explanation / Answer

1. Ascending order of income :$10,000, $12,000,$16,000, $20,000, $24,000, $32,000, $38,000,  $56,000, $70,000, $120,000

Percentage in 3rd quintile = 114,000/396,000 = 29%

2)d) Decrease the supply of low skilled workers and increase the supply of high skilled workers

5) Answer is (c)

6) (c)

7)(a)

8 (d) poverty will fall and inequality will fall

10. (c) 100%

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