King: Economics Chapter 16 Instructions Answer the following questions and then press 'Submit' to get your score. Question 1 When statisticians discuss the distribution of income, which of the following figures do they look at? a) The incomes of different individuals. b) The incomes of different households. c) The incomes each household would need to maintain its present living standard if it comprised just one adult. d) The incomes each household would need to maintain its present living standard if it comprised just a married or cohabiting couple. Question 2 Which of the following definitions of a household's income is false? a) Its original income is its income from earnings, investments and pensions other than State Pensions. b) Its gross income adds in transfers from the government. c) Its disposable income deducts taxes paid directly to the government. d) Its post-tax income deducts other taxes and adds in the value of government services received free of charge. Question 3 Which of the following statements about income inequality is false? a) Gross incomes are less unequal than original incomes. b) Final incomes are less unequal than disposable incomes. c) A curve which plots a cumulative percentage of income against a cumulative percentage of households is called a Lorenz curve. d) If we compare the distribution of two incomes, the one with the lower Gini coefficient is the more unequal. Question 4 Which of the following might help to make the distribution of original incomes more unequal? a) A rise in the State Pension. b) A ceiling on the number of hours that people were allowed to work each week. c) A policy to encourage more low income households to buy shares in companies. d) An effective policy to reduce bankers' bonuses. Question 5 Which of the following might help to make original incomes less unequal? a) People living longer. b) A rise in the demand for unskilled labour. c) Lower occupational pensions in many jobs. d) A rise in unemployment. Question 6 Many rich people support government policies for redistribution. Which of the following would not help to explain why they do so? a) Rich people may be altruistic. b) Rich people may fear that one day in the future they may be poor themselves. c) Rich people may feel redistribution should be left to voluntary donations d) Rich people regard redistribution as a public good. Question 7 Which of the following statements is false? a) Utilitarians believe the government should aim to maximize total utility. b) Followers of Rawls believe the government should aim to make the person with the lowest original income as well off as possible. c) With each tax, the higher the rate, the larger the revenue. d) A government which pursued complete equality of final incomes might leave everyone on very low incomes. Question 8 Which of the following statements about approaches to poverty is false? a) On every approach, a doubling of the incomes of all households would reduce the number of people in poverty. b) A problem with the absolute approach to poverty is deciding what items to put on the list. c) A problem with the relative approach to poverty is deciding what percentage of average incomes to use. d) A problem with hybrid approaches to poverty is deciding exactly what to include. Question 9 Suppose a UK newspaper headline reads 'government figures show that more children are in poverty than was the case ten years ago'. What can we be sure of from this? a) More children are in households which find it harder to survive than was the case ten years ago. b) Many children are in households whose incomes are lower than they were ten years ago. c) The incomes of poorer families have risen less over the last ten years than the incomes of average families. d) The very poorest households are poorer than they were ten years ago. Question 10 Which of the following does not cause problems for the government in its efforts to reduce poverty? a) The fact that means-tested transfers may create an unemployment trap. b) The fact that housing is covered by separate benefits. c) The fact that some people may become benefit-reliant. d) The fact that some people do not claim benefits to which they are entitled.