Income Inequality and Poverty 5061
37. The maximin criterion is attributed to which political philosophy?
a. utilitarianism
b. liberalism
c. libertarianism
d. repubicanism
38. Liberalism aims to raise the welfare of the worst-off person in society. This rule is called the
a. minimax regret criterion.
b. conservative approach.
c. Nozick criterion.
d. maximin criterion.
5062 Income Inequality and Poverty
39. Raising the welfare of the worst-off person in society is an important goal of which political
philosophy?
a. utilitarianism
b. liberalism
c. libertarianism
d. secularism
40. “The government should choose policies deemed to be just, as evaluated by an impartial observer
behind a ‘veil of ignorance.’” This statement is most closely associated with which political
philosophy?
a. liberalism
b. utilitarianism
c. libertarianism
d. welfarism
Income Inequality and Poverty 5063
41. Suppose that Jamal is moving to a state where personal incomes are distributed randomly. If
Jamal believes in liberalism, he would prefer
a. an income distribution that is relatively equal.
b. that everyone has the same work opportunities and market-determined wage rates.
c. that private property be transformed to government property to safeguard people’s incomes.
d. less economic assistance to the poor because it distorts the price system.
42. The philosopher John Rawls argued that
a. people would choose a more equal distribution of income if they had to determine an economic
distribution system before knowing their place in it.
b. people would choose income inequality to allow the maximum use of their individual talents.
c. government has a role to ensure income equality to prevent social unrest.
d. people would choose equal opportunity because it is morally right.
5064 Income Inequality and Poverty
43. Liberalism is founded on a premise that behind a “veil of ignorance,”
a. justice cannot be agreed upon.
b. everyone’s income should be equal.
c. everyone would agree to “just” rules to reallocate income.
d. society should maximize the sum of individual utilities.
44. According to the doctrine of liberalism, principles of justice are the result of
a. fair agreement and bargain.
b. command-and-control policies.
c. domination of the powerful by the weak.
d. workers owning the factors of production.
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45. The political philosophy that views the redistribution of income as a form of social insurance is
a. utilitarianism
b. liberalism
c. libertarianism
d. welfarism
46. The maximin criterion suggests that social policy should
a. expropriate the factors of production from the capitalist class.
b. ensure an equal distribution of income.
c. elevate the well–being of those at the bottom of the income distribution.
d. elevate the well-being of all workers.
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47. The rule for redistribution proposed by John Rawls in his book A Theory of Justice is called the
a. “optimal ignorance” rule.
b. libertarian justice rule.
c. maximin criterion.
d. egalitarian criterion.
48. According to the maximin criterion, income should be transferred from the rich to the poor as long
as it
a. raises the well-being of the least fortunate.
b. does not alter incentives to work and save.
c. promotes an equal distribution of income.
d. does not lower the welfare of the elderly.
Income Inequality and Poverty 5067
49. If society chose to maximize total utility rather than minimum utility,
a. society would achieve perfect income equality.
b. society would achieve the maximin objective.
c. its justice would be more utilitarian than Rawlsian.
d. its justice would be more Rawlsian than utilitarian.
50. Would the maximin criterion achieve perfect income equality?
a. Yes. There would be no way to reallocate resources to raise the utility of the poor.
b. Yes. The maximin criterion would eliminate poverty.
c. No. It is impossible for complete equality to benefit the worst-off people in society.
d. No. Complete equality would reduce incentives to work, which would reduce total income,
which would reduce the incomes of the worst-off people in society.
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51. The goal of liberalism is to
a. redistribute income based on the assumption of diminishing marginal utility.
b. redistribute income in order to improve the well–being of the worst-off person in society.
c. punish crimes and enforce voluntary agreements but not to redistribute income.
d. measure happiness and satisfaction.
52. Liberals believe
a. that the government should choose just policies as evaluated by an impartial observer behind a
“veil of ignorance.”
b. in the assumption of diminishing marginal utility.
c. that everyone in society should have equal utility.
d. that the government should not redistribute income.
Income Inequality and Poverty 5069
53. Libertarians believe that
a. it is more important to evaluate the process by which economic outcomes are produced than
the outcomes themselves.
b. government should attempt to redistribute income from the rich to the poor when the gap
between rich and poor is more than 20%.
c. equality of income is more important than equality of opportunity.
d. it is more important to evaluate economic outcomes first and then the process that produced
them.
54. Which group would be the least upset by wide variation in the income distribution?
a. utilitarians
b. liberals
c. libertarians
d. Each group would be equally upset.
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55. “Only individual members of society earn income, not society itself.” This statement is most
closely associated with the political philosophy of a
a. utilitarian.
b. liberal.
c. libertarian.
d. None of the above is correct.
56. “The government should punish crimes and enforce voluntary agreements but not redistribute
income.” This statement is most closely associated with which political philosophy?
a. liberalism
b. utilitarianism
c. libertarianism
d. welfarism
Income Inequality and Poverty 5071
57. “Equality of opportunities is more important than equality of incomes.” This statement would be
most likely attributed to which political philosophy?
a. utilitarianism
b. liberalism
c. libertarianism
d. welfarism
58. Robert Nozick criticizes Rawls‘s concept of justice by using an example of
a. minimum wage laws.
b. the grade distribution in a class.
c. a leaky bucket.
d. the price of tea in China.
5072 Income Inequality and Poverty
59. Which political philosophy focuses on the process of determining the distribution of income rather
than on the outcome?
a. utilitarianism
b. liberalism
c. libertarianism
d. welfarism
60. Libertarians believe that in considering economic fairness, one should primarily consider the
a. outcome of the system.
b. process by which outcomes arise.
c. maximin criterion.
d. maximization total social utility.
Income Inequality and Poverty 5073
61. Libertarianism identifies a redistribution of income role for government when
a. the utility of the worst–off could be improved.
b. the income distribution is altered by illegal means (e.g. theft).
c. the total utility for society can be improved through redistribution of income.
d. a “veil of ignorance” would result in a recommendation of redistribution of income.
62. In general, which of the following would libertarians argue is more important than equal
outcomes?
a. equal opportunities
b. equal incomes
c. providing a social safety net
d. offering the opportunity to purchase social insurance
5074 Income Inequality and Poverty
63. Marco earns more than Antonio. A legislator proposes taxing Marco to supplement Antonio’s
income. A libertarian would view this proposal as
a. a way to improve the welfare of all in society.
b. a way to enhance Antonio’s income in a socially responsible way.
c. validation of the role of diminishing marginal utility over the maximin criterion.
d. an inappropriate role for government, since government should not redistribute income.
64. The goal of libertarianism is to
a. redistribute income based on the assumption of diminishing marginal utility.
b. redistribute income in order to maximize the well–being of the worst–off person in society.
c. punish crimes and enforce voluntary agreements but not to redistribute income.
d. measure happiness and satisfaction.
Income Inequality and Poverty 5075
65. Caroline earns more than John. Under a new tax system, some of the taxes paid by Caroline
would go to John. A libertarian would
a. support the system because an extra dollar earned by Caroline would be worth less to her than
an extra dollar given to John.
b. oppose the system if it redistributed income in the presence of equal opportunity.
c. oppose the system because an extra dollar earned by Caroline would be worth more to her
than an extra dollar given to John.
d. support the system if it maximized the well-being of the poorest member of society.
66. Libertarians believe that
a. the government should choose just policies as evaluated by an impartial observer behind a “veil
of ignorance.”
b. the government should aim to maximize the well-being of the worst-off person in society.
c. everyone in society should have equal utility.
d. the government should not redistribute income.
5076 Income Inequality and Poverty
Scenario 20-1
The government is proposing switching from a progressive tax system in which families pay 15%
of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over
$100,000 to a tax system in which every family pays 20% of their income less $20,000.
67. Refer to Scenario 20-1. Which group would be most in favor of the switch from the current
progressive tax policy to the new policy?
a. Utilitarians, because they want to maximize the utility to the worst–off person in society
b. Liberals, because of the maximin criterion
c. Libertarians, because they believe in diminishing marginal utility
d. All three groups would be equally in favor of the switch.
68. Refer to Scenario 20–1. What would the libertarians think of the proposed policy change?
a. They would favor the current progressive policy over the proposed policy because it accounts
for diminishing marginal utility.
b. They would favor the proposed tax policy over the current progressive policy because it would
result in a negative tax for the poorest families.
c. They would favor the current progressive tax policy over the proposed policy because it
rewards those who work the hardest.
d. They would oppose both tax policies because both redistribute income.
Income Inequality and Poverty 5077
Scenario 20-2
The government is proposing switching from a progressive tax system, in which families pay 15%
of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000
to a tax system in which every family pays 1/4 of its income regardless of how much they earn and
all income redistribution is eliminated. That is, the tax revenue generated is used only for
infrastructure, public administration, and national defense.
69. Refer to Scenario 20-2. Which group would be most in favor of the proposed change in tax
policy?
a. Liberals, because they believe in the maximin criterion.
b. Libertarians, because they do not believe in redistributing income.
c. Utilitarians, because they believe in diminishing marginal utility.
d. None of the above would be in favor of the proposed change.
70. Refer to Scenario 20-2. Which philosopher would be most in favor of the proposed change in
tax policy?
a. Jeremy Bentham
b. John Stuart Mill
c. John Rawls
d. Robert Nozick
5078 Income Inequality and Poverty
71. Which of the following pholitical philosophies would support redistribution of income that makes
society fully egalitarian?
a. Liberals, because they believe in the maximin criterion.
b. Libertarians, because they believe in evaluating the process by which economic outcomes arise.
c. Utilitarians, because they believe in diminishing marginal utility.
d. None of the above would support completely egalitarian redistribution of income.
Multiple Choice – Section 03:
Policies to Reduce Poverty
1. Which of the following statements is not correct?
a. Libertarians are opposed to redistributing income.
b. Critics of the welfare system argue that it breaks up families.
c. One of the problems with measuring income inequality is valuing in–kind transfers.
d. Utilitarians believe that the government should punish crimes but should not redistribute income.
Income Inequality and Poverty 5079
2. Which of the following statements is not correct?
a. Two key elements of welfare reform are work requirements and limiting the time that recipients
can receive benefits.
b. The Earned Income Tax Credit (EITC) is very similar to a negative income tax.
c. Minimum wage laws will likely increase unemployment.
d. The elderly are more likely to be poor than single mothers.
3. Which of the following statements is correct?
a. Followers of the liberalism political philosophy believe that society should maximize the total of
individual utilities.
b. The poverty line is adjusted for regional differences in the costs of raising children.
c. One advantage to the Earned Income Tax Credit (EITC) is that it benefits the working poor.
d. Libertarians pursue policies to redistribute income from the rich to the poor.
5080 Income Inequality and Poverty
4. The best government policy to reduce poverty is
a. a minimum wage law because the resulting unemployment is small in comparison to the benefits
to people it helps.
b. an expanded welfare program because people must have an additional “need” such as small
children or a disability.
c. an in-kind transfer because it ensures that the poor receive what they need most such as food or
shelter.
d. not obvious. Government programs to reduce poverty have many advantages but also many
disadvantages.
5. Which of the following programs would be opposed by philosopher John Rawls?
a. a negative income tax
b. the Supplemental Security Income (SSI) program
c. a tax plan creating a perfectly egalitarian income distribution
d. Rawls would oppose all of the programs.