Test Questions with Answers
Chapter 20. Markets and the Government IV.
Social Policy and the Alleviation of Poverty
Chapter 20 ― Question 1
What is the difference between "median" and "average"? Explain and use an example.
* A median number is at the midpoint of a series.
7 is the median of 5, 7 9. The average is also 7 (21:3).
Chapter 20 ― Question 2
What were President Roosevelt's Four Freedoms?
* The freedom of speech, the freedom of every person to worship God in his own way, the freedom from want and the freedom from fear.
Chapter 20 ― Question 3
What does FICA cover?
* Public old-age pensions, Medicare, disability and survivor benefits.
Chapter 20 ― Question 4
Explain the difference between an absolute and a relative poverty line.
* An absolute poverty line defines poverty with the help of a basket of goods. People are categorised as poor if their incomes are not sufficient to buy this basket.
A relative poverty line categorises everybody as poor whose spending on necessities is less than 50 percent of the median household's spending on these items.
Chapter 20 ― Question 5
An individual earns $100,000 a year. The NIT is $10,000 a year. The tax rate is 30 percent. What is his tax burden?
A. $27,000
B. $20,000
C. $30,000
D. $60,000
*B. Answer A ignores that the NIC is deducted from the tax burden, not from taxable income. Answer C ignores that the NIT is paid to everybody. Answer D is nonsense.
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