Question 1

Inheritance taxes tend to increase income inequality in the long run.

Accepted Answer

A) True 
 B)False

Question 2

A man may be preferred to a woman by an employer who will make a substantial investment in the training of the employee because

Accepted Answer

A)  most employers are sexist and think that women belong in the home caring for children. 
B)  as a group women tend to have a weaker attachment to the labor force than men. 
C)  employers have observed that women are less productive than men on most jobs. 
D)  employers are afraid women will disrupt the workplace by distracting the male employees. 
A)  most employers are sexist and think that women belong in the home caring for children. 
B)  as a group women tend to have a weaker attachment to the labor force than men. 
C)  employers have observed that women are less productive than men on most jobs. 
D)  employers are afraid women will disrupt the workplace by distracting the male employees.

Question 3

How do income redistribution programs affect equality and efficiency?

Accepted Answer

Programs intended to improve equality by

Question 4

With a negative income tax providing a minimum of $20,000 and a tax rate of 25 percent, what amount of supplement would the government pay to a household earning $10,000?

Accepted Answer

A)  $5,000 
B)  $10,000 
C)  $17,500 
D)  $20,000 
A)  $5,000 
B)  $10,000 
C)  $17,500 
D)  $20,000

Question 5

The essence of the trade-off between equality and efficiency is that

Accepted Answer

A)  taxes and transfers reduce incentives to earn income, thus reducing GNP. 
B)  people are ideologically opposed to socialistic income redistribution. 
C)  redistribution violates the "work ethic." 
D)  people are prejudiced against blacks and women. 
A)  taxes and transfers reduce incentives to earn income, thus reducing GNP. 
B)  people are ideologically opposed to socialistic income redistribution. 
C)  redistribution violates the "work ethic." 
D)  people are prejudiced against blacks and women.

Question 6

Table 21-1
 $\begin{array}{lc}
&\text { Share of } \
 \underline {\text { Income Group }} &  \underline {\text { National Income }}\
\text { Lowest fifth } & 6 \
\text { Second fifth } & 9 \
\text { Third fifth } & 17 \
\text { Fourth fffth } & 19 \
\text { Highest ffth } & 49
\end{array}$
-Consider the economy described by the income distribution in Table 21-1.From this table, we can conclude that the

Accepted Answer

A)  poorest quarter of the population earns 15 percent of the income. 
B)  "middle" fifth of the population earns 32 percent of the income. 
C)  poorest quarter of the population earns 19 percent of the income. 
D)  richest fifth of the population earns 49 percent of the income. 
A)  poorest quarter of the population earns 15 percent of the income. 
B)  "middle" fifth of the population earns 32 percent of the income. 
C)  poorest quarter of the population earns 19 percent of the income. 
D)  richest fifth of the population earns 49 percent of the income.

Question 7

The United States has greater inequality of income than

Accepted Answer

A)  Japan. 
B)  Germany and Australia. 
C)  most industrialized nations. 
D)  all of the above. 
A)  Japan. 
B)  Germany and Australia. 
C)  most industrialized nations. 
D)  all of the above.

Question 8

Tax loopholes in the personal income tax benefit only very rich people.

Accepted Answer

A) True 
 B)False

Question 9

Many economists believe that

Accepted Answer

A)  once a negative income tax system was in place, the United States could increase economic equality indefinitely without reducing economic efficiency. 
B)  a negative income tax would be less efficient than the current welfare system. 
C)  replacing the current welfare system with a negative income tax would increase both economic efficiency and economic equality. 
D)  None of the above is correct. 
A)  once a negative income tax system was in place, the United States could increase economic equality indefinitely without reducing economic efficiency. 
B)  a negative income tax would be less efficient than the current welfare system. 
C)  replacing the current welfare system with a negative income tax would increase both economic efficiency and economic equality. 
D)  None of the above is correct.

Question 10

Japanese employers tend to hire employees right out of college and train them for a lifetime job with the company.Over time they found that women often, but not always, married after a few years and left the company so they were not good training investments.Based on this experience, and despite the exceptions, firms stopped hiring any women for jobs that require substantial training.This practice is called

Accepted Answer

A)  economic discrimination. 
B)  statistical discrimination. 
C)  compensating differentials. 
D)  the substitution effect. 
A)  economic discrimination. 
B)  statistical discrimination. 
C)  compensating differentials. 
D)  the substitution effect.

Question 11

One of the more powerful forces leading to an end in economic discrimination is

Accepted Answer

A)  pure competition. 
B)  pure monopoly. 
C)  government regulation. 
D)  oligopolistic rivalry. 
A)  pure competition. 
B)  pure monopoly. 
C)  government regulation. 
D)  oligopolistic rivalry.

Question 12

If two individuals have identical schooling, their incomes will be equal.

Accepted Answer

A) True 
 B)False

Question 13

Explain why greater equality is inevitably gained at the expense of efficiency.

Accepted Answer

Achieving greater equality requires redu

Question 14

Tax loopholes serve to

Accepted Answer

A)  improve the incomes of the poor. 
B)  erode the progressivity of the income tax. 
C)  increase the progressivity of the income tax. 
D)  decrease work incentives for the poor. 
A)  improve the incomes of the poor. 
B)  erode the progressivity of the income tax. 
C)  increase the progressivity of the income tax. 
D)  decrease work incentives for the poor.

Question 15

In 1964, the poverty line for a family stood at about which of the following figures?

Accepted Answer

A)  $2,100 
B)  $3,000 
C)  $4,500 
D)  $7,500 
A)  $2,100 
B)  $3,000 
C)  $4,500 
D)  $7,500

Question 16

How is the dividing line between poverty and nonpoverty measured? Does this method overstate the degree of poverty?

Accepted Answer

Originally, the poverty line was establi

Question 17

Roughly what percentage of Americans were officially considered poor in 2009?

Accepted Answer

A)  1.5 percent 
B)  8.6 percent 
C)  14.3 percent 
D)  22.1 percent 
A)  1.5 percent 
B)  8.6 percent 
C)  14.3 percent 
D)  22.1 percent

Question 18

What is the difference between the absolute and relative concepts of poverty? What are the major problems in measuring poverty with them?

Accepted Answer

The absolute concept of poverty is the m

Question 19

Poverty is defined in two ways: the absolute concept of poverty and the relative concept of poverty.

Accepted Answer

A) True 
 B)False

Question 20

The poor are those who fall too far behind the average income.This refers to the ____ definition of poverty.

Accepted Answer

A)  marginal 
B)  absolute 
C)  relative 
D)  threshold 
A)  marginal 
B)  absolute 
C)  relative 
D)  threshold

Exam 21: Poverty, Inequality, and Discrimination

Inheritance taxes tend to increase income inequality in the long run.

A man may be preferred to a woman by an employer who will make a substantial investment in the training of the employee because

How do income redistribution programs affect equality and efficiency?

With a negative income tax providing a minimum of $20,000 and a tax rate of 25 percent, what amount of supplement would the government pay to a household earning $10,000?

The essence of the trade-off between equality and efficiency is that

Table 21-1 Share of Lowest fifth 6 Second fifth 9 Third fifth 17 Fourth fffth 19 Highest ffth 49 -Consider the economy described by the income distribution in Table 21-1.From this table, we can conclude that the

The United States has greater inequality of income than

Tax loopholes in the personal income tax benefit only very rich people.

Many economists believe that

One of the more powerful forces leading to an end in economic discrimination is

If two individuals have identical schooling, their incomes will be equal.

Explain why greater equality is inevitably gained at the expense of efficiency.

Tax loopholes serve to

In 1964, the poverty line for a family stood at about which of the following figures?

How is the dividing line between poverty and nonpoverty measured? Does this method overstate the degree of poverty?

Roughly what percentage of Americans were officially considered poor in 2009?

What is the difference between the absolute and relative concepts of poverty? What are the major problems in measuring poverty with them?

Poverty is defined in two ways: the absolute concept of poverty and the relative concept of poverty.

The poor are those who fall too far behind the average income.This refers to the ____ definition of poverty.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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