Question 1

The Gini coefficient or ratio is a summary measure of income inequality derived from the Lorenz curve.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the table. The rise in percentage of income received from before taxes and transfers to after taxes and transfers is greatest for the

Accepted Answer

A) third 20 percent of households. 
B) second 20 percent of households. 
C) highest 20 percent of households. 
D) lowest 20 percent of households. 
A) third 20 percent of households. 
B) second 20 percent of households. 
C) highest 20 percent of households. 
D) lowest 20 percent of households.

Question 3

Which of the following provides public assistance to those who are blind and otherwise disabled?

Accepted Answer

A) Medicare 
B) Supplemental Security Income (SSI) 
C) Medicaid 
D) TANF 
A) Medicare 
B) Supplemental Security Income (SSI) 
C) Medicaid 
D) TANF

Question 4

Statistical discrimination occurs when employers base hiring decisions on individual workers' previous employment records and statistics.

Accepted Answer

A) True 
 B)False

Question 5

Suppose an employer is biased against African Americans. If his discrimination coefficient is $2, the employer will

Accepted Answer

A) randomly hire African-American and white workers if the actual African-American-white wage differential is more than $2. 
B) randomly hire African-American and white workers if the actual African-American-white wage differential is less than $2. 
C) hire only African Americans if the actual African-American-white wage differential is less than $2. 
D) hire only whites if the actual African-American-white wage differential is less than $2. 
A) randomly hire African-American and white workers if the actual African-American-white wage differential is more than $2. 
B) randomly hire African-American and white workers if the actual African-American-white wage differential is less than $2. 
C) hire only African Americans if the actual African-American-white wage differential is less than $2. 
D) hire only whites if the actual African-American-white wage differential is less than $2.

Question 6

The poverty rate for African Americans is

Accepted Answer

A) greater than for any other racial or ethnic group. 
B) below that for whites. 
C) considerably lower than that for Hispanics. 
D) below that for persons 65 years of age or older. 
A) greater than for any other racial or ethnic group. 
B) below that for whites. 
C) considerably lower than that for Hispanics. 
D) below that for persons 65 years of age or older.

Question 7

As the area between the Lorenz curve and diagonal gets larger, the Gini ratio

Accepted Answer

A) rises to reflect greater equality. 
B) rises to reflect greater inequality. 
C) falls to reflect greater inequality. 
D) falls to reflect greater equality. 
A) rises to reflect greater equality. 
B) rises to reflect greater inequality. 
C) falls to reflect greater inequality. 
D) falls to reflect greater equality.

Question 8

Social Security is financed

Accepted Answer

A) by state income tax revenues. 
B) by payroll taxes on employees and employers. 
C) by federal excise taxes. 
D) out of general tax revenues. 
A) by state income tax revenues. 
B) by payroll taxes on employees and employers. 
C) by federal excise taxes. 
D) out of general tax revenues.

Question 9

The crowding model of occupational segregation shows how white males earn higher incomes at the expense of women and minorities who are restricted to a limited number of occupations.

Accepted Answer

A) True 
 B)False

Question 10

The taste-for-discrimination model examines an employer's prejudice and discrimination in hiring by using tools of

Accepted Answer

A) demand theory. 
B) theory of costs. 
C) production theory. 
D) profit theory. 
A) demand theory. 
B) theory of costs. 
C) production theory. 
D) profit theory.

Question 11

The unequal distribution of wealth among households in the United States is one of the causes of income inequality.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that a prejudiced white employer is willing to hire white workers at a rate of $16/hour, and this employer has a discrimination coefficient of $4. This implies that the employer would

Accepted Answer

A) not hire a nonwhite worker regardless of wage rate. 
B) hire a nonwhite worker only at a rate of $12/hour or less. 
C) actually pay a white worker $20/hour. 
D) pay a nonwhite worker only $4/hour. 
A) not hire a nonwhite worker regardless of wage rate. 
B) hire a nonwhite worker only at a rate of $12/hour or less. 
C) actually pay a white worker $20/hour. 
D) pay a nonwhite worker only $4/hour.

Question 13

The eligibility basis for the Supplemental Nutrition Assistance Program (or SNAP, formerly called the food-stamp program)is

Accepted Answer

A) age. 
B) illness. 
C) income. 
D) disability. 
A) age. 
B) illness. 
C) income. 
D) disability.

Question 14

The movement of individuals and households from one income quintile to another over time is called

Accepted Answer

A) income averaging. 
B) wealth turnover. 
C) income mobility. 
D) the ratchet effect. 
A) income averaging. 
B) wealth turnover. 
C) income mobility. 
D) the ratchet effect.

Question 15

African-American worker Jackson earns $30,000 per year; white worker Johnson earns $40,000 per year. On the basis of this information, we can conclude that

Accepted Answer

A) it is not clear whether discrimination is present in this situation. 
B) there are no discriminatory forces at work in the labor market. 
C) Jackson is being discriminated against, but the dollar amount is unclear. 
D) Jackson is being discriminated against in the amount of $10,000 per year. 
A) it is not clear whether discrimination is present in this situation. 
B) there are no discriminatory forces at work in the labor market. 
C) Jackson is being discriminated against, but the dollar amount is unclear. 
D) Jackson is being discriminated against in the amount of $10,000 per year.

Question 16

The Temporary Assistance for Needy Families (TANF)program

Accepted Answer

A) put a limit on receiving welfare payments and required able-bodied adults to work after receiving assistance for two years. 
B) increased the number of people receiving welfare benefits and the amount of the assistance. 
C) required businesses to monitor low-income workers and used federal funds to supplement their pay. 
D) required the use of food stamps for food purchases by families but permitted cash assistance to be given to the elderly. 
A) put a limit on receiving welfare payments and required able-bodied adults to work after receiving assistance for two years. 
B) increased the number of people receiving welfare benefits and the amount of the assistance. 
C) required businesses to monitor low-income workers and used federal funds to supplement their pay. 
D) required the use of food stamps for food purchases by families but permitted cash assistance to be given to the elderly.

Question 17

The degree of inequality in income distribution based on single-year data is

Accepted Answer

A) understated even though it takes into account income mobility. 
B) overstated because it does not take into account income mobility. 
C) understated because it does not take into account income mobility. 
D) overstated even though it takes into account income mobility. 
A) understated even though it takes into account income mobility. 
B) overstated because it does not take into account income mobility. 
C) understated because it does not take into account income mobility. 
D) overstated even though it takes into account income mobility.

Question 18

Income mobility

Accepted Answer

A) makes lifetime income inequality among income receivers in the United States less than income inequality in any single year. 
B) is less in the United States than in most developing nations. 
C) refers to the movement of wage earners from one job to another. 
D) reduces the total percentage of households in the lowest quintile of the income distribution over time. 
A) makes lifetime income inequality among income receivers in the United States less than income inequality in any single year. 
B) is less in the United States than in most developing nations. 
C) refers to the movement of wage earners from one job to another. 
D) reduces the total percentage of households in the lowest quintile of the income distribution over time.

Question 19

Perfect income equality would yield a Gini ratio of

Accepted Answer

A) 2. 
B) 1. 
C) 0. 
D) 0.5. 
A) 2. 
B) 1. 
C) 0. 
D) 0.5.

Question 20

Refer to the diagram. Which of the following would be consistent with a decrease in racial prejudice against African Americans and thus a decrease in the discrimination coefficients of employers, taken as a group?

Accepted Answer

A) a shift in the labor demand curve from D₃ to D₂ 
B) an increase in the African-American wage rate from W₁ to W₂ 
C) a reduction in African-American employment from Q₃ to Q₂ 
D) a decrease in the African-American wage rate from W₂ to W₁ 
A) a shift in the labor demand curve from D₃ to D₂ 
B) an increase in the African-American wage rate from W₁ to W₂ 
C) a reduction in African-American employment from Q₃ to Q₂ 
D) a decrease in the African-American wage rate from W₂ to W₁

Exam 23: Income Inequality, Poverty, and Discrimination

The Gini coefficient or ratio is a summary measure of income inequality derived from the Lorenz curve.

Refer to the table. The rise in percentage of income received from before taxes and transfers to after taxes and transfers is greatest for the

Which of the following provides public assistance to those who are blind and otherwise disabled?

Statistical discrimination occurs when employers base hiring decisions on individual workers' previous employment records and statistics.

Suppose an employer is biased against African Americans. If his discrimination coefficient is $2, the employer will

The poverty rate for African Americans is

As the area between the Lorenz curve and diagonal gets larger, the Gini ratio

Social Security is financed

The crowding model of occupational segregation shows how white males earn higher incomes at the expense of women and minorities who are restricted to a limited number of occupations.

The taste-for-discrimination model examines an employer's prejudice and discrimination in hiring by using tools of

The unequal distribution of wealth among households in the United States is one of the causes of income inequality.

Suppose that a prejudiced white employer is willing to hire white workers at a rate of $16/hour, and this employer has a discrimination coefficient of $4. This implies that the employer would

The eligibility basis for the Supplemental Nutrition Assistance Program (or SNAP, formerly called the food-stamp program)is

The movement of individuals and households from one income quintile to another over time is called

African-American worker Jackson earns $30,000 per year; white worker Johnson earns $40,000 per year. On the basis of this information, we can conclude that

The Temporary Assistance for Needy Families (TANF)program

The degree of inequality in income distribution based on single-year data is

Income mobility

Perfect income equality would yield a Gini ratio of

Refer to the diagram. Which of the following would be consistent with a decrease in racial prejudice against African Americans and thus a decrease in the discrimination coefficients of employers, taken as a group?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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