Question 1

Refer to the graph. The Gini ratio would be greatest for which curve?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
A) a 
B) b 
C) c 
D) d

Question 2

The equality-efficiency trade-off suggests that

Accepted Answer

A) welfare programs stimulate incentives to work. 
B) inefficiencies result when incentives to produce are reduced. 
C) noncash transfers are superior to cash transfers. 
D) economic growth is the best means of reducing poverty. 
A) welfare programs stimulate incentives to work. 
B) inefficiencies result when incentives to produce are reduced. 
C) noncash transfers are superior to cash transfers. 
D) economic growth is the best means of reducing poverty.

Question 3

The Gini ratio

Accepted Answer

A) measures the relative extent of poverty in a nation. 
B) compares the income of persons, households, or households at the 90th percentile of the income distribution to the income at the 10th percentile. 
C) is a numerical measure of the overall dispersion of income in a nation. 
D) is found by dividing the entire area below and to the right of the diagonal in the Lorenz diagram by the area between the diagonal and Lorenz curve. 
A) measures the relative extent of poverty in a nation. 
B) compares the income of persons, households, or households at the 90th percentile of the income distribution to the income at the 10th percentile. 
C) is a numerical measure of the overall dispersion of income in a nation. 
D) is found by dividing the entire area below and to the right of the diagonal in the Lorenz diagram by the area between the diagonal and Lorenz curve.

Question 4

Explain how the Gini ratio is measured and what it means.

Accepted Answer

The Gini ratio is a numerical measure of

Question 5

The U.S. poverty rate was, in 2017, a little over 12 percent..

Accepted Answer

A) True 
 B)False

Question 6

Suppose that Jane earns $10,000 in year 1 and $15,000 in year 2, while Jim earns $15,000 in year 1 and $10,000 in year 2. Is there income equality for the two individuals?

Accepted Answer

A) The annual data indicate equality, but the two-year data indicate inequality. 
B) The annual data indicate inequality, but the two-year data indicate equality. 
C) Both the annual and the two-year data indicate equality. 
D) Both the annual and the two-year data indicate inequality. 
A) The annual data indicate equality, but the two-year data indicate inequality. 
B) The annual data indicate inequality, but the two-year data indicate equality. 
C) Both the annual and the two-year data indicate equality. 
D) Both the annual and the two-year data indicate inequality.

Question 7

A major difference between social insurance and public assistance is that the

Accepted Answer

A) former is regarded as an earned right while the latter is public charity. 
B) latter is regarded as an earned right while the former is public charity. 
C) latter is financed through earmarked payroll taxes and the former is financed by general tax revenues. 
D) former are state and local programs while the latter are federal programs. 
A) former is regarded as an earned right while the latter is public charity. 
B) latter is regarded as an earned right while the former is public charity. 
C) latter is financed through earmarked payroll taxes and the former is financed by general tax revenues. 
D) former are state and local programs while the latter are federal programs.

Question 8

Which of the following is an example of statistical discrimination?

Accepted Answer

A) An employer hires only white workers even though there are otherwise identical African-American workers available at lower pay. 
B) Female students in college business schools are overrepresented in human resource management courses and underrepresented in finance courses. 
C) A young woman who plans to work for only five to seven years after graduating college decides that getting an advanced degree "just won't pay off." 
D) A firm hires a man rather than a woman for a specific job because, on average, women have higher rates of absenteeism than do men. 
A) An employer hires only white workers even though there are otherwise identical African-American workers available at lower pay. 
B) Female students in college business schools are overrepresented in human resource management courses and underrepresented in finance courses. 
C) A young woman who plans to work for only five to seven years after graduating college decides that getting an advanced degree "just won't pay off." 
D) A firm hires a man rather than a woman for a specific job because, on average, women have higher rates of absenteeism than do men.

Question 9

List the factors that have contributed to growing inequality in incomes in the United States.

Accepted Answer

The factors that have contribu

Question 10

Earnings received from wealth

Accepted Answer

A) contribute to income inequality. 
B) are the major source of income for families. 
C) are becoming more equal in the society. 
D) are primarily the result of advanced education. 
A) contribute to income inequality. 
B) are the major source of income for families. 
C) are becoming more equal in the society. 
D) are primarily the result of advanced education.

Question 11

During the past 35 years or so, the degree of income inequality in the United States has decreased considerably.

Accepted Answer

A) True 
 B)False

Question 12

For which of the following income-maintenance programs is aggregate spending the greatest?

Accepted Answer

A) Medicare 
B) Social Security 
C) Unemployment compensation 
D) TANF 
A) Medicare 
B) Social Security 
C) Unemployment compensation 
D) TANF

Question 13

A reduction in the redistribution of income

Accepted Answer

A) lowers the poverty rate for people. 
B) raises people's standard of living. 
C) results in more income inequality. 
D) results in less income inequality. 
A) lowers the poverty rate for people. 
B) raises people's standard of living. 
C) results in more income inequality. 
D) results in less income inequality.

Question 14

What is a Lorenz curve? How is it constructed?

Accepted Answer

The Lorenz curve is a curve showing the

Question 15

The crowding model is primarily concerned with explaining

Accepted Answer

A) occupational discrimination. 
B) human-capital discrimination. 
C) the size of the discrimination coefficient. 
D) why affirmative action is reverse discrimination. 
A) occupational discrimination. 
B) human-capital discrimination. 
C) the size of the discrimination coefficient. 
D) why affirmative action is reverse discrimination.

Question 16

Suppose Copernicus Corporation hires Damon Danielson rather than Elmer Ellison, simply because Damon is a graduate of an Ivy League school, while Elmer is a graduate of a small public university. Elmer is actually more qualified than Damon. This is an example of

Accepted Answer

A) statistical discrimination. 
B) irrational behavior. 
C) monopsony exploitation. 
D) human-capital discrimination. 
A) statistical discrimination. 
B) irrational behavior. 
C) monopsony exploitation. 
D) human-capital discrimination.

Question 17

Suppose the total income of an economy is analogous to a pizza, with the division of the pizza representing income distribution. The relevance of this analogy to income distribution would be best reflected in which one of the following questions?

Accepted Answer

A) If resources are used to make pizza, what other goods and services must be given up to do this? 
B) If cutting a pizza in more equal slices shrinks the pizza, how much shrinkage will society tolerate? 
C) If pizza workers were paid more money, would they become more productive workers for society? 
D) If pizza sales increase, would pizza companies redistribute the profits to their employees? 
A) If resources are used to make pizza, what other goods and services must be given up to do this? 
B) If cutting a pizza in more equal slices shrinks the pizza, how much shrinkage will society tolerate? 
C) If pizza workers were paid more money, would they become more productive workers for society? 
D) If pizza sales increase, would pizza companies redistribute the profits to their employees?

Question 18

When the distribution of income is adjusted for noncash transfers, the income distribution shows

Accepted Answer

A) perfect equality. 
B) greater equality. 
C) greater inequality. 
D) little, if any, change. 
A) perfect equality. 
B) greater equality. 
C) greater inequality. 
D) little, if any, change.

Question 19

Which of the following Gini ratios indicates the highest degree of income inequality?

Accepted Answer

A) 0.78 
B) 0.65 
C) 0.29 
D) 0.42 
A) 0.78 
B) 0.65 
C) 0.29 
D) 0.42

Question 20

Refer to the diagrams, which show identical marginal utility from income curves for Singer and Catalano. If a given income of $20,000 is initially distributed so that Singer receives $15,000 and Catalano $5,000, the marginal utility

Accepted Answer

A) of the last dollar of income will be greater for Catalano than for Singer. 
B) derived from the last dollar will not be comparable between the two income receivers. 
C) of the last dollar of income will be the same for both Singer and Catalano. 
D) of the last dollar of income will be greater for Singer than for Catalano. 
A) of the last dollar of income will be greater for Catalano than for Singer. 
B) derived from the last dollar will not be comparable between the two income receivers. 
C) of the last dollar of income will be the same for both Singer and Catalano. 
D) of the last dollar of income will be greater for Singer than for Catalano.

Exam 23: Income Inequality, Poverty, and Discrimination

Refer to the graph. The Gini ratio would be greatest for which curve?

The equality-efficiency trade-off suggests that

The Gini ratio

Explain how the Gini ratio is measured and what it means.

The U.S. poverty rate was, in 2017, a little over 12 percent..

Suppose that Jane earns $10,000 in year 1 and $15,000 in year 2, while Jim earns $15,000 in year 1 and $10,000 in year 2. Is there income equality for the two individuals?

A major difference between social insurance and public assistance is that the

Which of the following is an example of statistical discrimination?

List the factors that have contributed to growing inequality in incomes in the United States.

Earnings received from wealth

During the past 35 years or so, the degree of income inequality in the United States has decreased considerably.

For which of the following income-maintenance programs is aggregate spending the greatest?

A reduction in the redistribution of income

What is a Lorenz curve? How is it constructed?

The crowding model is primarily concerned with explaining

Suppose Copernicus Corporation hires Damon Danielson rather than Elmer Ellison, simply because Damon is a graduate of an Ivy League school, while Elmer is a graduate of a small public university. Elmer is actually more qualified than Damon. This is an example of

Suppose the total income of an economy is analogous to a pizza, with the division of the pizza representing income distribution. The relevance of this analogy to income distribution would be best reflected in which one of the following questions?

When the distribution of income is adjusted for noncash transfers, the income distribution shows

Which of the following Gini ratios indicates the highest degree of income inequality?

Refer to the diagrams, which show identical marginal utility from income curves for Singer and Catalano. If a given income of $20,000 is initially distributed so that Singer receives $15,000 and Catalano $5,000, the marginal utility

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