Question 1

Compensating wage differentials explain some income differences.

Accepted Answer

A) True 
 B)False

Question 2

When employers discriminate, they

Accepted Answer

A) believe they have a sound economic reason for doing so. 
B) may pay the price in lost earnings and productivity. 
C) subject themselves to civil action. 
D) All of the above are correct. 
A) believe they have a sound economic reason for doing so. 
B) may pay the price in lost earnings and productivity. 
C) subject themselves to civil action. 
D) All of the above are correct.

Question 3

The U.S.income tax system is progressive.

Accepted Answer

A) True 
 B)False

Question 4

How do income redistribution programs affect equality and efficiency?

Accepted Answer

Programs intended to improve equality by

Question 5

The distribution of income in the United States

Accepted Answer

A) became slightly more equal during the 1980s. 
B) did not change significantly during the 1980s. 
C) has become more unequal since 1980. 
D) has become more equal since 1980. 
A) became slightly more equal during the 1980s. 
B) did not change significantly during the 1980s. 
C) has become more unequal since 1980. 
D) has become more equal since 1980.

Question 6

In 2012, the median income of U.S.families was about $86,000.

Accepted Answer

A) True 
 B)False

Question 7

With a negative income tax, the larger the difference between the break-even income level and the guaranteed level,

Accepted Answer

A) the greater the tax rate (by definition). 
B) the greater the incentive to work. 
C) the smaller the number of people eligible to receive benefits. 
D) the more inequitable the resulting distribution of income will be. 
A) the greater the tax rate (by definition). 
B) the greater the incentive to work. 
C) the smaller the number of people eligible to receive benefits. 
D) the more inequitable the resulting distribution of income will be.

Question 8

A tax is more likely to promote economic equality if it is

Accepted Answer

A) regressive. 
B) proportional. 
C) indirect. 
D) progressive. 
A) regressive. 
B) proportional. 
C) indirect. 
D) progressive.

Question 9

Official data may overstate the extent of poverty because

Accepted Answer

A) poverty is a relative as opposed to an absolute concept. 
B) it does not add "in-kind" transfers to the incomes of the poor. 
C) it overstates the taxes paid by the poor. 
D) it overestimates the amount the poor earn in the "underground economy." 
A) poverty is a relative as opposed to an absolute concept. 
B) it does not add "in-kind" transfers to the incomes of the poor. 
C) it overstates the taxes paid by the poor. 
D) it overestimates the amount the poor earn in the "underground economy."

Question 10

If a female supervisor is discriminated against by one of her workers who refuses to cooperate, she may earn lower wages.

Accepted Answer

A) True 
 B)False

Question 11

If one includes in-kind income in the calculation, the

Accepted Answer

A) official poverty rate becomes meaningless. 
B) incidence of poverty actually increases. 
C) poverty rate is unchanged. 
D) fraction of the population in poverty drops. 
A) official poverty rate becomes meaningless. 
B) incidence of poverty actually increases. 
C) poverty rate is unchanged. 
D) fraction of the population in poverty drops.

Question 12

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

Accepted Answer

Achieving greater equality requires redu

Question 13

Figure 21-1
  
-In Figure 21-1, the optimal amount of equality lies only between which points?

Accepted Answer

A) A and B 
B) C and D 
C) D and E 
D) B and E 
A) A and B 
B) C and D 
C) D and E 
D) B and E

Question 14

Susan argues that she is the victim of economic discrimination.The primary technical difficulty for an economist investigating her claim will be

Accepted Answer

A) defining economic discrimination. 
B) finding a worker with the same productivity as Susan for comparison purposes. 
C) defining statistical discrimination. 
D) measuring Susan's human capital. 
A) defining economic discrimination. 
B) finding a worker with the same productivity as Susan for comparison purposes. 
C) defining statistical discrimination. 
D) measuring Susan's human capital.

Question 15

By law, employers in the United States may not ask prospective female employees whether they plan to have babies.The existence of this law seems most likely to

Accepted Answer

A) increase the probability that firms will practice economic discrimination against women. 
B) decrease the probability that firms will practice economic discrimination against women. 
C) increase the probability that firms will practice statistical discrimination against women. 
D) decrease the probability that firms will practice statistical discrimination against women. 
A) increase the probability that firms will practice economic discrimination against women. 
B) decrease the probability that firms will practice economic discrimination against women. 
C) increase the probability that firms will practice statistical discrimination against women. 
D) decrease the probability that firms will practice statistical discrimination against women.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Tax loopholes increase the progressivity of the federal income tax.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following observations concerning poverty rates in America is true?

Accepted Answer

A) Major increase in poverty in the decade from 1963 to 1973. 
B) It hit an all-time low by 1983. 
C) The economic boom of the 1990s restored it almost to its 1970s levels. 
D) It decreased from 2007 to 2009. 
A) Major increase in poverty in the decade from 1963 to 1973. 
B) It hit an all-time low by 1983. 
C) The economic boom of the 1990s restored it almost to its 1970s levels. 
D) It decreased from 2007 to 2009.

Question 20

Because of the owner's prejudice, a firm chooses to discriminate against hiring Oriental workers.Compared to an otherwise identical nondiscriminating firm hiring in the same competitive market, the discriminating firm will have

Accepted Answer

A) higher costs. 
B) lower profits. 
C) a lower quantity of labor supplied at every wage. 
D) All of the above are correct. 
A) higher costs. 
B) lower profits. 
C) a lower quantity of labor supplied at every wage. 
D) All of the above are correct.

Exam 20: Poverty, Inequality, and Discrimination

Compensating wage differentials explain some income differences.

When employers discriminate, they

The U.S.income tax system is progressive.

How do income redistribution programs affect equality and efficiency?

The distribution of income in the United States

In 2012, the median income of U.S.families was about $86,000.

With a negative income tax, the larger the difference between the break-even income level and the guaranteed level,

A tax is more likely to promote economic equality if it is

Official data may overstate the extent of poverty because

If a female supervisor is discriminated against by one of her workers who refuses to cooperate, she may earn lower wages.

If one includes in-kind income in the calculation, the

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

Figure 21-1 -In Figure 21-1, the optimal amount of equality lies only between which points?

Susan argues that she is the victim of economic discrimination.The primary technical difficulty for an economist investigating her claim will be

By law, employers in the United States may not ask prospective female employees whether they plan to have babies.The existence of this law seems most likely to

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

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

Tax loopholes increase the progressivity of the federal income tax.

Which of the following observations concerning poverty rates in America is true?

Because of the owner's prejudice, a firm chooses to discriminate against hiring Oriental workers.Compared to an otherwise identical nondiscriminating firm hiring in the same competitive market, the discriminating firm will have

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: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Is Useconomic Leadership Threatened

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

He 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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