Question 1

In 2014, the official poverty line for a household of four in the United States was

Accepted Answer

A)  $24,230. 
B)  $32,473. 
C)  $12,071. 
D)  $26,803. 
A)  $24,230. 
B)  $32,473. 
C)  $12,071. 
D)  $26,803. A

Question 2

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. C

Question 3

The standard data on income distribution do not include the value of noncash transfers as income.

Accepted Answer

A) True 
 B)False  True

Question 4

TANF stands for Temporary Assistance for Needy Families.

Accepted Answer

A) True 
 B)False

Question 5

The crowding of certain ethnic or racial groups into specific occupations results in

Accepted Answer

A)  lower wages and a less efficient allocation of resources. 
B)  lower wages but a more efficient allocation of resources. 
C)  lower wages but no effect on the efficient allocation of resources. 
D)  higher wages and a more efficient allocation of labor resources. 
A)  lower wages and a less efficient allocation of resources. 
B)  lower wages but a more efficient allocation of resources. 
C)  lower wages but no effect on the efficient allocation of resources. 
D)  higher wages and a more efficient allocation of labor resources.

Question 6

Which of the following statements is correct?

Accepted Answer

A)  The Social Security Act requires all employers to insure their workers against industrial accidents and diseases. 
B)  An increase in the degree of income inequality means that the income level of the poor is falling while the income level of the rich is rising. 
C)  Over 90 percent of the workers in the United States are currently covered by Social Security. 
D)  About one-fifth of our population is now classified as living in poverty. 
A)  The Social Security Act requires all employers to insure their workers against industrial accidents and diseases. 
B)  An increase in the degree of income inequality means that the income level of the poor is falling while the income level of the rich is rising. 
C)  Over 90 percent of the workers in the United States are currently covered by Social Security. 
D)  About one-fifth of our population is now classified as living in poverty.

Question 7

The average household income in the United States in 2014 was close to

Accepted Answer

A)  $35,000. 
B)  $50,000. 
C)  $70,000. 
D)  $100,000. 
A)  $35,000. 
B)  $50,000. 
C)  $70,000. 
D)  $100,000.

Question 8

The basic economic argument for greater income equality is that

Accepted Answer

A)  an equal distribution of income is the logical outcome of any tax-transfer program. 
B)  because citizens enjoy political equality, they are also entitled to economic equality. 
C)  a more equal distribution of income will tend to maximize incentives to work, invest, and assume risk. 
D)  a more equal distribution of a given amount of income will increase the total utility of consumers. 
A)  an equal distribution of income is the logical outcome of any tax-transfer program. 
B)  because citizens enjoy political equality, they are also entitled to economic equality. 
C)  a more equal distribution of income will tend to maximize incentives to work, invest, and assume risk. 
D)  a more equal distribution of a given amount of income will increase the total utility of consumers.

Question 9

Economic discrimination puts the economy inside its production possibilities curve because discrimination

Accepted Answer

A)  redistributes income from low-paid to high-paid persons. 
B)  promotes present consumption rather than production of capital goods. 
C)  arbitrarily blocks women and certain minorities from higher-productivity, higher-wage jobs and thus keeps the economy from producing its maximum output. 
D)  often causes inflation, which reduces the nation's real output. 
A)  redistributes income from low-paid to high-paid persons. 
B)  promotes present consumption rather than production of capital goods. 
C)  arbitrarily blocks women and certain minorities from higher-productivity, higher-wage jobs and thus keeps the economy from producing its maximum output. 
D)  often causes inflation, which reduces the nation's real output.

Question 10

Which of the following would be considered part of income?

Accepted Answer

A)  wages and salaries 
B)  the value of a house 
C)  corporate stock holdings 
D)  money in a bank account 
A)  wages and salaries 
B)  the value of a house 
C)  corporate stock holdings 
D)  money in a bank account

Question 11

Which of the following is a major reason for the growing income inequality in the United States since 1975?

Accepted Answer

A)  higher marginal tax rates 
B)  unemployment benefits 
C)  rising number of skilled workers 
D)  import competition 
A)  higher marginal tax rates 
B)  unemployment benefits 
C)  rising number of skilled workers 
D)  import competition

Question 12

A major criticism of the welfare system that led to reforms in the mid-1990s is that welfare payments

Accepted Answer

A)  encourage overuse of the medical system. 
B)  create dependency on government programs. 
C)  give strong incentives for people to change jobs. 
D)  fail to provide a minimum income for young children. 
A)  encourage overuse of the medical system. 
B)  create dependency on government programs. 
C)  give strong incentives for people to change jobs. 
D)  fail to provide a minimum income for young children.

Question 13

After the implementation of TANF, the U.S. welfare rolls fell by more than one-half between 1996 and 2007.

Accepted Answer

A) True 
 B)False

Question 14

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 15

The Supplemental Nutrition Assistance Program (SNAP)

Accepted Answer

A)  was previously known as the food-stamp program. 
B)  added assistance to the food-stamp program by targeting children. 
C)  was created to supplement the food consumption of low-income Social Security recipients. 
D)  has been subject to widespread fraud through the illegal reproduction of paper food-stamp coupons. 
A)  was previously known as the food-stamp program. 
B)  added assistance to the food-stamp program by targeting children. 
C)  was created to supplement the food consumption of low-income Social Security recipients. 
D)  has been subject to widespread fraud through the illegal reproduction of paper food-stamp coupons.

Question 16

A Lorenz curve is a graph that shows

Accepted Answer

A)  the equity versus efficiency trade-off. 
B)  how many households are living in poverty. 
C)  the trade-off between inflation and unemployment. 
D)  the distribution of household income. 
A)  the equity versus efficiency trade-off. 
B)  how many households are living in poverty. 
C)  the trade-off between inflation and unemployment. 
D)  the distribution of household income.

Question 17

Wealth

Accepted Answer

A)  is a flow concept. 
B)  refers to accumulated financial assets only. 
C)  refers to accumulated real assets only. 
D)  refers to accumulated financial and real assets. 
A)  is a flow concept. 
B)  refers to accumulated financial assets only. 
C)  refers to accumulated real assets only. 
D)  refers to accumulated financial and real assets.

Question 18

Which of the following is an example of a noncash transfer that is typically not included in the income-distribution data?

Accepted Answer

A)  Social Security benefits 
B)  welfare assistance 
C)  unemployment compensation 
D)  Medicare 
A)  Social Security benefits 
B)  welfare assistance 
C)  unemployment compensation 
D)  Medicare

Question 19

The greater the degree of inequality in the distribution of income, the more bowed will be the Lorenz curve toward the

Accepted Answer

A)  upper left-hand corner. 
B)  upper right-hand corner. 
C)  lower right-hand corner. 
D)  lower left-hand corner. 
A)  upper left-hand corner. 
B)  upper right-hand corner. 
C)  lower right-hand corner. 
D)  lower left-hand corner.

Question 20

Assume that there is a supply and demand market for nonpreferred workers. If prejudice against these workers among employers increases, then there will be a(n)

Accepted Answer

A)  increased supply of these workers, a rise in their wage rate, and a decrease in their employment. 
B)  increased demand for these workers, a rise in their wage rate, and an increase in their employment. 
C)  decreased supply of these workers, a fall in their wage rate, and a decrease in their employment. 
D)  decreased demand for these workers, a fall in their wage rate, and a decrease in their employment. 
A)  increased supply of these workers, a rise in their wage rate, and a decrease in their employment. 
B)  increased demand for these workers, a rise in their wage rate, and an increase in their employment. 
C)  decreased supply of these workers, a fall in their wage rate, and a decrease in their employment. 
D)  decreased demand for these workers, a fall in their wage rate, and a decrease in their employment.

Exam 23: Income Inequality, Poverty, and Discrimination

In 2014, the official poverty line for a household of four in the United States was

The Gini ratio

The standard data on income distribution do not include the value of noncash transfers as income.

TANF stands for Temporary Assistance for Needy Families.

The crowding of certain ethnic or racial groups into specific occupations results in

Which of the following statements is correct?

The average household income in the United States in 2014 was close to

The basic economic argument for greater income equality is that

Economic discrimination puts the economy inside its production possibilities curve because discrimination

Which of the following would be considered part of income?

Which of the following is a major reason for the growing income inequality in the United States since 1975?

A major criticism of the welfare system that led to reforms in the mid-1990s is that welfare payments

After the implementation of TANF, the U.S. welfare rolls fell by more than one-half between 1996 and 2007.

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?

The Supplemental Nutrition Assistance Program (SNAP)

A Lorenz curve is a graph that shows

Wealth

Which of the following is an example of a noncash transfer that is typically not included in the income-distribution data?

The greater the degree of inequality in the distribution of income, the more bowed will be the Lorenz curve toward the

Assume that there is a supply and demand market for nonpreferred workers. If prejudice against these workers among employers increases, then there will be a(n)

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role 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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