Question 1

Discrimination creates a

Accepted Answer

A)  redistribution of a larger domestic output. 
B)  larger domestic output but no redistribution. 
C)  smaller domestic output but no redistribution. 
D)  redistribution of a smaller domestic output. 
A)  redistribution of a larger domestic output. 
B)  larger domestic output but no redistribution. 
C)  smaller domestic output but no redistribution. 
D)  redistribution of a smaller domestic output.

Question 2

The Gini ratio, or Gini coefficient, is a measure of the

Accepted Answer

A)  inflationary gap. 
B)  recessionary gap. 
C)  number of households that are classified as being poor. 
D)  degree of income inequality. 
A)  inflationary gap. 
B)  recessionary gap. 
C)  number of households that are classified as being poor. 
D)  degree of income inequality.

Question 3

Entitlement programs include

Accepted Answer

A)  welfare programs only. 
B)  social insurance programs only. 
C)  both public assistance programs and social insurance programs. 
D)  welfare programs and public assistance programs. 
A)  welfare programs only. 
B)  social insurance programs only. 
C)  both public assistance programs and social insurance programs. 
D)  welfare programs and public assistance programs.

Question 4

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 5

The exercise of market power by suppliers in resource markets tends to

Accepted Answer

A)  reduce income inequality, ensuring that all workers receive fair wages. 
B)  have little impact on the distribution of income. 
C)  increase income inequality by raising incomes of those able to "rig the market." 
D)  increase income inequality but is offset by the exercise of market power in product markets. 
A)  reduce income inequality, ensuring that all workers receive fair wages. 
B)  have little impact on the distribution of income. 
C)  increase income inequality by raising incomes of those able to "rig the market." 
D)  increase income inequality but is offset by the exercise of market power in product markets.

Question 6

The Gini ratio is calculated by dividing the area between the Lorenz curve and the diagonal by the

Accepted Answer

A)  remaining area below the diagonal. 
B)  total area below the diagonal. 
C)  total area of the box or rectangle. 
D)  remaining area of the box or rectangle. 
A)  remaining area below the diagonal. 
B)  total area below the diagonal. 
C)  total area of the box or rectangle. 
D)  remaining area of the box or rectangle.

Question 7

A Lorenz curve showing perfect equality in the distribution of income

Accepted Answer

A)  coincides with the horizontal axis. 
B)  coincides with the vertical axis. 
C)  is a straight line with a 45-degree angle. 
D)  is a curve bowed to the southwest. 
A)  coincides with the horizontal axis. 
B)  coincides with the vertical axis. 
C)  is a straight line with a 45-degree angle. 
D)  is a curve bowed to the southwest.

Question 8

Which of the following terms describes a system of subsidized health insurance available to the aged?

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 9

The Great Recession of 2007-2009 caused U.S. family wealth to shrink, mostly due to the sharp decline in

Accepted Answer

A)  family incomes. 
B)  consumer spending. 
C)  average house prices. 
D)  employment and wages. 
A)  family incomes. 
B)  consumer spending. 
C)  average house prices. 
D)  employment and wages.

Question 10

Social insurance programs partially replace income that has been lost due to the following, except

Accepted Answer

A)  retirement. 
B)  disabilities. 
C)  temporary unemployment. 
D)  resignation from a job. 
A)  retirement. 
B)  disabilities. 
C)  temporary unemployment. 
D)  resignation from a job.

Question 11

The so-called 90-10 ratio (the hourly wage at the 90th percentile compared to that at the 10th percentile) was roughly how much in 2007?

Accepted Answer

A)  2.5 
B)  4.5 
C)  8.0 
D)  10.5 
A)  2.5 
B)  4.5 
C)  8.0 
D)  10.5

Question 12

The lowest quintile of households in the income distribution (as of 2014) receives about

Accepted Answer

A)  2.4 percent of the total income. 
B)  3.1 percent of the total income. 
C)  8.2 percent of the total income. 
D)  10 percent of the total income. 
A)  2.4 percent of the total income. 
B)  3.1 percent of the total income. 
C)  8.2 percent of the total income. 
D)  10 percent of the total income.

Question 13

Which is correct?

Accepted Answer

A)  Wealth is less equally distributed than income and therefore increases income inequality. 
B)  Wealth is more equally distributed than income and therefore increases income inequality. 
C)  Wealth is less equally distributed than income and therefore decreases income inequality. 
D)  Wealth is more equally distributed than income and therefore decreases income inequality. 
A)  Wealth is less equally distributed than income and therefore increases income inequality. 
B)  Wealth is more equally distributed than income and therefore increases income inequality. 
C)  Wealth is less equally distributed than income and therefore decreases income inequality. 
D)  Wealth is more equally distributed than income and therefore decreases income inequality.

Question 14

Labor market discrimination occurs when equivalent labor resources are paid or treated differently even though their productive contributions are equal.

Accepted Answer

A) True 
 B)False

Question 15

The necessity to maintain incentives to work and incentives to produce output would be a point made by an individual making the case for

Accepted Answer

A)  income equality. 
B)  income inequality. 
C)  maximizing total utility. 
D)  maximizing marginal utility. 
A)  income equality. 
B)  income inequality. 
C)  maximizing total utility. 
D)  maximizing marginal utility.

Question 16

Income mobility

Accepted Answer

A)  contributes to greater wealth inequality in the United States. 
B)  is less in the United States than in most developing nations. 
C)  is the movement of individuals and households from one income quintile to another over time. 
D)  makes lifetime income inequality among income receivers in the United States greater than income inequality in any single year. 
A)  contributes to greater wealth inequality in the United States. 
B)  is less in the United States than in most developing nations. 
C)  is the movement of individuals and households from one income quintile to another over time. 
D)  makes lifetime income inequality among income receivers in the United States greater than income inequality in any single year.

Question 17

A major difference between social insurance and welfare is that social insurance

Accepted Answer

A)  exclusively involves older Americans, whereas welfare is confined mainly to mothers with young children. 
B)  forces recipients to demonstrate need, while welfare does not. 
C)  is normally financed by earmarked payroll taxes, while welfare is financed out of general tax revenues. 
D)  provides cash transfers, while welfare does not. 
A)  exclusively involves older Americans, whereas welfare is confined mainly to mothers with young children. 
B)  forces recipients to demonstrate need, while welfare does not. 
C)  is normally financed by earmarked payroll taxes, while welfare is financed out of general tax revenues. 
D)  provides cash transfers, while welfare does not.

Question 18

The equality-efficiency trade-off would be most closely associated with which one of the following statements?

Accepted Answer

A)  The rich get richer and the poor get poorer. 
B)  The only way to create income equality is to take from the rich and give to the poor. 
C)  If cutting the income pie in more equal slices tends to shrink the pie, what amount of shrinkage will society tolerate? 
D)  People are less concerned with the larger question of income distribution than they are with the more specific issue of income inadequacy. 
A)  The rich get richer and the poor get poorer. 
B)  The only way to create income equality is to take from the rich and give to the poor. 
C)  If cutting the income pie in more equal slices tends to shrink the pie, what amount of shrinkage will society tolerate? 
D)  People are less concerned with the larger question of income distribution than they are with the more specific issue of income inadequacy.

Question 19

The Temporary Assistance for Needy Families (TANF) program that replaced the old Aid for Families with Dependent Children welfare program succeeded in reducing the number of welfare recipients and increasing the employment rate among single mothers.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 23: Income Inequality, Poverty, and Discrimination

Discrimination creates a

The Gini ratio, or Gini coefficient, is a measure of the

Entitlement programs include

Social Security is financed

The exercise of market power by suppliers in resource markets tends to

The Gini ratio is calculated by dividing the area between the Lorenz curve and the diagonal by the

A Lorenz curve showing perfect equality in the distribution of income

Which of the following terms describes a system of subsidized health insurance available to the aged?

The Great Recession of 2007-2009 caused U.S. family wealth to shrink, mostly due to the sharp decline in

Social insurance programs partially replace income that has been lost due to the following, except

The so-called 90-10 ratio (the hourly wage at the 90th percentile compared to that at the 10th percentile) was roughly how much in 2007?

The lowest quintile of households in the income distribution (as of 2014) receives about

Which is correct?

Labor market discrimination occurs when equivalent labor resources are paid or treated differently even though their productive contributions are equal.

The necessity to maintain incentives to work and incentives to produce output would be a point made by an individual making the case for

Income mobility

A major difference between social insurance and welfare is that social insurance

The equality-efficiency trade-off would be most closely associated with which one of the following statements?

The Temporary Assistance for Needy Families (TANF) program that replaced the old Aid for Families with Dependent Children welfare program succeeded in reducing the number of welfare recipients and increasing the employment rate among single mothers.

The Temporary Assistance for Needy Families (TANF) program

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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