Question 1

A so-called welfare cliff occurs when

Accepted Answer

A)  the number of welfare-payment recipients steeply declines. 
B)  a welfare-payment recipient's overall income falls if they earn more from work. 
C)  the government runs out of funds and begins cutting social programs, including welfare payments. 
D)  a low-income household's application for welfare payments gets bogged down in the bureaucracy. 
A)  the number of welfare-payment recipients steeply declines. 
B)  a welfare-payment recipient's overall income falls if they earn more from work. 
C)  the government runs out of funds and begins cutting social programs, including welfare payments. 
D)  a low-income household's application for welfare payments gets bogged down in the bureaucracy.

Question 2

Unemployment compensation is financed by taxes levied on employers.

Accepted Answer

A) True 
 B)False

Question 3

In statistical discrimination,

Accepted Answer

A)  the average characteristics of the group are applied to individual members. 
B)  the characteristics of individual members of a group are applied to describe the group as a whole. 
C)  hiring characteristics for workers are based on set government requirements 
D)  workers are given preferential treatment if they help fulfill a quota for a particular type of characteristic. 
A)  the average characteristics of the group are applied to individual members. 
B)  the characteristics of individual members of a group are applied to describe the group as a whole. 
C)  hiring characteristics for workers are based on set government requirements 
D)  workers are given preferential treatment if they help fulfill a quota for a particular type of characteristic.

Question 4

Which of the following groups has the lowest poverty rate?

Accepted Answer

A)  married-couple families 
B)  whites 
C)  foreign-born (not citizens) 
D)  Asians 
A)  married-couple families 
B)  whites 
C)  foreign-born (not citizens) 
D)  Asians

Question 5

Statistical discrimination

Accepted Answer

A)  is malicious. 
B)  is profitable but not malicious. 
C)  cannot persist because of competition. 
D)  explains all occupational discrimination. 
A)  is malicious. 
B)  is profitable but not malicious. 
C)  cannot persist because of competition. 
D)  explains all occupational discrimination.

Question 6

Eligibility for social insurance programs is largely on the basis of need and "means tests."

Accepted Answer

A) True 
 B)False

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

Social insurance is distinguished from public assistance, or welfare, by the fact that

Accepted Answer

A)  all social insurance benefits are paid in cash, while all public assistance benefits are paid in kind (food, housing, medical care). 
B)  an individual acquires a right to social insurance benefits by meeting objective eligibility criteria, while public assistance benefits are determined according to individual need. 
C)  the total amount paid in benefits is much larger in the public assistance programs than in the social insurance programs. 
D)  payroll taxes are used to finance public assistance programs, while general revenues are used to finance social insurance programs. 
A)  all social insurance benefits are paid in cash, while all public assistance benefits are paid in kind (food, housing, medical care). 
B)  an individual acquires a right to social insurance benefits by meeting objective eligibility criteria, while public assistance benefits are determined according to individual need. 
C)  the total amount paid in benefits is much larger in the public assistance programs than in the social insurance programs. 
D)  payroll taxes are used to finance public assistance programs, while general revenues are used to finance social insurance programs.

Question 9

The U.S. income-maintenance program consists of two kinds of programs. They are

Accepted Answer

A)  the minimum wage law and Social Security. 
B)  antidiscrimination law and education and training programs. 
C)  social insurance and public assistance programs. 
D)  progressive income taxes and transfer payments. 
A)  the minimum wage law and Social Security. 
B)  antidiscrimination law and education and training programs. 
C)  social insurance and public assistance programs. 
D)  progressive income taxes and transfer payments.

Question 10

The debate over income distribution focuses on the trade-off between

Accepted Answer

A)  unemployment and economic freedom. 
B)  equality and economic freedom. 
C)  economic efficiency and equality. 
D)  unemployment and economic growth. 
A)  unemployment and economic freedom. 
B)  equality and economic freedom. 
C)  economic efficiency and equality. 
D)  unemployment and economic growth.

Question 11

"Redistributing income in order to have a more equal distribution in the United States would result in a higher level of total consumer satisfaction." This statement is based on the concept that

Accepted Answer

A)  income inequality is unfair. 
B)  income inequality is undemocratic. 
C)  income equality stimulates efficiency. 
D)  incomes are subject to diminishing marginal utility. 
A)  income inequality is unfair. 
B)  income inequality is undemocratic. 
C)  income equality stimulates efficiency. 
D)  incomes are subject to diminishing marginal utility.

Question 12

The distribution of wealth in the United States is such that it

Accepted Answer

A)  is randomly distributed among income classes. 
B)  has no perceptible impact on the distribution of income. 
C)  reduces income inequality. 
D)  contributes to income inequality. 
A)  is randomly distributed among income classes. 
B)  has no perceptible impact on the distribution of income. 
C)  reduces income inequality. 
D)  contributes to income inequality.

Question 13

Some economists have criticized standard government figures on income inequality, arguing that these data

Accepted Answer

A)  exclude households whose earnings arise in the public sector. 
B)  conceal the strong trend toward greater equality in household sizes. 
C)  conceal the growth of poverty due to a growing number of discouraged workers. 
D)  overstate the degree of income inequality by failing to include noncash transfers as income. 
A)  exclude households whose earnings arise in the public sector. 
B)  conceal the strong trend toward greater equality in household sizes. 
C)  conceal the growth of poverty due to a growing number of discouraged workers. 
D)  overstate the degree of income inequality by failing to include noncash transfers as income.

Question 14

The Supplemental Nutrition Assistance Program (formerly the food-stamp program) mostly pays out cash-vouchers to eligible households.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a noncash transfer?

Accepted Answer

A)  a payment to a divorced mother under TANF 
B)  SNAP (food stamps) 
C)  a Social Security payment to a retiree 
D)  unemployment compensation benefits 
A)  a payment to a divorced mother under TANF 
B)  SNAP (food stamps) 
C)  a Social Security payment to a retiree 
D)  unemployment compensation benefits

Question 16

Each of the following has contributed to growing income inequality in the United States since 1975 except

Accepted Answer

A)  the decline in unionism. 
B)  greater demand for highly skilled workers. 
C)  stronger international competition from imports. 
D)  government transfers. 
A)  the decline in unionism. 
B)  greater demand for highly skilled workers. 
C)  stronger international competition from imports. 
D)  government transfers.

Question 17

Which of the following countries has the highest Gini ratio, as of 2014?

Accepted Answer

A)  Ukraine 
B)  United States 
C)  Honduras 
D)  Mexico 
A)  Ukraine 
B)  United States 
C)  Honduras 
D)  Mexico

Question 18

If discrimination based on gender and race was eliminated, we would expect the

Accepted Answer

A)  personal distribution of income to become less equal. 
B)  personal distribution of income to become more equal. 
C)  personal distribution of income to be unaffected. 
D)  functional distribution of income to change in favor of profits and interest. 
A)  personal distribution of income to become less equal. 
B)  personal distribution of income to become more equal. 
C)  personal distribution of income to be unaffected. 
D)  functional distribution of income to change in favor of profits and interest.

Question 19

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 20

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.

Exam 23: Income Inequality, Poverty, and Discrimination

A so-called welfare cliff occurs when

Unemployment compensation is financed by taxes levied on employers.

In statistical discrimination,

Which of the following groups has the lowest poverty rate?

Statistical discrimination

Eligibility for social insurance programs is largely on the basis of need and "means tests."

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

Social insurance is distinguished from public assistance, or welfare, by the fact that

The U.S. income-maintenance program consists of two kinds of programs. They are

The debate over income distribution focuses on the trade-off between

"Redistributing income in order to have a more equal distribution in the United States would result in a higher level of total consumer satisfaction." This statement is based on the concept that

The distribution of wealth in the United States is such that it

Some economists have criticized standard government figures on income inequality, arguing that these data

The Supplemental Nutrition Assistance Program (formerly the food-stamp program) mostly pays out cash-vouchers to eligible households.

Which of the following is a noncash transfer?

Each of the following has contributed to growing income inequality in the United States since 1975 except

Which of the following countries has the highest Gini ratio, as of 2014?

If discrimination based on gender and race was eliminated, we would expect the

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

A reduction in the redistribution of income

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

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Pure Competition in the Short Run

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