Question 1

The distribution of household income in the United States becomes more unequal after taxes and transfer payments are taken into account.

Accepted Answer

A) True 
 B)False

Question 2

(Consider This) The main problem with welfare cliffs is that they

Accepted Answer

A)  discourage welfare recipients from moving into higher paying jobs and ultimately becoming self-sufficient. 
B)  cause dramatic increases in government spending at times when tax revenues are falling. 
C)  occur randomly, further destabilizing the lives of recipients who are suddenly cut off. 
D)  significantly increase the number of people receiving welfare. 
A)  discourage welfare recipients from moving into higher paying jobs and ultimately becoming self-sufficient. 
B)  cause dramatic increases in government spending at times when tax revenues are falling. 
C)  occur randomly, further destabilizing the lives of recipients who are suddenly cut off. 
D)  significantly increase the number of people receiving welfare.

Question 3

An employer whose discrimination coefficient is $4 will

Accepted Answer

A)  refuse to hire nonpreferred-race workers at any wage rate. 
B)  hire only nonpreferred-race workers if the actual nonpreferred-preferred wage differential is $3 an hour. 
C)  hire only preferred-race workers if the actual nonpreferred-preferred wage differential is $3 an hour. 
D)  hire only preferred-race workers if the nonpreferred-preferred wage differential is $4. 
A)  refuse to hire nonpreferred-race workers at any wage rate. 
B)  hire only nonpreferred-race workers if the actual nonpreferred-preferred wage differential is $3 an hour. 
C)  hire only preferred-race workers if the actual nonpreferred-preferred wage differential is $3 an hour. 
D)  hire only preferred-race workers if the nonpreferred-preferred wage differential is $4.

Question 4

Labor market discrimination increases the size of the nation's GDP by promoting specialization on the basis of race.

Accepted Answer

A) True 
 B)False

Question 5

The earned-income tax credit (EITC) is, in essence,

Accepted Answer

A)  a tax credit for corporate contributions to charity. 
B)  a tax break for businesses that invest in community programs. 
C)  an income payment to those individuals who are not able to work. 
D)  a wage subsidy for low-income workers to offset Social Security taxes. 
A)  a tax credit for corporate contributions to charity. 
B)  a tax break for businesses that invest in community programs. 
C)  an income payment to those individuals who are not able to work. 
D)  a wage subsidy for low-income workers to offset Social Security taxes.

Question 6

The basic reason why the debate between income equality versus inequality is ongoing is because there is a trade-off between income equality and economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

In 2014, a household with an annual income of $75,000 would find itself in the

Accepted Answer

A)  second lowest quintile of the household income distribution. 
B)  third quintile of the household income distribution. 
C)  fourth quintile of the household income distribution. 
D)  fifth (highest) quintile of the household income distribution. 
A)  second lowest quintile of the household income distribution. 
B)  third quintile of the household income distribution. 
C)  fourth quintile of the household income distribution. 
D)  fifth (highest) quintile of the household income distribution.

Question 8

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 9

The degree of inequality in income distribution based on single-year data is

Accepted Answer

A)  understated even though it takes into account income mobility. 
B)  overstated because it does not take into account income mobility. 
C)  understated because it does not take into account income mobility. 
D)  overstated even though it takes into account income mobility. 
A)  understated even though it takes into account income mobility. 
B)  overstated because it does not take into account income mobility. 
C)  understated because it does not take into account income mobility. 
D)  overstated even though it takes into account income mobility.

Question 10

About a quarter of all U.S. households had personal incomes of $100,000 or more in 2014.

Accepted Answer

A) True 
 B)False

Question 11

In the United States,

Accepted Answer

A)  taxes decrease, but transfers increase, income inequality. 
B)  taxes increase, but transfers reduce, income inequality. 
C)  both taxes and transfers decrease income inequality. 
D)  both taxes and transfers increase income inequality. 
A)  taxes decrease, but transfers increase, income inequality. 
B)  taxes increase, but transfers reduce, income inequality. 
C)  both taxes and transfers decrease income inequality. 
D)  both taxes and transfers increase income inequality.

Question 12

In the quintile distribution of income, the term "quintile" represents

Accepted Answer

A)  5 percent of the income receivers. 
B)  10 percent of the income receivers. 
C)  20 percent of the income receivers. 
D)  25 percent of the income receivers. 
A)  5 percent of the income receivers. 
B)  10 percent of the income receivers. 
C)  20 percent of the income receivers. 
D)  25 percent of the income receivers.

Question 13

Since 1975, the distribution of household income in the United States has

Accepted Answer

A)  moved toward greater inequality. 
B)  moved toward greater equality. 
C)  remained about the same. 
D)  fluctuated considerably. 
A)  moved toward greater inequality. 
B)  moved toward greater equality. 
C)  remained about the same. 
D)  fluctuated considerably.

Question 14

Social Security payments are primarily made to assist

Accepted Answer

A)  families with dependent children. 
B)  families affected by natural disasters. 
C)  retired and disabled workers. 
D)  unemployed workers. 
A)  families with dependent children. 
B)  families affected by natural disasters. 
C)  retired and disabled workers. 
D)  unemployed workers.

Question 15

Suppose the market wage rate for whites is $18 an hour and the monetary value a prejudiced employer attaches to the disutility of hiring African Americans is $3. This employer will be indifferent between hiring African Americans and whites only when the African-American wage rate is

Accepted Answer

A)  $3. 
B)  $12. 
C)  $15. 
D)  $21. 
A)  $3. 
B)  $12. 
C)  $15. 
D)  $21.

Question 16

In the U.S., the top 20 percent of households received a little more than 50 percent of total pretax income in 2014.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would most likely increase income inequality?

Accepted Answer

A)  improvements in public education 
B)  greater monopoly power among product sellers 
C)  greater equality in the distribution of wealth 
D)  fewer differences in working conditions across occupations 
A)  improvements in public education 
B)  greater monopoly power among product sellers 
C)  greater equality in the distribution of wealth 
D)  fewer differences in working conditions across occupations

Question 18

In 2014, the highest quintile of households in the U.S. income distribution received about

Accepted Answer

A)  43 percent of total income. 
B)  55 percent of total income. 
C)  62 percent of total income. 
D)  51 percent of total income. 
A)  43 percent of total income. 
B)  55 percent of total income. 
C)  62 percent of total income. 
D)  51 percent of total income.

Question 19

Suppose that a prejudiced white employer is willing to hire white workers at a rate of $16/hour, and this employer has a discrimination coefficient of $4. This implies that the employer would

Accepted Answer

A)  not hire a nonwhite worker regardless of wage rate. 
B)  hire a nonwhite worker only at a rate of $12/hour or less. 
C)  actually pay a white worker $20/hour. 
D)  pay a nonwhite worker only $4/hour. 
A)  not hire a nonwhite worker regardless of wage rate. 
B)  hire a nonwhite worker only at a rate of $12/hour or less. 
C)  actually pay a white worker $20/hour. 
D)  pay a nonwhite worker only $4/hour.

Question 20

The incidence of poverty is very high among the elderly (65 years or older).

Accepted Answer

A) True 
 B)False

Exam 23: Income Inequality, Poverty, and Discrimination

The distribution of household income in the United States becomes more unequal after taxes and transfer payments are taken into account.

(Consider This) The main problem with welfare cliffs is that they

An employer whose discrimination coefficient is $4 will

Labor market discrimination increases the size of the nation's GDP by promoting specialization on the basis of race.

The earned-income tax credit (EITC) is, in essence,

The basic reason why the debate between income equality versus inequality is ongoing is because there is a trade-off between income equality and economic efficiency.

In 2014, a household with an annual income of $75,000 would find itself in the

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

The degree of inequality in income distribution based on single-year data is

About a quarter of all U.S. households had personal incomes of $100,000 or more in 2014.

In the United States,

In the quintile distribution of income, the term "quintile" represents

Since 1975, the distribution of household income in the United States has

Social Security payments are primarily made to assist

Suppose the market wage rate for whites is $18 an hour and the monetary value a prejudiced employer attaches to the disutility of hiring African Americans is $3. This employer will be indifferent between hiring African Americans and whites only when the African-American wage rate is

In the U.S., the top 20 percent of households received a little more than 50 percent of total pretax income in 2014.

Which of the following would most likely increase income inequality?

In 2014, the highest quintile of households in the U.S. income distribution received about

Suppose that a prejudiced white employer is willing to hire white workers at a rate of $16/hour, and this employer has a discrimination coefficient of $4. This implies that the employer would

The incidence of poverty is very high among the elderly (65 years or older).

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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