Question 1

Which of the following helps explain growing income inequality in the United States in recent years?

Accepted Answer

A)  reduced immigration 
B)  increased demand for highly skilled workers 
C)  the falling labor force participation rate of women 
D)  increased power of unions 
A)  reduced immigration 
B)  increased demand for highly skilled workers 
C)  the falling labor force participation rate of women 
D)  increased power of unions

Question 2

Which of the following would move the Lorenz curve closer to the diagonal?

Accepted Answer

A)  a 20 percent boost in Social Security retirement benefits 
B)  increasing payroll taxes 
C)  reducing the progressiveness of the federal personal income tax 
D)  eliminating the TANF program 
A)  a 20 percent boost in Social Security retirement benefits 
B)  increasing payroll taxes 
C)  reducing the progressiveness of the federal personal income tax 
D)  eliminating the TANF program

Question 3

In 2014, an unattached individual would be defined as living in poverty if his or her income was less than

Accepted Answer

A)  $5,100. 
B)  $12,700. 
C)  $20,400. 
D)  $29,500. 
A)  $5,100. 
B)  $12,700. 
C)  $20,400. 
D)  $29,500.

Question 4

Which of the following is correct?

Accepted Answer

A)  Income is a stock concept, and wealth is a flow concept. 
B)  Both income and wealth are flow concepts. 
C)  Both income and wealth are stock concepts. 
D)  Income is a flow concept, and wealth is a stock concept. 
A)  Income is a stock concept, and wealth is a flow concept. 
B)  Both income and wealth are flow concepts. 
C)  Both income and wealth are stock concepts. 
D)  Income is a flow concept, and wealth is a stock concept.

Question 5

Greater income equality that is achieved through the redistribution of income is thought to

Accepted Answer

A)  stimulate innovation and entrepreneurship. 
B)  promote economic efficiency in the economy. 
C)  increase incentives to work, save, and invest in the economy. 
D)  come at the opportunity cost of reduced production and income. 
A)  stimulate innovation and entrepreneurship. 
B)  promote economic efficiency in the economy. 
C)  increase incentives to work, save, and invest in the economy. 
D)  come at the opportunity cost of reduced production and income.

Question 6

Another term often used to refer to family wealth is

Accepted Answer

A)  income. 
B)  net worth. 
C)  salary and wages. 
D)  spending. 
A)  income. 
B)  net worth. 
C)  salary and wages. 
D)  spending.

Question 7

When taxes and transfer payments are taken into account, the distribution of income in the United States

Accepted Answer

A)  is unchanged. 
B)  is less equally distributed. 
C)  is more equally distributed. 
D)  becomes more beneficial for the wealthy. 
A)  is unchanged. 
B)  is less equally distributed. 
C)  is more equally distributed. 
D)  becomes more beneficial for the wealthy.

Question 8

In the taste-for-discrimination model,

Accepted Answer

A)  discriminatory employers behave as if employing nonpreferred-race workers adds to costs. 
B)  individual workers are judged by the characteristics of the groups to which they belong. 
C)  prejudiced white employers will never hire African-American workers. 
D)  women and minorities are confined to a limited number of occupations. 
A)  discriminatory employers behave as if employing nonpreferred-race workers adds to costs. 
B)  individual workers are judged by the characteristics of the groups to which they belong. 
C)  prejudiced white employers will never hire African-American workers. 
D)  women and minorities are confined to a limited number of occupations.

Question 9

In 2014, the poverty line for a family of four was about

Accepted Answer

A)  $15,508. 
B)  $30,453. 
C)  $24,230. 
D)  $38,754. 
A)  $15,508. 
B)  $30,453. 
C)  $24,230. 
D)  $38,754.

Question 10

The basic argument for income inequality is that

Accepted Answer

A)  the very rich establish consumption patterns that are desirable for the rest of society to emulate. 
B)  the rich buy luxury goods that soon become affordable to everyone else because of economies of scale. 
C)  income inequality is essential to maintain incentives to produce. 
D)  inequality undermines incentives and tends to reduce the size of the national income. 
A)  the very rich establish consumption patterns that are desirable for the rest of society to emulate. 
B)  the rich buy luxury goods that soon become affordable to everyone else because of economies of scale. 
C)  income inequality is essential to maintain incentives to produce. 
D)  inequality undermines incentives and tends to reduce the size of the national income.

Question 11

Which of the following demographic groups does not bear a disproportionate burden of poverty?

Accepted Answer

A)  households headed by women 
B)  persons 65 or over 
C)  Hispanics 
D)  children under 18 
A)  households headed by women 
B)  persons 65 or over 
C)  Hispanics 
D)  children under 18

Question 12

The empirical data indicate that the tax system and the transfer programs of the government

Accepted Answer

A)  increase the degree of inequality in the distribution of income. 
B)  make no change in the degree of inequality in the distribution of income. 
C)  reduce the degree of inequality in the distribution of income. 
D)  affect the distribution of wealth, not income. 
A)  increase the degree of inequality in the distribution of income. 
B)  make no change in the degree of inequality in the distribution of income. 
C)  reduce the degree of inequality in the distribution of income. 
D)  affect the distribution of wealth, not income.

Question 13

The U.S. poverty rate for

Accepted Answer

A)  Hispanics is higher than that for African Americans. 
B)  children under 18 years of age is higher than for the overall population. 
C)  African Americans has increased since 1993. 
D)  foreign-born individuals who are not citizens is below the poverty rate for the general population. 
A)  Hispanics is higher than that for African Americans. 
B)  children under 18 years of age is higher than for the overall population. 
C)  African Americans has increased since 1993. 
D)  foreign-born individuals who are not citizens is below the poverty rate for the general population.

Question 14

A particular woman is denied on-the-job training because women on average are more likely to drop out of the workforce than men. This illustrates

Accepted Answer

A)  occupational segregation. 
B)  the crowding model. 
C)  the taste-for-discrimination model. 
D)  statistical discrimination. 
A)  occupational segregation. 
B)  the crowding model. 
C)  the taste-for-discrimination model. 
D)  statistical discrimination.

Question 15

Standard census data on the distribution of income

Accepted Answer

A)  take all taxes and transfer payments into account. 
B)  are before taxes in that they do not account for personal income and payroll taxes. 
C)  include noncash transfers. 
D)  exclude cash transfers. 
A)  take all taxes and transfer payments into account. 
B)  are before taxes in that they do not account for personal income and payroll taxes. 
C)  include noncash transfers. 
D)  exclude cash transfers.

Question 16

The crowding of women and minorities into a restricted number of occupations

Accepted Answer

A)  has no effect on the size of the domestic output or its distribution in the long run. 
B)  will increase the size of the domestic output and make its distribution more equal. 
C)  will decrease the size of the domestic output and make its distribution less equal. 
D)  will increase the size of the domestic output but make its distribution less equal. 
A)  has no effect on the size of the domestic output or its distribution in the long run. 
B)  will increase the size of the domestic output and make its distribution more equal. 
C)  will decrease the size of the domestic output and make its distribution less equal. 
D)  will increase the size of the domestic output but make its distribution less equal.

Question 17

Statistical discrimination

Accepted Answer

A)  can persist in the long run if differences in average characteristics among groups continue. 
B)  will tend to diminish in the long run because nondiscriminating firms will drive out discriminating firms. 
C)  requires that employers have discrimination coefficients greater than zero. 
D)  is also known as occupational segregation. 
A)  can persist in the long run if differences in average characteristics among groups continue. 
B)  will tend to diminish in the long run because nondiscriminating firms will drive out discriminating firms. 
C)  requires that employers have discrimination coefficients greater than zero. 
D)  is also known as occupational segregation.

Question 18

A progressive income tax would cause the after-tax Lorenz curve, compared with the before-tax Lorenz curve, to be

Accepted Answer

A)  more bowed toward the southeast. 
B)  less bowed toward the southeast. 
C)  a vertical line. 
D)  a horizontal line. 
A)  more bowed toward the southeast. 
B)  less bowed toward the southeast. 
C)  a vertical line. 
D)  a horizontal line.

Question 19

An employer (biased against African Americans) whose discrimination coefficient is $5 will hire only whites if the actual African-American-white wage gap is $7.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following Gini ratios indicates the highest degree of income inequality?

Accepted Answer

A)  0.78 
B)  0.65 
C)  0.29 
D)  0.42 
A)  0.78 
B)  0.65 
C)  0.29 
D)  0.42

Exam 23: Income Inequality, Poverty, and Discrimination

Which of the following helps explain growing income inequality in the United States in recent years?

Which of the following would move the Lorenz curve closer to the diagonal?

In 2014, an unattached individual would be defined as living in poverty if his or her income was less than

Which of the following is correct?

Greater income equality that is achieved through the redistribution of income is thought to

Another term often used to refer to family wealth is

When taxes and transfer payments are taken into account, the distribution of income in the United States

In the taste-for-discrimination model,

In 2014, the poverty line for a family of four was about

The basic argument for income inequality is that

Which of the following demographic groups does not bear a disproportionate burden of poverty?

The empirical data indicate that the tax system and the transfer programs of the government

The U.S. poverty rate for

A particular woman is denied on-the-job training because women on average are more likely to drop out of the workforce than men. This illustrates

Standard census data on the distribution of income

The crowding of women and minorities into a restricted number of occupations

Statistical discrimination

A progressive income tax would cause the after-tax Lorenz curve, compared with the before-tax Lorenz curve, to be

An employer (biased against African Americans) whose discrimination coefficient is $5 will hire only whites if the actual African-American-white wage gap is $7.

Which of the following Gini ratios indicates the highest degree of income inequality?

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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