Question 1

Which of the following is an example of statistical discrimination?

Accepted Answer

A)  An employer hires only white workers even though there are otherwise identical African-American workers available at lower pay. 
B)  Female students in college business schools are overrepresented in human resource management courses and underrepresented in finance courses. 
C)  A young woman who plans to work for only five to seven years after graduating college decides that getting an advanced degree "just won't pay off." 
D)  A firm hires a man rather than a woman for a specific job because, on average, women have higher rates of absenteeism than do men.

Question 2

The greater the area between the Lorenz curve and the diagonal in the Lorenz curve diagram, the

Accepted Answer

A)  smaller is the Gini ratio and the greater is the degree of income inequality. 
B)  larger is the Gini ratio and the greater is the degree of income inequality. 
C)  smaller is the Gini ratio and the lesser is the degree of income inequality. 
D)  larger is the Gini ratio and the lesser is the degree of income inequality.

Question 3

Being "underwater" in one's home mortgage means that the market value of one's house has fallen below

Accepted Answer

A)  its value the previous year. 
B)  what is owed in the mortgage loan. 
C)  the purchase price. 
D)  the average home price in the neighborhood.

Question 4

Two major criticisms of the Bureau of Census data as a portrayal of the degree of income inequality are that the income concept employed is too

Accepted Answer

A)  broad and the income accounting period is too short. 
B)  narrow and the income accounting period is too long. 
C)  narrow and the income accounting period is too short. 
D)  broad and the income accounting period is too long.

Question 5

An implication of the taste-for-discrimination model is that

Accepted Answer

A)  discrimination can lower a firm's production costs. 
B)  discrimination will move a firm along its declining average total cost curve. 
C)  other things equal, nondiscriminating firms will have lower production costs than discriminating firms. 
D)  other things equal, discriminating firms will have lower production costs than nondiscriminating firms.

Question 6

In 2014, a household with an annual income of $23,000 would find itself in the

Accepted Answer

A)  highest quintile of the household income distribution. 
B)  lowest quintile of the household income distribution. 
C)  second lowest quintile of the household income distribution. 
D)  second highest quintile of the household income distribution.

Question 7

The effect of the so-called welfare cliff is that it discourages welfare recipients from doing the following, except

Accepted Answer

A)  working more hours. 
B)  finding and transitioning into higher-paying jobs. 
C)  applying for an extension of the welfare payment. 
D)  acquiring education and training for better jobs.

Question 8

In the taste for discrimination model, the perceived cost for a prejudiced white employer for hiring an African-American worker is

Accepted Answer

A)  the ratio of the wages of African-American workers to white workers. 
B)  the ratio of the wages of white workers to African-American workers. 
C)  the wages of African-American workers plus the monetary value of the disutility from hiring an African-American worker. 
D)  the wages of a white worker plus the monetary value of the disutility from hiring an African-American worker.

Question 9

Reasons for the growing income inequality in the United States since 1975 include the following, except

Accepted Answer

A)  a shift in labor demand toward highly skilled and better-educated workers. 
B)  the entrance of larger numbers of less-experienced, less-skilled workers into the workforce. 
C)  an increase in the number of households headed by single or divorced women. 
D)  the decline of unionism in the U.S. workforce.

Question 10

In the taste-for-discrimination model,

Accepted Answer

A)  a decline in discrimination will reduce the actual African-American-white wage ratio. 
B)  an increase in collective discrimination coefficients of employers will reduce the demand for African-American workers, decrease the African-American wage, and increase African-American employment. 
C)  firms that discriminate will have lower costs than firms that do not discriminate. 
D)  competitive forces will tend to reduce discrimination in the very long run.

Question 11

U.S. income statistics indicate that more than one-eighth of the nation lived in poverty in 2014.

Accepted Answer

A) True 
 B)False

Question 12

Statistical discrimination refers to

Accepted Answer

A)  the crowding of women or minorities into low-paying occupations. 
B)  significant differences in average levels of earnings by gender, race, and ethnicity, after accounting for nondiscriminatory factors. 
C)  making individual hiring decisions on the basis of the characteristics of the group to which a person belongs, rather than on his or her personal characteristics and productivity. 
D)  the 50-percent unexplained residual in studies that try to account for wage differences by gender, race, and ethnic origin.

Question 13

The crowding model of occupational discrimination suggests that occupational segregation results in

Accepted Answer

A)  a lower domestic output than would otherwise be the case. 
B)  higher levels of total employment than would otherwise be the case. 
C)  higher interest rates in the private sector than would otherwise be the case. 
D)  a higher rate of inflation than would otherwise be the case.

Question 14

Gomez argues that we need to increase the nation's output. Chang contends that our top priority should be a more equal distribution of income and output. It can be correctly stated that these two goals are

Accepted Answer

A)  essentially unrelated. 
B)  complementary because the realization of one will promote fulfillment of the other. 
C)  at least partially competing because the redistribution of income might impair incentives to work and produce. 
D)  complementary because a more equal distribution of income always promotes economic growth.

Question 15

Which of the following would be evidence of an increase in income inequality over time in the United States?

Accepted Answer

A)  an increase in the percentage of total household income received by the lowest quintile 
B)  an increase in the percentage of total household income received by the highest quintile 
C)  an increase in the percentage of total household income received by the four lowest quintiles 
D)  a decrease in the percentage of total household income received by the highest quintile

Question 16

Income

Accepted Answer

A)  is a stock concept. 
B)  consists of accumulated assets. 
C)  is a flow concept. 
D)  consists of wages only.

Question 17

The degree of inequality in the distribution of income in an economy is depicted in a(n)

Accepted Answer

A)  Lorenz curve. 
B)  Phillips curve. 
C)  Engels curve. 
D)  indifference curve.

Question 18

Which of the following is a public assistance or welfare program as opposed to a social insurance program?

Accepted Answer

A)  Supplemental Security Income (SSI) 
B)  unemployment compensation 
C)  Medicare 
D)  Social Security

Question 19

Which of the following would be an example of how pure luck contributes to income inequality?

Accepted Answer

A)  approval to receive unemployment benefits 
B)  receipt of a government grant for housing 
C)  selection as winner of a state lottery 
D)  admission to a state university

Question 20

Ending discrimination against minority groups in educational processes and in employment situations would cause total domestic output to

Accepted Answer

A)  fall because of the increased costs of training and living. 
B)  rise because spending on consumer goods and services would decrease. 
C)  rise because of an increase in the productivity of the labor force. 
D)  fall, since trained minority workers would force some present workers out of their jobs.

Exam 23: Income Inequality, Poverty, and Discrimination