Question 1

The highest quintile of households in the income distribution (as of 2014)

Accepted Answer

A)   receives about 51 percent of the total income.
B)   comprises 10 percent of all households.
C)   comprises 5 percent of all households.
D)   receives about 43 percent of the total income.E) A) and C)
F) A) and B)

Question 2

Poverty is a condition where a person or family does not have the means to

Accepted Answer

A)   satisfy all wants.
B)   save enough for the future.
C)   earn a stable income.
D)   meet basic needs.E) B) and C)
F) A) and D)

Question 3

Housing subsidies for low-income households

Accepted Answer

A)   represent a cash transfer.
B)   are a part of the U.S. social insurance programs.
C)   represent a noncash transfer.
D)   conflict with the leaky-bucket analogy.E) A) and B)
F) A) and C)

Question 4

One cause of income inequality in the United States is

Accepted Answer

A)   the free public school system.
B)   differences in preferences for market work relative to nonmarket activities as well as differences in preferences for types of work.
C)   antidiscrimination laws.
D)   a system of taxes and government transfers that redistributes income away from the lowest earners.E) A) and C)
F) A) and D)

Question 5

From the economic point of view, discrimination

Accepted Answer

A)   no longer exists in the U.S. economy.
B)   results in an actual domestic output that is below potential domestic output.
C)   provides incentives for minority groups to work harder at their jobs.
D)   results in an actual output that is no different from potential domestic output, provided resources are fully employed.E) B) and D)
F) A) and B)

Question 6

(Consider This)  According to The Economist magazine, growing income inequality is less of a concern because

Accepted Answer

A)   it is increasing at a decreasing rate.
B)   the poor have increasingly better access to goods and services once only available to the rich.
C)   poverty rates have fallen below 10 percent.
D)   government transfers eliminate virtually all consumption inequality.E) C) and D)
F) B) and D)

Question 7

The equality-efficiency trade-off refers to

Accepted Answer

A)   the conflict between risk averters and risk takers.
B)   the willingness of Congress to abandon existing welfare programs in favor of a comprehensive plan to increase education and training for low-income persons.
C)   possible conflicts between the goals of economic efficiency and greater income equality.
D)   the difference between the goals of income equality and equality of economic opportunity.E) B) and C)
F) All of the above

Question 8

Which of the following measurement issues makes interpretation of U.S. poverty rates difficult?

Accepted Answer

A)   Poverty statistics measure consumption rather than income, and some families may receive income that is above the official poverty line.
B)   The high cost of living in urban areas tends to result in the understatement of poverty.
C)   Most people below the poverty line have substantial unreported income.
D)   The poverty rate is adjusted for every urban and rural area, so people's poverty status changes whenever they move.E) A) and B)
F) A) and C)

Question 9

Government transfer programs result in a U.S. Lorenz curve that is closer to the diagonal line than would be the case without the programs.

Accepted Answer

A) True 
 B)False

Question 10

When welfare payments like housing credits are completely cut off when the recipient's income goes above a certain threshold, then this could discourage the recipient from finding more work or a better-paying job.

Accepted Answer

A) True 
 B)False

Question 11

Earnings received from wealth

Accepted Answer

A)   contribute to income inequality.
B)   are the major source of income for families.
C)   are becoming more equal in the society.
D)   are primarily the result of advanced education.E) B) and D)
F) B) and C)

Question 12

Which of the following helps finance the medical expenses of individuals receiving TANF or SSI?

Accepted Answer

A)   Medicare
B)   Supplemental Security Income (SSI) 
C)   Medicaid
D)   Social SecurityE) B) and C)
F) A) and D)

Question 13

Which one of the following is not a cash transfer program?

Accepted Answer

A)   TANF
B)   Supplemental Security Income (SSI) 
C)   low-rent public housing
D)   Social SecurityE) B) and C)
F) A) and C)

Question 14

Statistical discrimination occurs when employers base hiring decisions on individual workers' previous employment records and statistics.

Accepted Answer

A) True 
 B)False

Question 15

The following groups in the U.S. all had higher-than-the-national-average poverty rates in 2014, except

Accepted Answer

A)   households headed by females.
B)   foreign-born noncitizens.
C)   persons 65 or older.
D)   Hispanics.E) C) and D)
F) B) and D)

Question 16

Which of the following is a cause of growing income inequality in the United States since 1975?

Accepted Answer

A)   exporting to other countries by major U.S. industries
B)   industrial restructuring from services to goods production
C)   a widening wage gap between skilled and unskilled workers
D)   an increase in the progressivity of the federal tax systemE) None of the above
F) All of the above

Question 17

In the taste-for-discrimination model, an increase in the prejudice of employers will decrease the demand for African-American workers, lower the African- American wage rate, and lower the ratio of African-American to white wages.

Accepted Answer

A) True 
 B)False

Question 18

The crowding model is primarily concerned with explaining

Accepted Answer

A)   occupational discrimination.
B)   human-capital discrimination.
C)   the size of the discrimination coefficient.
D)   why affirmative action is reverse discrimination.E) All of the above
F) A) and B)

Question 19

A kingdom where only the king earns all income would have a Gini ratio of

Accepted Answer

A)   100.
B)   0.
C)   1.
D)   2.E) All of the above
F) C) and D)

Question 20

Since 1980 the difference between the earnings of college graduates and high school graduates has

Accepted Answer

A)   fallen, thereby increasing income inequality.
B)   increased, thereby increasing income inequality.
C)   remained constant.
D)   increased, thereby decreasing income inequality.E) All of the above
F) A) and B)

Exam 23: Income Inequality, Poverty, and Discrimination

A kingdom where only the king earns all income would have a Gini ratio of

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One cause of income inequality in the United States is

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The following groups in the U.S. all had higher-than-the-national-average poverty rates in 2014, except

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The equality-efficiency trade-off refers to

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Which of the following measurement issues makes interpretation of U.S. poverty rates difficult?

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In the taste-for-discrimination model, an increase in the prejudice of employers will decrease the demand for African-American workers, lower the African- American wage rate, and lower the ratio of African-American to white wages.

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Government transfer programs result in a U.S. Lorenz curve that is closer to the diagonal line than would be the case without the programs.

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From the economic point of view, discrimination

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Poverty is a condition where a person or family does not have the means to

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(Consider This) According to The Economist magazine, growing income inequality is less of a concern because

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When welfare payments like housing credits are completely cut off when the recipient's income goes above a certain threshold, then this could discourage the recipient from finding more work or a better-paying job.

Correct AnswerverifiedShow Answer

Which of the following helps finance the medical expenses of individuals receiving TANF or SSI?

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Statistical discrimination occurs when employers base hiring decisions on individual workers' previous employment records and statistics.

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Housing subsidies for low-income households

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Earnings received from wealth

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Which one of the following is not a cash transfer program?

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The crowding model is primarily concerned with explaining

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Which of the following is a cause of growing income inequality in the United States since 1975?

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The highest quintile of households in the income distribution (as of 2014)

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Since 1980 the difference between the earnings of college graduates and high school graduates has

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