Question 1

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 SecurityE) A) and B)
F) A) and D)

Question 2

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 3

What is the major argument in the case for income equality?

Accepted Answer

The basic argument for an equal distribu...

Question 4

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 5

The percentage of total before-tax household income received by the lowest 20 percent of households in 2017 was about ____ percent, while the top 20 percent received about ___ percent.

Accepted Answer

A)  1; 30
B)  3; 50
C)  8; 60
D)  12; 40E) B) and C)
F) A) and D)

Question 6

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.E) A) and B)
F) A) and C)

Question 7

In 2017, the portion of the U.S. population that lived in poverty was

Accepted Answer

A)  about 1 percent.
B)  about 5 percent.
C)  about 12 percent.
D)  about 15 percent.E) B) and D)
F) B) and C)

Question 8

Assumptions: (1) the labor force comprises 9 million men and 9 million women workers; (2) the economy has 3 occupations, X, Y, and Z, each having identical demand curves for labor; (3) male and female workers are homogeneous with respect to their labor-market capabilities; (4) women are discriminated against by being excluded from occupations X and Y and are confined to Z; and (5) aside from discrimination, the economy is competitive, and workers seek to maximize their earnings.Refer to the diagram and list of assumptions. With women confined to occupation Z and men free to choose occupations, how will this affect the wages paid?

Accepted Answer

A)  Men and women will both be paid $5.
B)  Men will be paid $5 and women $4.
C)  Men will be paid $6.50 and women $3.
D)  Women and men will both be paid $6.50.E) B) and C)
F) C) and D)

Question 9

Refer to the figure, which shows four different Lorenz curves (I, II, III, and IV) . What point indicates that the lower 60 percent of the households receive only 40 percent of the nation's total income?

Accepted Answer

A)  a
B)  b
C)  c
D)  dE) None of the above
F) A) and D)

Question 10

Refer to the table. What percentage of households made $50,000 or more?

Accepted Answer

A)  35
B)  49
C)  51
D)  65E) A) and C)
F) A) and D)

Question 11

Insurance companies require male drivers under age 25 to pay higher insurance rates than female drivers under age 25. Craig Raymond, however, is a safer driver than the average female driver under age 25. Craig's higher insurance rate reflects

Accepted Answer

A)  monopoly power.
B)  statistical discrimination.
C)  the insurance firm's taste for discrimination.
D)  human-capital discrimination.E) None of the above
F) All of the above

Question 12

A Lorenz curve is a graph that shows

Accepted Answer

A)  the equity versus efficiency trade-off.
B)  how many households are living in poverty.
C)  the trade-off between inflation and unemployment.
D)  the distribution of household income.E) C) and D)
F) A) and D)

Question 13

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.E) A) and D)
F) None of the above

Question 14

The earned-income tax credit

Accepted Answer

A)  increases the personal income tax liability of low-income working families.
B)  provides a cash payment to low-income working families if their tax credit exceeds their tax liability.
C)  is designed to make labor force employment less attractive.
D)  was eliminated as part of welfare reform in 1996.E) C) and D)
F) B) and D)

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 quintileE) A) and C)
F) A) and B)

Question 16

Refer to the diagram, where curves (a) through (e) are for five different countries. The Gini ratio is

Accepted Answer

A)  zero in country (e) and 1 in country (a) .
B)  greater in country (b) than in country (c) .
C)  zero in country (a) and 1 in country (e) .
D)  less than 0.5 in country (d) .E) A) and B)
F) All of the above

Question 17

Suppose the members of population A, consisting of Al, Bob, Curt, Doris, and Ellie, receive annual incomes of $5,000, $2,500, $1,250, $750, and $500, respectively. What percentage of total income is received by the highest quintile?

Accepted Answer

A)  50
B)  5
C)  25
D)  20E) All of the above
F) A) and D)

Question 18

"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.E) All of the above
F) A) and C)

Question 19

Assumptions: (1) the labor force comprises 9 million men and 9 million women workers; (2) the economy has 3 occupations, X, Y, and Z, each having identical demand curves for labor; (3) male and female workers are homogeneous with respect to their labor-market capabilities; (4) women are discriminated against by being excluded from occupations X and Y and are confined to Z; and (5) aside from discrimination, the economy is competitive, and workers seek to maximize their earnings.Refer to the diagram and list of assumptions. The elimination of gender discrimination

Accepted Answer

A)  may either increase or reduce real domestic output, depending on what happens to the level of wages.
B)  will increase real domestic output.
C)  will have no effect on real domestic output.
D)  will reduce real domestic output.E) All of the above
F) None of the above

Question 20

People's incomes are relatively low when they are young, reach a peak in middle age, and then decline. This fact helps explain

Accepted Answer

A)  the wide variations of Gini ratios among nations.
B)  the equality-efficiency trade-off.
C)  why the lifetime distribution of income is more equal than the distribution in any given year.
D)  why the lifetime distribution of income is less equal than the distribution in any given year.E) A) and B)
F) B) and C)

Exam 23: Income Inequality, Poverty, and Discrimination

Correct Answer
verified

The percentage of total before-tax household income received by the lowest 20 percent of households in 2017 was about __ percent, while the top 20 percent received about _ percent.

Correct Answer
verified

Insurance companies require male drivers under age 25 to pay higher insurance rates than female drivers under age 25. Craig Raymond, however, is a safer driver than the average female driver under age 25. Craig's higher insurance rate reflects

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Suppose the members of population A, consisting of Al, Bob, Curt, Doris, and Ellie, receive annual incomes of $5,000, $2,500, $1,250, $750, and $500, respectively. What percentage of total income is received by the highest quintile?

Correct Answer
verified

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.

Correct Answer
verified

People's incomes are relatively low when they are young, reach a peak in middle age, and then decline. This fact helps explain

Correct Answer
verified

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

Correct Answer
verified

"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

Correct Answer
verified

In 2017, the portion of the U.S. population that lived in poverty was

Correct Answer
verified

What is the major argument in the case for income equality?

Correct Answer
verified
The basic argument for an equal distribu...
View Answer

The earned-income tax credit

Correct Answer
verified

A Lorenz curve is a graph that shows

Correct Answer
verified

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.

Correct Answer
verified

Refer to the figure, which shows four different Lorenz curves (I, II, III, and IV) . What point indicates that the lower 60 percent of the households receive only 40 percent of the nation's total income?

Correct Answer
verified

Refer to the table. What percentage of households made $50,000 or more?

Correct Answer
verified

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

Correct Answer
verified

Refer to the diagram, where curves (a) through (e) are for five different countries. The Gini ratio is

Correct Answer
verified

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

Correct Answer
verified

Exam 23: Income Inequality, Poverty, and Discrimination

Correct AnswerverifiedShow Answer

The percentage of total before-tax household income received by the lowest 20 percent of households in 2017 was about ____ percent, while the top 20 percent received about ___ percent.

Correct AnswerverifiedShow Answer

Insurance companies require male drivers under age 25 to pay higher insurance rates than female drivers under age 25. Craig Raymond, however, is a safer driver than the average female driver under age 25. Craig's higher insurance rate reflects

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the members of population A, consisting of Al, Bob, Curt, Doris, and Ellie, receive annual incomes of $5,000, $2,500, $1,250, $750, and $500, respectively. What percentage of total income is received by the highest quintile?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

People's incomes are relatively low when they are young, reach a peak in middle age, and then decline. This fact helps explain

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

"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

Correct AnswerverifiedShow Answer

In 2017, the portion of the U.S. population that lived in poverty was

Correct AnswerverifiedShow Answer

What is the major argument in the case for income equality?

Correct AnswerverifiedThe basic argument for an equal distribu...View AnswerShow Answer

The earned-income tax credit

Correct AnswerverifiedShow Answer

A Lorenz curve is a graph that shows

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Refer to the figure, which shows four different Lorenz curves (I, II, III, and IV) . What point indicates that the lower 60 percent of the households receive only 40 percent of the nation's total income?

Correct AnswerverifiedShow Answer

Refer to the table. What percentage of households made $50,000 or more?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the diagram, where curves (a) through (e) are for five different countries. The Gini ratio is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

The percentage of total before-tax household income received by the lowest 20 percent of households in 2017 was about __ percent, while the top 20 percent received about _ percent.

Correct Answer
verified

Correct Answer
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The basic argument for an equal distribu...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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