Question 1

Economic discrimination puts the economy inside its production possibilities curve because discrimination

Accepted Answer

A)   redistributes income from low-paid to high-paid persons.
B)   promotes present consumption rather than production of capital goods.
C)   arbitrarily blocks women and certain minorities from higher-productivity, higher-wage jobs and thus keeps the economy from producing its maximum output.
D)   often causes inflation, which reduces the nation's real output.E) C) and D)
F) None of the above

Question 2

TANF stands for Temporary Assistance for Needy Families.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A)   The Social Security Act requires all employers to insure their workers against industrial accidents and diseases.
B)   An increase in the degree of income inequality means that the income level of the poor is falling while the income level of the rich is rising.
C)   Over 90 percent of the workers in the United States are currently covered by Social Security.
D)   About one-fifth of our population is now classified as living in poverty.E) B) and C)
F) All of the above

Question 4

The Supplemental Nutrition Assistance Program (SNAP)

Accepted Answer

A)   was previously known as the food-stamp program.
B)   added assistance to the food-stamp program by targeting children.
C)   was created to supplement the food consumption of low-income Social Security recipients.
D)   has been subject to widespread fraud through the illegal reproduction of paper food-stamp coupons.E) B) and C)
F) A) and D)

Question 5

The crowding of certain ethnic or racial groups into specific occupations results in

Accepted Answer

A)   lower wages and a less efficient allocation of resources.
B)   lower wages but a more efficient allocation of resources.
C)   lower wages but no effect on the efficient allocation of resources.
D)   higher wages and a more efficient allocation of labor resources.E) B) and C)
F) All of the above

Question 6

Assume that there is a supply and demand market for nonpreferred workers. If prejudice against these workers among employers increases, then there will be a(n)

Accepted Answer

A)   increased supply of these workers, a rise in their wage rate, and a decrease in their employment.
B)   increased demand for these workers, a rise in their wage rate, and an increase in their employment.
C)   decreased supply of these workers, a fall in their wage rate, and a decrease in their employment.
D)   decreased demand for these workers, a fall in their wage rate, and a decrease in their employment.E) A) and B)
F) A) and C)

Question 7

Which of the following is an example of a noncash transfer that is typically not included in the income-distribution data?

Accepted Answer

A)   Social Security benefits
B)   welfare assistance
C)   unemployment compensation
D)   MedicareE) C) and D)
F) A) and D)

Question 8

Wealth

Accepted Answer

A)   is a flow concept.
B)   refers to accumulated financial assets only.
C)   refers to accumulated real assets only.
D)   refers to accumulated financial and real assets.E) All of the above
F) A) and B)

Question 9

Which of the following would be considered part of income?

Accepted Answer

A)   wages and salaries
B)   the value of a house
C)   corporate stock holdings
D)   money in a bank accountE) A) and D)
F) C) and D)

Question 10

The basic economic argument for greater income equality is that

Accepted Answer

A)   an equal distribution of income is the logical outcome of any tax-transfer program.
B)   because citizens enjoy political equality, they are also entitled to economic equality.
C)   a more equal distribution of income will tend to maximize incentives to work, invest, and assume risk.
D)   a more equal distribution of a given amount of income will increase the total utility of consumers.E) B) and C)
F) C) and D)

Question 11

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) A) and D)
F) C) and D)

Question 12

The greater the degree of inequality in the distribution of income, the more bowed will be the Lorenz curve toward the

Accepted Answer

A)   upper left-hand corner.
B)   upper right-hand corner.
C)   lower right-hand corner.
D)   lower left-hand corner.E) C) and D)
F) B) and C)

Question 13

A major criticism of the welfare system that led to reforms in the mid-1990s is that welfare payments

Accepted Answer

A)   encourage overuse of the medical system.
B)   create dependency on government programs.
C)   give strong incentives for people to change jobs.
D)   fail to provide a minimum income for young children.E) C) and D)
F) A) and D)

Question 14

The average household income in the United States in 2014 was close to

Accepted Answer

A)   $35,000.
B)   $50,000.
C)   $70,000.
D)   $100,000.E) B) and C)
F) A) and C)

Question 15

After the implementation of TANF, the U.S. welfare rolls fell by more than one-half between 1996 and 2007.

Accepted Answer

A) True 
 B)False

Question 16

In 2014, the official poverty line for a household of four in the United States was

Accepted Answer

A)   $24,230.
B)   $32,473.
C)   $12,071.
D)   $26,803.E) C) and D)
F) A) and B) A

Question 17

The standard data on income distribution do not include the value of noncash transfers as income.

Accepted Answer

A) True 
 B)False  True

Question 18

Suppose that Jane earns $10,000 in year 1 and $15,000 in year 2, while Jim earns $15,000 in year 1 and $10,000 in year 2. Is there income equality for the two individuals?

Accepted Answer

A)   The annual data indicate equality, but the two-year data indicate inequality.
B)   The annual data indicate inequality, but the two-year data indicate equality.
C)   Both the annual and the two-year data indicate equality.
D)   Both the annual and the two-year data indicate inequality.E) B) and D)
F) A) and C)

Question 19

The Gini ratio

Accepted Answer

A)   measures the relative extent of poverty in a nation.
B)   compares the income of persons, households, or households at the 90th percentile of the income distribution to the income at the 10th percentile.
C)   is a numerical measure of the overall dispersion of income in a nation.
D)   is found by dividing the entire area below and to the right of the diagonal in the Lorenz diagram by the area between the diagonal and Lorenz curve.E) B) and C)
F) A) and B) C

Question 20

Which of the following is a major reason for the growing income inequality in the United States since 1975?

Accepted Answer

A)   higher marginal tax rates
B)   unemployment benefits
C)   rising number of skilled workers
D)   import competitionE) A) and C)
F) B) and D)

Exam 23: Income Inequality, Poverty, and Discrimination

Economic discrimination puts the economy inside its production possibilities curve because discrimination

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TANF stands for Temporary Assistance for Needy Families.

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Which of the following statements is correct?

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The Supplemental Nutrition Assistance Program (SNAP)

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The crowding of certain ethnic or racial groups into specific occupations results in

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Assume that there is a supply and demand market for nonpreferred workers. If prejudice against these workers among employers increases, then there will be a(n)

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Which of the following is an example of a noncash transfer that is typically not included in the income-distribution data?

Correct AnswerverifiedShow Answer

Wealth

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Which of the following would be considered part of income?

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The basic economic argument for greater income equality is that

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A Lorenz curve is a graph that shows

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The greater the degree of inequality in the distribution of income, the more bowed will be the Lorenz curve toward the

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A major criticism of the welfare system that led to reforms in the mid-1990s is that welfare payments

Correct AnswerverifiedShow Answer

The average household income in the United States in 2014 was close to

Correct AnswerverifiedShow Answer

After the implementation of TANF, the U.S. welfare rolls fell by more than one-half between 1996 and 2007.

Correct AnswerverifiedShow Answer

In 2014, the official poverty line for a household of four in the United States was

Correct AnswerverifiedA

The standard data on income distribution do not include the value of noncash transfers as income.

Correct AnswerverifiedTrue

Suppose that Jane earns $10,000 in year 1 and $15,000 in year 2, while Jim earns $15,000 in year 1 and $10,000 in year 2. Is there income equality for the two individuals?

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The Gini ratio

Correct AnswerverifiedC

Which of the following is a major reason for the growing income inequality in the United States since 1975?

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A

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True

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C

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