Question 1

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

Question 2

When the distribution of income is adjusted for noncash transfers, the income distribution shows

Accepted Answer

A)  perfect equality.
B)  greater equality.
C)  greater inequality.
D)  little, if any, change.E) A) and B)
F) None of the above

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

Question 4

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.E) A) and B)
F) All of the above

Question 5

Labor market discrimination occurs when equivalent labor resources are paid or treated differently even though their productive contributions are equal.

Accepted Answer

A) True 
 B)False

Question 6

The Supplemental Nutrition Assistance Program (formerly the food-stamp program) mostly pays out cash-vouchers to eligible households.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following groups would we expect to have the highest poverty rate?

Accepted Answer

A)  Hispanic married households
B)  elderly Asian households
C)  white households headed by females
D)  African-American households headed by femalesE) C) and D)
F) B) and C)

Question 8

In the pizza analogy for income distribution, the pizza would shrink because

Accepted Answer

A)  the burden for the consumer would be greater than the burden for the producer.
B)  the risk of investment would be greater than the potential return on investment.
C)  there would be inequitable treatment of people.
D)  redistribution would reduce incentives to work.E) All of the above
F) B) and D)

Question 9

Suppose that a prejudiced white employer is willing to hire white workers at a rate of $16/hour, and this employer has a discrimination coefficient of $4.This implies that the employer would

Accepted Answer

A)  not hire a nonwhite worker regardless of wage rate.
B)  hire a nonwhite worker only at a rate of $12/hour or less.
C)  actually pay a white worker $20/hour.
D)  pay a nonwhite worker only $4/hour.E) B) and C)
F) A) and B)

Question 10

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.E) B) and D)
F) A) and D)

Question 11

The pizza analogy of income distribution would be most closely associated with which one of the following questions?

Accepted Answer

A)  If resources are used to make pizza, what other goods and services must be given up to do this?
B)  If cutting a pizza in more equal slices shrinks the pizza, how much shrinkage will society tolerate?
C)  If pizza workers were paid more money, would they become more productive workers for society?
D)  If pizza sales increase, would pizza companies redistribute the profits to their employees?E) B) and D)
F) B) and C)

Question 12

The term "growing income inequality" implies that the

Accepted Answer

A)  poor are getting poorer in both a relative and an absolute sense.
B)  Lorenz curve is shifting toward the diagonal.
C)  diagonal is shifting toward the Lorenz curve.
D)  upper quintiles of income receivers are getting relatively more of the total income than before and the lower quintiles are getting relatively less.E) C) and D)
F) None of the above

Question 13

Which of the following would most likely increase income inequality?

Accepted Answer

A)  improvements in public education
B)  greater monopoly power among product sellers
C)  greater equality in the distribution of wealth
D)  fewer differences in working conditions across occupationsE) A) and D)
F) All of the above

Question 14

The Gini coefficient or ratio is a summary measure of income inequality derived from the Lorenz curve.

Accepted Answer

A) True 
 B)False

Question 15

Government programs that pay benefits to those who are unable to earn income because of permanent disabilities or to those who have very low incomes and dependent children are called

Accepted Answer

A)  public assistance programs.
B)  social insurance programs.
C)  affirmative action programs.
D)  dependent programs.E) None of the above
F) All of the above

Question 16

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.E) A) and D)
F) A) and C)

Question 17

The movement of individuals and households from one income quintile to another over time is called

Accepted Answer

A)  income averaging.
B)  wealth turnover.
C)  income mobility.
D)  the ratchet effect.E) C) and D)
F) None of the above

Question 18

(Consider This)  In "Slicing the Pizza," the shrinkage of the pizza refers to the

Accepted Answer

A)  fact that poor people are not helped by the income-maintenance system.
B)  efficiency losses-the losses of output and income associated with the tax-transfer system.
C)  tendency of rich people in developing nations to hoard their wealth overseas.
D)  failure of the Internal Revenue Service to collect all the tax revenues owed by taxpayers.E) All of the above
F) None of the above

Question 19

Each of the following has contributed to growing income inequality in the United States since 1975 except

Accepted Answer

A)  the decline in unionism.
B)  greater demand for highly skilled workers.
C)  stronger international competition from imports.
D)  government transfers.E) A) and B)
F) All of the above

Question 20

A cause of the unequal distribution of income in the United States is

Accepted Answer

A)  differences in work preferences and risks.
B)  differences in noncash transfers.
C)  high expenditures for social insurance.
D)  a low benefit-reduction rate for income.E) None of the above
F) All of the above

Exam 23: Income Inequality, Poverty, and Discrimination

Suppose that a prejudiced white employer is willing to hire white workers at a rate of $16/hour, and this employer has a discrimination coefficient of $4.This implies that the employer would

Correct AnswerverifiedShow Answer

Labor market discrimination occurs when equivalent labor resources are paid or treated differently even though their productive contributions are equal.

Correct AnswerverifiedShow Answer

The Gini coefficient or ratio is a summary measure of income inequality derived from the Lorenz curve.

Correct AnswerverifiedShow Answer

(Consider This) In "Slicing the Pizza," the shrinkage of the pizza refers to the

Correct AnswerverifiedShow Answer

Government programs that pay benefits to those who are unable to earn income because of permanent disabilities or to those who have very low incomes and dependent children are called

Correct AnswerverifiedShow Answer

Each of the following has contributed to growing income inequality in the United States since 1975 except

Correct AnswerverifiedShow Answer

Housing subsidies for low-income households

Correct AnswerverifiedShow Answer

The Supplemental Nutrition Assistance Program (formerly the food-stamp program) mostly pays out cash-vouchers to eligible households.

Correct AnswerverifiedShow Answer

Which of the following would most likely increase income inequality?

Correct AnswerverifiedShow Answer

In the pizza analogy for income distribution, the pizza would shrink because

Correct AnswerverifiedShow Answer

In the taste-for-discrimination model,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A cause of the unequal distribution of income in the United States is

Correct AnswerverifiedShow Answer

Which of the following groups would we expect to have the highest poverty rate?

Correct AnswerverifiedShow Answer

The movement of individuals and households from one income quintile to another over time is called

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The U.S.poverty rate for

Correct AnswerverifiedShow Answer

When the distribution of income is adjusted for noncash transfers, the income distribution shows

Correct AnswerverifiedShow Answer

The term "growing income inequality" implies that the

Correct AnswerverifiedShow Answer

The pizza analogy of income distribution would be most closely associated with which one of the following questions?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified