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) B) and D)

Question 2

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) All of the above
F) A) and C)

Question 3

When taxes and transfer payments are taken into account, the distribution of income in the United States

Accepted Answer

A)   is unchanged.
B)   is less equally distributed.
C)   is more equally distributed.
D)   becomes more beneficial for the wealthy.E) C) and D)
F) B) and D)

Question 4

The empirical data indicate that the tax system and the transfer programs of the government

Accepted Answer

A)   increase the degree of inequality in the distribution of income.
B)   make no change in the degree of inequality in the distribution of income.
C)   reduce the degree of inequality in the distribution of income.
D)   affect the distribution of wealth, not income.E) A) and B)
F) All of the above

Question 5

A particular woman is denied on-the-job training because women on average are more likely to drop out of the workforce than men. This illustrates

Accepted Answer

A)   occupational segregation.
B)   the crowding model.
C)   the taste-for-discrimination model.
D)   statistical discrimination.E) B) and D)
F) C) and D)

Question 6

Another term often used to refer to family wealth is

Accepted Answer

A)   income.
B)   net worth.
C)   salary and wages.
D)   spending.E) B) and C)
F) A) and D)

Question 7

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) A) and C)

Question 8

Greater income equality that is achieved through the redistribution of income is thought to

Accepted Answer

A)   stimulate innovation and entrepreneurship.
B)   promote economic efficiency in the economy.
C)   increase incentives to work, save, and invest in the economy.
D)   come at the opportunity cost of reduced production and income.E) All of the above
F) C) and D)

Question 9

The basic argument for income inequality is that

Accepted Answer

A)   the very rich establish consumption patterns that are desirable for the rest of society to emulate.
B)   the rich buy luxury goods that soon become affordable to everyone else because of economies of scale.
C)   income inequality is essential to maintain incentives to produce.
D)   inequality undermines incentives and tends to reduce the size of the national income.E) A) and C)
F) None of the above

Question 10

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 11

In 2014, an unattached individual would be defined as living in poverty if his or her income was less than

Accepted Answer

A)   $5,100.
B)   $12,700.
C)   $20,400.
D)   $29,500.E) All of the above
F) B) and C)

Question 12

The crowding of women and minorities into a restricted number of occupations

Accepted Answer

A)   has no effect on the size of the domestic output or its distribution in the long run.
B)   will increase the size of the domestic output and make its distribution more equal.
C)   will decrease the size of the domestic output and make its distribution less equal.
D)   will increase the size of the domestic output but make its distribution less equal.E) All of the above
F) None of the above

Question 13

Which of the following is correct?

Accepted Answer

A)   Income is a stock concept, and wealth is a flow concept.
B)   Both income and wealth are flow concepts.
C)   Both income and wealth are stock concepts.
D)   Income is a flow concept, and wealth is a stock concept.E) C) and D)
F) B) and C)

Question 14

In the taste-for-discrimination model,

Accepted Answer

A)   discriminatory employers behave as if employing nonpreferred-race workers adds to costs.
B)   individual workers are judged by the characteristics of the groups to which they belong.
C)   prejudiced white employers will never hire African-American workers.
D)   women and minorities are confined to a limited number of occupations.E) B) and D)
F) B) and C)

Question 15

In 2014, the poverty line for a family of four was about

Accepted Answer

A)   $15,508.
B)   $30,453.
C)   $24,230.
D)   $38,754.E) A) and D)
F) A) and C)

Question 16

Which of the following Gini ratios indicates the highest degree of income inequality?

Accepted Answer

A)   0.78
B)   0.65
C)   0.29
D)   0.42E) A) and C)
F) C) and D)

Question 17

Which of the following helps explain growing income inequality in the United States in recent years?

Accepted Answer

A)   reduced immigration
B)   increased demand for highly skilled workers
C)   the falling labor force participation rate of women
D)   increased power of unionsE) None of the above
F) All of the above

Question 18

Statistical discrimination

Accepted Answer

A)   can persist in the long run if differences in average characteristics among groups continue.
B)   will tend to diminish in the long run because nondiscriminating firms will drive out discriminating firms.
C)   requires that employers have discrimination coefficients greater than zero.
D)   is also known as occupational segregation.E) C) and D)
F) A) and D)

Question 19

Which of the following demographic groups does not bear a disproportionate burden of poverty?

Accepted Answer

A)   households headed by women
B)   persons 65 or over
C)   Hispanics
D)   children under 18E) A) and C)
F) C) and D)

Question 20

Standard census data on the distribution of income

Accepted Answer

A)   take all taxes and transfer payments into account.
B)   are before taxes in that they do not account for personal income and payroll taxes.
C)   include noncash transfers.
D)   exclude cash transfers.E) A) and C)
F) All of the above

Exam 23: Income Inequality, Poverty, and Discrimination

Which of the following Gini ratios indicates the highest degree of income inequality?

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The empirical data indicate that the tax system and the transfer programs of the government

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When taxes and transfer payments are taken into account, the distribution of income in the United States

Correct AnswerverifiedShow Answer

The U.S. poverty rate for

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The basic argument for income inequality is that

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Greater income equality that is achieved through the redistribution of income is thought to

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Another term often used to refer to family wealth is

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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.

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Standard census data on the distribution of income

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In 2014, an unattached individual would be defined as living in poverty if his or her income was less than

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Which of the following demographic groups does not bear a disproportionate burden of poverty?

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

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Which of the following helps explain growing income inequality in the United States in recent years?

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In the taste-for-discrimination model,

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Which of the following is correct?

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

Correct AnswerverifiedShow Answer

A particular woman is denied on-the-job training because women on average are more likely to drop out of the workforce than men. This illustrates

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Statistical discrimination

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In 2014, the poverty line for a family of four was about

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The crowding of women and minorities into a restricted number of occupations

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