Question 1

Which of the following would likely reduce income inequality?

Accepted Answer

A)  a reduction in the number of high school dropouts
B)  a reduction in Social Security benefits
C)  greater inequality in the distribution of wealth
D)  more stringent requirements to obtain occupational licensesE) A) and D)
F) C) and D)

Question 2

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 B)
F) B) and D)

Question 3

The primary purpose of Social Security is to

Accepted Answer

A)  subsidize families in need.
B)  offset the progressiveness of the personal income tax.
C)  provide income for workers who are temporarily unemployed.
D)  provide income for retired and disabled workers.E) None of the above
F) C) and D)

Question 4

Suppose Gigantic Health Cooperative doesn't hire Mandy Morrison solely because she is a graduate of a particular foreign medical school, which is not known for the high quality of its graduates.Yet Mandy is actually more qualified than the average graduate of American medical schools.This is an example of

Accepted Answer

A)  monopsony exploitation.
B)  human-capital discrimination.
C)  statistical discrimination.
D)  irrational behavior.E) C) and D)
F) A) and B)

Question 5

The taste-for-discrimination model examines an employer's prejudice and discrimination in hiring by using tools of

Accepted Answer

A)  demand theory.
B)  theory of costs.
C)  production theory.
D)  profit theory.E) A) and B)
F) A) and C)

Question 6

The wages and salaries that people earn differ partly because of differences in

Accepted Answer

A)  wealth.
B)  ability.
C)  Social Security payments.
D)  in-kind transfer payments.E) B) and D)
F) None of the above

Question 7

Social Security payments are primarily made to assist

Accepted Answer

A)  families with dependent children.
B)  families affected by natural disasters.
C)  retired and disabled workers.
D)  unemployed workers.E) C) and D)
F) None of the above

Question 8

Each of the following contributes to income inequality except

Accepted Answer

A)  differences in ability and training.
B)  differences in job tastes.
C)  differences in wealth ownership.
D)  government transfers.E) A) and B)
F) A) and D)

Question 9

If income inequality is increasing, it means that the income levels of the poor are falling while the income levels of the rich are rising.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

The exercise of market power by suppliers in resource markets tends to

Accepted Answer

A)  reduce income inequality, ensuring that all workers receive fair wages.
B)  have little impact on the distribution of income.
C)  increase income inequality by raising incomes of those able to "rig the market."
D)  increase income inequality but is offset by the exercise of market power in product markets.E) A) and D)
F) B) and C)

Question 12

Medicaid

Accepted Answer

A)  helps finance medical expenses for those participating in the TANF and Supplemental Security Income programs.
B)  has been abandoned in favor of privately provided medical insurance.
C)  is a program of medical insurance for the aged and retired.
D)  is a compulsory national health insurance program that only covers preventative medical services.E) All of the above
F) A) and B)

Question 13

Some economists have criticized standard government figures on income inequality, arguing that these data

Accepted Answer

A)  exclude households whose earnings arise in the public sector.
B)  conceal the strong trend toward greater equality in household sizes.
C)  conceal the growth of poverty due to a growing number of discouraged workers.
D)  overstate the degree of income inequality by failing to include noncash transfers as income.E) A) and B)
F) All of the above

Question 14

The Gini ratio, or Gini coefficient, is a measure of the

Accepted Answer

A)  inflationary gap.
B)  recessionary gap.
C)  number of households that are classified as being poor.
D)  degree of income inequality.E) B) and D)
F) None of the above

Question 15

Some economists prefer to look at the distribution of consumption rather than that of income.A Review of Economic Studies article in 2006 reported that consumption inequality in the U.S.is

Accepted Answer

A)  about the same as the income inequality.
B)  worse than the income inequality.
C)  less severe than the income inequality.
D)  highly unstable from one year to the next.E) A) and B)
F) A) and C)

Question 16

In 2014, a household with an annual income of $75,000 would find itself in the

Accepted Answer

A)  second lowest quintile of the household income distribution.
B)  third quintile of the household income distribution.
C)  fourth quintile of the household income distribution.
D)  fifth (highest)  quintile of the household income distribution.E) A) and B)
F) B) and D)

Question 17

In the taste-for-discrimination model, a prejudiced employer who prefers white workers and who has a discrimination coefficient of $3/hour would still hire
African-Americans if the market wage rate were $22/hour for white workers and $20/hour for African Americans.

Accepted Answer

A) True 
 B)False

Question 18

The distribution of wealth in the United States is such that it

Accepted Answer

A)  is randomly distributed among income classes.
B)  has no perceptible impact on the distribution of income.
C)  reduces income inequality.
D)  contributes to income inequality.E) B) and C)
F) None of the above

Question 19

In 2014, the percentage of the total U.S.population that lived in poverty was approximately

Accepted Answer

A)  5 percent.
B)  10 percent.
C)  15 percent.
D)  20 percent.E) B) and C)
F) A) and D)

Question 20

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

Exam 23: Income Inequality, Poverty, and Discrimination

In 2014, the percentage of the total U.S.population that lived in poverty was approximately

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

Some economists prefer to look at the distribution of consumption rather than that of income.A Review of Economic Studies article in 2006 reported that consumption inequality in the U.S.is

Correct Answer
verified

Each of the following contributes to income inequality except

Correct Answer
verified

Some economists have criticized standard government figures on income inequality, arguing that these data

Correct Answer
verified

If income inequality is increasing, it means that the income levels of the poor are falling while the income levels of the rich are rising.

Correct Answer
verified

Correct Answer
verified

The primary purpose of Social Security is to

Correct Answer
verified

Medicaid

Correct Answer
verified

The Gini ratio, or Gini coefficient, is a measure of the

Correct Answer
verified

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

Correct Answer
verified

The taste-for-discrimination model examines an employer's prejudice and discrimination in hiring by using tools of

Correct Answer
verified

The exercise of market power by suppliers in resource markets tends to

Correct Answer
verified

The distribution of wealth in the United States is such that it

Correct Answer
verified

In 2014, a household with an annual income of $75,000 would find itself in the

Correct Answer
verified

Social Security payments are primarily made to assist

Correct Answer
verified

Which of the following would likely reduce income inequality?

Correct Answer
verified

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

Correct Answer
verified

In the taste-for-discrimination model, a prejudiced employer who prefers white workers and who has a discrimination coefficient of $3/hour would still hire African-Americans if the market wage rate were $22/hour for white workers and $20/hour for African Americans.

Correct Answer
verified

The wages and salaries that people earn differ partly because of differences in

Correct Answer
verified

Exam 23: Income Inequality, Poverty, and Discrimination

In 2014, the percentage of the total U.S.population that lived in poverty was approximately

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

Some economists prefer to look at the distribution of consumption rather than that of income.A Review of Economic Studies article in 2006 reported that consumption inequality in the U.S.is

Correct AnswerverifiedShow Answer

Each of the following contributes to income inequality except

Correct AnswerverifiedShow Answer

Some economists have criticized standard government figures on income inequality, arguing that these data

Correct AnswerverifiedShow Answer

If income inequality is increasing, it means that the income levels of the poor are falling while the income levels of the rich are rising.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The primary purpose of Social Security is to

Correct AnswerverifiedShow Answer

Medicaid

Correct AnswerverifiedShow Answer

The Gini ratio, or Gini coefficient, is a measure of the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The taste-for-discrimination model examines an employer's prejudice and discrimination in hiring by using tools of

Correct AnswerverifiedShow Answer

The exercise of market power by suppliers in resource markets tends to

Correct AnswerverifiedShow Answer

The distribution of wealth in the United States is such that it

Correct AnswerverifiedShow Answer

In 2014, a household with an annual income of $75,000 would find itself in the

Correct AnswerverifiedShow Answer

Social Security payments are primarily made to assist

Correct AnswerverifiedShow Answer

Which of the following would likely reduce income inequality?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the taste-for-discrimination model, a prejudiced employer who prefers white workers and who has a discrimination coefficient of $3/hour would still hire African-Americans if the market wage rate were $22/hour for white workers and $20/hour for African Americans.

Correct AnswerverifiedShow Answer

The wages and salaries that people earn differ partly because of differences in

Correct AnswerverifiedShow Answer

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