Question 1

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

Question 2

In a supply and demand model of the labor market for nonpreferred workers, a reduction in employer prejudice against nonpreferred workers will

Accepted Answer

A)  increase supply, raise the wage rate, and decrease the employment of these workers.
B)  decrease supply, lower the wage rate, and decrease employment of these workers.
C)  decrease demand, lower the wage rate, and decrease the employment of these workers.
D)  increase demand, raise the wage rate, and increase the employment of these workers.E) C) and D)
F) A) and D)

Question 3

Minority workers are underrepresented and have less access to certain high-paying occupations.This illustrates

Accepted Answer

A)  human-capital discrimination.
B)  the crowding model.
C)  the taste-for-discrimination model.
D)  statistical discrimination.E) B) and C)
F) All of the above

Question 4

Suppose an employer is biased against African Americans.If his discrimination coefficient is $2, the employer will

Accepted Answer

A)  randomly hire African-American and white workers if the actual African-American-white wage differential is more than $2.
B)  randomly hire African-American and white workers if the actual African-American-white wage differential is less than $2.
C)  hire only African Americans if the actual African-American-white wage differential is less than $2.
D)  hire only whites if the actual African-American-white wage differential is less than $2.E) None of the above
F) All of the above

Question 5

When the occupational choices of women or minorities are restricted, this results in

Accepted Answer

A)  lower wages for these groups, but has no effect on the efficient allocation of labor resources.
B)  lower wages for these groups, but more efficient allocation of labor resources.
C)  lower wages for these groups and less efficient allocation of labor resources.
D)  higher wages for these groups and more efficient allocation of labor resources.E) C) and D)
F) B) and C)

Question 6

The percentage of total before-tax household income received by the lowest 20 percent of households in 2014 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) A) and B)
F) B) and C)

Question 7

The judging of an individual on the basis of the average characteristics of the group to which the individual belongs rather than the individual's characteristics is

Accepted Answer

A)  statistical discrimination.
B)  reverse discrimination.
C)  human capital discrimination.
D)  wage discrimination.E) A) and B)
F) A) and C)

Question 8

Labor market discrimination increases the size of the nation's GDP by promoting specialization on the basis of race.

Accepted Answer

A) True 
 B)False

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) B) and C)
F) None of the above

Question 10

Which of the following measurement issues makes interpretation of U.S.poverty rates difficult?

Accepted Answer

A)  Poverty statistics measure consumption rather than income, and some families may receive income that is above the official poverty line.
B)  The high cost of living in urban areas tends to result in the understatement of poverty.
C)  Most people below the poverty line have substantial unreported income.
D)  The poverty rate is adjusted for every urban and rural area, so people's poverty status changes whenever they move.E) A) and B)
F) A) and C)

Question 11

Which of the following countries has the highest Gini ratio, as of 2014?

Accepted Answer

A)  Ukraine
B)  United States
C)  Honduras
D)  MexicoE) A) and B)
F) A) and C)

Question 12

Eligibility for social insurance programs is largely on the basis of need and "means tests."

Accepted Answer

A) True 
 B)False

Question 13

The debate over income distribution focuses on the trade-off between

Accepted Answer

A)  unemployment and economic freedom.
B)  equality and economic freedom.
C)  economic efficiency and equality.
D)  unemployment and economic growth.E) A) and C)
F) None of the above

Question 14

The crowding model of discrimination suggests that

Accepted Answer

A)  women and selected minorities are systematically excluded from high-paying occupations and crowded into low-paying occupations, decreasing their wages and reducing domestic output.
B)  employers having high discrimination coefficients will be crowded out by nondiscriminating employers in the long run.
C)  firms will base hiring decisions on group averages, rather than on individual characteristics and productivity.
D)  occupational segregation is largely the result of freely made rational choices of women and minorities.E) B) and C)
F) B) and D)

Question 15

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

Question 16

(Consider This)  According to economists Krueger and Perri,

Accepted Answer

A)  although income inequality has increased in recent decades, consumption inequality has remained relatively constant.
B)  increases in income inequality over recent decades understate the growth in consumption inequality.
C)  both income and consumption inequality have increased at approximately the same rate over recent decades.
D)  both income and consumption are more equally distributed than they were 30 years ago.E) None of the above
F) C) and D)

Question 17

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

Question 18

The Gini ratio is calculated by dividing the area between the Lorenz curve and the diagonal by the

Accepted Answer

A)  remaining area below the diagonal.
B)  total area below the diagonal.
C)  total area of the box or rectangle.
D)  remaining area of the box or rectangle.E) None of the above
F) B) and D)

Question 19

Government programs, such as Social Security, food stamps, AFDC, SSI, Medicare, and Medicaid, that guarantee particular levels of transfer payments to all who fit the programs' criteria are called

Accepted Answer

A)  public assistance programs.
B)  social insurance programs.
C)  benefit-reduction programs.
D)  entitlement programs.E) A) and B)
F) All of the above

Question 20

The equality-efficiency trade-off suggests that

Accepted Answer

A)  welfare programs stimulate incentives to work.
B)  inefficiencies result when incentives to produce are reduced.
C)  noncash transfers are superior to cash transfers.
D)  economic growth is the best means of reducing poverty.E) C) and D)
F) A) and C)

Exam 23: Income Inequality, Poverty, and Discrimination

The crowding model of discrimination suggests that

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The debate over income distribution focuses on the trade-off between

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Eligibility for social insurance programs is largely on the basis of need and "means tests."

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Which of the following countries has the highest Gini ratio, as of 2014?

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The percentage of total before-tax household income received by the lowest 20 percent of households in 2014 was about percent, while the top 20 percent received about percent.

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Government programs, such as Social Security, food stamps, AFDC, SSI, Medicare, and Medicaid, that guarantee particular levels of transfer payments to all who fit the programs' criteria are called

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

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Minority workers are underrepresented and have less access to certain high-paying occupations.This illustrates

Correct AnswerverifiedShow Answer

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)

Correct AnswerverifiedShow Answer

In a supply and demand model of the labor market for nonpreferred workers, a reduction in employer prejudice against nonpreferred workers will

Correct AnswerverifiedShow Answer

Suppose an employer is biased against African Americans.If his discrimination coefficient is $2, the employer will

Correct AnswerverifiedShow Answer

Labor market discrimination increases the size of the nation's GDP by promoting specialization on the basis of race.

Correct AnswerverifiedShow Answer

When the occupational choices of women or minorities are restricted, this results in

Correct AnswerverifiedShow Answer

(Consider This) According to economists Krueger and Perri,

Correct AnswerverifiedShow Answer

Which of the following measurement issues makes interpretation of U.S.poverty rates difficult?

Correct AnswerverifiedShow Answer

The equality-efficiency trade-off suggests that

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

The basic argument for income inequality is that

Correct AnswerverifiedShow Answer

The judging of an individual on the basis of the average characteristics of the group to which the individual belongs rather than the individual's characteristics is

Correct AnswerverifiedShow Answer

The Gini ratio is calculated by dividing the area between the Lorenz curve and the diagonal by the

Correct AnswerverifiedShow Answer

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