Question 1

The distribution of household income in the United States becomes more unequal after taxes and transfer payments are taken into account.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the market wage rate for whites is $18 an hour and the monetary value a prejudiced employer attaches to the disutility of hiring African Americans is $3. This employer will be indifferent between hiring African Americans and whites only when the African-American wage rate is

Accepted Answer

A)   $3.
B)   $12.
C)   $15.
D)   $21.E) None of the above
F) All of the above

Question 3

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

Question 4

Since 1975, the distribution of household income in the United States has

Accepted Answer

A)   moved toward greater inequality.
B)   moved toward greater equality.
C)   remained about the same.
D)   fluctuated considerably.E) A) and B)
F) C) and D)

Question 5

In the United States,

Accepted Answer

A)   taxes decrease, but transfers increase, income inequality.
B)   taxes increase, but transfers reduce, income inequality.
C)   both taxes and transfers decrease income inequality.
D)   both taxes and transfers increase income inequality.E) B) and C)
F) A) and B)

Question 6

The incidence of poverty is very high among the elderly (65 years or older).

Accepted Answer

A) True 
 B)False

Question 7

The basic reason why the debate between income equality versus inequality is ongoing is because there is a trade-off between income equality and economic efficiency.

Accepted Answer

A) True 
 B)False

Question 8

The earned-income tax credit (EITC)  is, in essence,

Accepted Answer

A)   a tax credit for corporate contributions to charity.
B)   a tax break for businesses that invest in community programs.
C)   an income payment to those individuals who are not able to work.
D)   a wage subsidy for low-income workers to offset Social Security taxes.E) B) and D)
F) All of the above

Question 9

(Consider This)  The main problem with welfare cliffs is that they

Accepted Answer

A)   discourage welfare recipients from moving into higher paying jobs and ultimately becoming self-sufficient.
B)   cause dramatic increases in government spending at times when tax revenues are falling.
C)   occur randomly, further destabilizing the lives of recipients who are suddenly cut off.
D)   significantly increase the number of people receiving welfare.E) A) and B)
F) C) and D)

Question 10

About a quarter of all U.S. households had personal incomes of $100,000 or more in 2014.

Accepted Answer

A) True 
 B)False

Question 11

During the past 35 years or so, the degree of income inequality in the United States has decreased considerably.

Accepted Answer

A) True 
 B)False

Question 12

In 2014, the highest quintile of households in the U.S. income distribution received about

Accepted Answer

A)   43 percent of total income.
B)   55 percent of total income.
C)   62 percent of total income.
D)   51 percent of total income.E) All of the above
F) A) and B)

Question 13

An employer whose discrimination coefficient is $4 will

Accepted Answer

A)   refuse to hire nonpreferred-race workers at any wage rate.
B)   hire only nonpreferred-race workers if the actual nonpreferred-preferred wage differential is $3 an hour.
C)   hire only preferred-race workers if the actual nonpreferred-preferred wage differential is $3 an hour.
D)   hire only preferred-race workers if the nonpreferred-preferred wage differential is $4.E) All of the above
F) None of the above

Question 14

The degree of inequality in income distribution based on single-year data is

Accepted Answer

A)   understated even though it takes into account income mobility.
B)   overstated because it does not take into account income mobility.
C)   understated because it does not take into account income mobility.
D)   overstated even though it takes into account income mobility.E) A) and D)
F) C) and D)

Question 15

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 16

In the U.S., the top 20 percent of households received a little more than 50 percent of total pretax income in 2014.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

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) C) and D)

Question 19

In the quintile distribution of income, the term "quintile" represents

Accepted Answer

A)   5 percent of the income receivers.
B)   10 percent of the income receivers.
C)   20 percent of the income receivers.
D)   25 percent of the income receivers.E) B) and C)
F) A) and D)

Question 20

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

Exam 23: Income Inequality, Poverty, and Discrimination

(Consider This) The main problem with welfare cliffs is that they

Correct AnswerverifiedShow Answer

Suppose the market wage rate for whites is $18 an hour and the monetary value a prejudiced employer attaches to the disutility of hiring African Americans is $3. This employer will be indifferent between hiring African Americans and whites only when the African-American wage rate is

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

In the U.S., the top 20 percent of households received a little more than 50 percent of total pretax income in 2014.

Correct AnswerverifiedShow Answer

In 2014, the highest quintile of households in the U.S. income distribution received about

Correct AnswerverifiedShow Answer

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

In the quintile distribution of income, the term "quintile" represents

Correct AnswerverifiedShow Answer

The degree of inequality in income distribution based on single-year data is

Correct AnswerverifiedShow Answer

The basic reason why the debate between income equality versus inequality is ongoing is because there is a trade-off between income equality and economic efficiency.

Correct AnswerverifiedShow Answer

About a quarter of all U.S. households had personal incomes of $100,000 or more in 2014.

Correct AnswerverifiedShow Answer

The distribution of household income in the United States becomes more unequal after taxes and transfer payments are taken into account.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the United States,

Correct AnswerverifiedShow Answer

The incidence of poverty is very high among the elderly (65 years or older).

Correct AnswerverifiedShow Answer

An employer whose discrimination coefficient is $4 will

Correct AnswerverifiedShow Answer

Social Security payments are primarily made to assist

Correct AnswerverifiedShow Answer

During the past 35 years or so, the degree of income inequality in the United States has decreased considerably.

Correct AnswerverifiedShow Answer

Since 1975, the distribution of household income in the United States has

Correct AnswerverifiedShow Answer

Which of the following would most likely increase income inequality?

Correct AnswerverifiedShow Answer

The earned-income tax credit (EITC) is, in essence,

Correct AnswerverifiedShow Answer

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