Question 1

The Temporary Assistance for Needy Families (TANF) program

Accepted Answer

A)  put a limit on receiving welfare payments and required able-bodied adults to work after receiving assistance for two years.
B)  increased the number of people receiving welfare benefits and the amount of the assistance.
C)  required businesses to monitor low-income workers and used federal funds to supplement their pay.
D)  required the use of food stamps for food purchases by families but permitted cash assistance to be given to the elderly.E) All of the above
F) A) and B)

Question 2

African-American worker Jackson earns $30,000 per year; white worker Johnson earns $40,000 per year. On the basis of this information, we can conclude that

Accepted Answer

A)  it is not clear whether discrimination is present in this situation.
B)  there are no discriminatory forces at work in the labor market.
C)  Jackson is being discriminated against, but the dollar amount is unclear.
D)  Jackson is being discriminated against in the amount of $10,000 per year.E) A) and B)
F) A) and C)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

As the area between the Lorenz curve and diagonal gets larger, the Gini ratio

Accepted Answer

A)  rises to reflect greater equality.
B)  rises to reflect greater inequality.
C)  falls to reflect greater inequality.
D)  falls to reflect greater equality.E) C) and D)
F) B) and C)

Question 5

Refer to the diagram. Which of the following would be consistent with a decrease in racial prejudice against African Americans and thus a decrease in the discrimination coefficients of employers, taken as a group?

Accepted Answer

A)  a shift in the labor demand curve from D₃ to D₂
B)  an increase in the African-American wage rate from W₁ to W₂
C)  a reduction in African-American employment from Q₃ to Q₂
D)  a decrease in the African-American wage rate from W₂ to W₁E) B) and C)
F) All of the above

Question 6

Which of the following provides public assistance to those who are blind and otherwise disabled?

Accepted Answer

A)  Medicare
B)  Supplemental Security Income (SSI) 
C)  Medicaid
D)  TANFE) C) and D)
F) A) and D)

Question 7

The eligibility basis for the Supplemental Nutrition Assistance Program (or SNAP, formerly called the food-stamp program) is

Accepted Answer

A)  age.
B)  illness.
C)  income.
D)  disability.E) None of the above
F) C) and D)

Question 8

Refer to the table. The rise in percentage of income received from before taxes and transfers to after taxes and transfers is greatest for the

Accepted Answer

A)  third 20 percent of households.
B)  second 20 percent of households.
C)  highest 20 percent of households.
D)  lowest 20 percent of households.E) All of the above
F) None of the above

Question 9

The poverty rate for African Americans is

Accepted Answer

A)  greater than for any other racial or ethnic group.
B)  below that for whites.
C)  considerably lower than that for Hispanics.
D)  below that for persons 65 years of age or older.E) All of the above
F) A) and B)

Question 10

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

Question 11

The crowding model of occupational segregation shows how white males earn higher incomes at the expense of women and minorities who are restricted to a limited number of occupations.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

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

Question 14

The unequal distribution of wealth among households in the United States is one of the causes of income inequality.

Accepted Answer

A) True 
 B)False

Question 15

Social Security is financed

Accepted Answer

A)  by state income tax revenues.
B)  by payroll taxes on employees and employers.
C)  by federal excise taxes.
D)  out of general tax revenues.E) A) and B)
F) B) and D)

Question 16

Perfect income equality would yield a Gini ratio of

Accepted Answer

A)  2.
B)  1.
C)  0.
D)  0.5.E) A) and B)
F) All of the above

Question 17

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 B)
F) None of the above

Question 18

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 C)
F) A) and B)

Question 19

Income mobility

Accepted Answer

A)  makes lifetime income inequality among income receivers in the United States less than income inequality in any single year.
B)  is less in the United States than in most developing nations.
C)  refers to the movement of wage earners from one job to another.
D)  reduces the total percentage of households in the lowest quintile of the income distribution over time.E) A) and D)
F) All of the above

Question 20

Statistical discrimination occurs when employers base hiring decisions on individual workers' previous employment records and statistics.

Accepted Answer

A) True 
 B)False

Exam 23: Income Inequality, Poverty, and Discrimination

The eligibility basis for the Supplemental Nutrition Assistance Program (or SNAP, formerly called the food-stamp program) is

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Refer to the diagram. Which of the following would be consistent with a decrease in racial prejudice against African Americans and thus a decrease in the discrimination coefficients of employers, taken as a group?

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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

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Perfect income equality would yield a Gini ratio of

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Statistical discrimination occurs when employers base hiring decisions on individual workers' previous employment records and statistics.

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

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

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The poverty rate for African Americans is

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The crowding model of occupational segregation shows how white males earn higher incomes at the expense of women and minorities who are restricted to a limited number of occupations.

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As the area between the Lorenz curve and diagonal gets larger, the Gini ratio

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The Temporary Assistance for Needy Families (TANF) program

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Social Security is financed

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The unequal distribution of wealth among households in the United States is one of the causes of income inequality.

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Which of the following provides public assistance to those who are blind and otherwise disabled?

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Refer to the table. The rise in percentage of income received from before taxes and transfers to after taxes and transfers is greatest for the

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African-American worker Jackson earns $30,000 per year; white worker Johnson earns $40,000 per year. On the basis of this information, we can conclude that

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Income mobility

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

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

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

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