Chapter 07 - Poverty Problems and Discrimination: Why Are So Many Still Poor?
Chapter 07
Poverty and Discrimination:
Why Are So Many Still Poor?
Multiple Choice Questions
1.The government's method of calculating the official poverty rate
a.Does not take into account differences in the cost of living in different parts of the country
b.Does not account for the value of in-kind benefits received by poor families
c.Is based on pre-tax household income
D.Does all of the above
e.Does none of the above
2.The incidence of poverty is highest among
a.Black families
B.Families headed by a female
c.Young families
d.White families
e.Small families
3.The percentage of the U.S. population living in poverty
a.Shows a long-term increase
B.Is holding steady over the long run
c.Is not a serious economic problem
d.Decreased significantly in the past decade
e.Fluctuates dramatically from year to year
4.The official U.S. poverty definition is an income sufficient to provide
a.Minimum biological needs
B.Three times the cost of an economy food budget
c.The income of the poorest 8% of the families
d.The average U.S. welfare allowance
e.None of the above
5.How is the official "poverty threshold" calculated?
a.Determine the minimum income necessary for a family to purchase clothing and shelter, and then multiply by three
b.Determine the minimum income necessary for a family to live at a "subsistence level" in a rural community
c.Determine the amount of income necessary for a family to live on without becoming eligible for food stamps
D.Determine the minimum income necessary for a family to purchase an adequate diet, and then multiply by three
e.None of the above
6.Which of the following demographic groups historically has the highest incidence of poverty?
a.White, married couples with no children living at home
b.Black families, headed by a male income earner, with children living at home
C.Female headed black families with children living at home
d.Hispanic families in rural areas with children living at home
e.White, female headed families in urban areas with no children living at home
7.Critics have argued that the official definition of poverty should
a.Account for differences in the cost of living in different regions of the country
b.Be revised to reflect the fact that the average family now spends less than a third of its income on food
c.Make allowances for in-kind benefits received by poor families
d.Be based on a family's after-tax income
E.All of the above
8.The incidence of poverty falls most heavily on
a.Families with a young person as head
b.Families with a female as head
c.Minority groups
d.Children
E.All of the above
9.Most poor people are poor because they
a.Are lazy
b.Are exploited
C.Own resources that are not worth much
d.Are old
e.Are all of the above
10.Poverty in the US occurs as a result of
a.Inadequate GDP
b.A shortage of resources
c.The occurrence of wars and natural disasters
D.Unequal distribution of income
e.None of the above
11.Since 1960, income inequality has
a.Stayed the same
B.Fallen, then risen
c.Steadily declined
d.Steadily increased
e.Decreased rapidly
12.The distribution of income among persons is determined by
a.The distribution of resource ownership
b.The prices paid for resources of different kinds in different employments
c.Government income-support programs
D.Both (a) and (b).
e.all of the above
13.Which of the following statements is true concerning income equality?
a.The share of income received by the top 5% remained declined between 1960 and 2000
B.The share of income received by the top 5% increased by about 20% between 1960 and 2000
c.The share of income received by the lower 20% of families increased significantly between 1960 and 2000
d.The United States has achieved true income inequality
e.None of the above
14.The official "poverty threshold" used by the U.S. government is based on a(n) ______definition of poverty.
a.Relative
b.Comparative
C.Absolute
d.Abstract
e.Economic
15.A number of reasons have been given to explain increasing income inequality in the US over the last few decades. One of these is
A.The decline of the US manufacturing sector
b.The growth of unionization through the US
c.Increases in tax rates on the wealthy
d.Improvements in productivity
e.The use of computers in the workplace
16.The ownership of capital resources varies widely among individuals. Which of the following is not a reason for this variation?
A.Ethnic background
b.Inheritance
c.Motivation to accumulate
d.Luck
e.All of the above
17.Which of the following best describes the trend in the share of income received by the lowest 20% of families in the United States? The lowest 20% of families receive
a.15% of the income, and their share has been rising since WWII
b.25% of the income, and their share has been falling since the 1960s
C. Less than 5% of the income, and their share has been slowly declining since the 1970s
d.A share of income approximately equal to that received by the top 20% of families, and their share has remained stable since the 1960s
e.10% of the income, but their share has been falling since WWII
18.Skill levels vary among individuals because of
a.Differences in location
B.Differences in education and training
c.The industry the person works in
d.The capital labor ratio in the economy
e.All of the above
19.Why might an individual's labor resource holdings differ?
a.Mental talents are not equally distributed among people
b.Physical talents are not equally distributed among people
C.People have different preferences for income and leisure
d.Skill levels vary among individuals
e.All of the above
20.The income of a person depends on
a.The price of labor owned
b.The quantity of labor owned
c.The quantity of capital owned
D.All of the above
e.None of the above
21.Which of the following results in differences in labor resource ownership?
a.Preferences for work and leisure
b.Propensities to accumulate
c.Skill levels
D.Both (a) and (c)
e.All of the above
22.Which of the following factors contribute to differences in labor resource ownership between people?
a.Unequal mental and physical genetic inheritances
b.Differences in skills due to human capital investments
c.Differences in attitudes toward working
D.All of the above
e.None of the above
23.Which of the following could reduce poverty?
a.Eliminating discrimination in educational policies
b.Increasing the productivity of poor workers
c.A negative income tax structure
d.Education and training programs for the poor
E.All of the above
24.A government transfer payment is a payment
a.Made to transfer workers form one area to another
B.To a person NOT in return for goods or services
c.Made to a person who works for the government
d.For roads built by the government
e.Made to move troops from one combat area to another
25.An advantage of the negative income tax proposal is that
a.It would allow for the free exercise of consumer choice
b.A family's size would be the fundamental criterion of eligibility
c.It would be favored by middle-income groups
D.Inequalities in present antipoverty programs would be eliminated by concentrating transfer payments on the poor
e.None of the above
26.Under a negative income tax, government payments to a family
a.Are positive at all levels of income
b.Increase as income increases
c.Decrease to zero as income decreases
D.Eventually become zero as income increases
e.Do none of the above
27.One of the problems in paying subsidies to the poor is that
A.It may reduce incentives to work
b.The poor will not spend it on the right things
c.It will cause inflation
d.It will require a cutback in the farm price support programs
e.It will do none of the above
28.A disadvantage of replacing all income-support programs with a negative income tax is that
a.It encourages low-income workers to work more
B.Benefits on the basis of need are not an adequate substitute for many social services
c.It is not based strictly on need
d.It will encounter strong political support
e.All of the above
29.Under a negative income tax,
a.Only the poor would receive negative taxes
b.We would experience a loss in efficiency relative to the current public assistance programs
c.The recipients of government subsidies are encouraged to earn income
D.Both (a) and (c)
e.All of the above
30.Suppose the minimum guaranteed income is $5,000 and the negative tax rate is 50%. Under this plan, a family of four earning $3,000 would have disposable income of
a.$3,000
B.$6,500
c.$8,000
d.$15,000
e.$45,000
31.In the 1990s, federal government training and education programs for the poor were
A.Cut
b.Increased by more than inflation
c.Not changed
d.Increased at the rate of inflation
e.Eliminated
32.Which of the following statements is true concerning the Earned Income Tax Credit (EITC)?
a.The EITC is a non-refundable credit that can be claimed by poor families with children
B.The EITC lifts many people out of poverty, but it does not change official poverty rates
c.The EITC is a true negative income tax scheme
d.The EITC was introduced as part of the welfare reform measures enacted during the mid-1990s
e.None of the above
33.Medicare, Medicaid, and Food Stamps are examples of programs that provide
A."in-kind" assistance to the poor
b.Guaranteed levels of income for the poor
c.Training and job experience for the poor
d.Income transfers from the poor to business firms
e.Non-economic support of the poor
34.Most federal assistance to the poor is in the form of
A.Cash payments
b.Provision of health services
c.Personnel programs
d.Training programs
e.Housing programs
35.Under the JTPA, the federal government gave money to states for programs that provided
a.Guaranteed income support for the poor
B.Employment training for disadvantaged workers
c."in-kind" assistance such as food stamps and health care for the poor
d.Guaranteed child care facilities for poor working mothers
e.College scholarships for children from impoverished households
36.In 1996, the Personal Responsibility and Work Opportunity Act established which of the following programs?
a.Food Stamps
b.Medicaid and Medicare
c.Aid to Families with Dependent Children (AFDC)
D.Temporary Assistance for Needy Families (TANF)
e.Supplemental Security Income (SSI)
37.Which of the following effects creates an incentive for poor workers to reduce their hours of work when they receive cash assistance?
A.Income
b.Substitution
c.Lorenz
d.Supply
e.Welfare
38.The record-breaking economic expansion in the 1990s
a.Reduced significantly the incidence of poverty
b.Increased incidence of poverty
C.Did not alter significantly the incidence of poverty
d.Led to a change in how poverty is calculated
e.Did none of the above
39.Income support programs have
a.Had no effect in alleviating the problem of poverty
B.Provided a minimum level of income to millions of people
c.Been completely unsuccessful
d.Actually led to increased poverty
e.Done none of the above
40.Which of the following statements concerning the Earned Income Tax Credit (EITC) is false?
A.The EITC has significantly reduced official poverty rates in the U.S. since enacted in 1975
b.If a family's tax liability is less than its EITC, the family will receive a check for the difference from the IRS
c.The EITC is eventually phased out as family income increases
d.More than 20 million American households now claim the EITC on tax returns each year
e.None of the above
41.Critics have claimed that the EITC
a.Creates an incentive for families to have fewer children
b.Causes poor families with children to pay more in taxes than poor families without children
C.Creates a disincentive to work for those who find themselves in the phase-out range of income eligibility
d.Distorts the economic incentives for poor families to work their way out of poverty
e.Does none of the above
42.Unlike the old AFDC program of income support, TANF requires recipients to
a.Be physically unable to work or go to school
b.Be retired
c.Be women with children living at home
D.Work
e.Be blind or disabled
43.Which of the following statements about the new welfare system is false?
A.Recipients have no time limits on how long they can receive income support
b.In general, non-citizens do not qualify for most public support programs
c.Single mothers must help officials identify the fathers of their dependent children
d.Time limits are imposed on the receipt of food stamps
e.States determine if TANF recipients qualify for Medicaid assistance
44.According to recent studies, which of the following programs is most likely to pull the average poor family above the official poverty threshold?
A.Earned Income Tax Credit (EITC)
b.Temporary Assistance for Needy Families (TANF)
c.Supplemental Security Income
d.Aid to Families with Dependent Children (AFDC)
e.The Job Training Partnership Act (JTPA)
45.Which of the following describes the Earned Income Tax Credit (EITC)?
a.All poor families with children are eligible for a non-refundable tax credit based on the number of children living at home
B.Poor families with two or more children are eligible for a refundable tax credit if household income is less than some predetermined threshold. Beyond the threshold, the credit is gradually phased out
c.Poor families without children receive a non-refundable tax credit if household income is less than some predetermined threshold. Beyond the threshold, the credit is gradually phased out
d.Poor families with household income below a predetermined threshold receive a refundable tax credit equal to a guaranteed minimum income. Above that threshold, all households must pay taxes
e.None of the above
46.Which of the following problems arise from the Earned Income Tax Credit (EITC)?
a.In the phase-out range of income, workers may experience a disincentive to work
b.The EITC may cause some households to falsely claim the refundable credit
c.It is too complicated and cumbersome
D.All of the above
e.None of the above
47.Suppose a male and female teacher have the same education and experience, but the female is paid more for teaching the same course. This would indicate that
a.The female must be more productive
b.The female works harder than the male
c.The employer is male
d.The employer is female
E.Discrimination may exist
48.Ending discrimination against minority groups in educational processes and in employment situations would cause GDP to
a.Fall because of the increased costs of training
b.Fall since trained minority workers would knock some of the present workers out of their jobs
C.Rise because of an increase in the quality and productivity of the labor force
d.Rise because minority groups would consume more goods and services
e.Do none of the above
49.Discrimination occurs
a.When everyone is treated arbitrarily
b.When equals are treated equally and when unequals are treated unequally
C.When equals are treated unequally and when unequals are treated equally
d.Whenever two workers in the same occupation are paid different wages
e.Only in social situations, not in economic markets
50.Median earnings of year-round, full-time women workers are considerably less than those for men because women have
a.Lower productivity in jobs
b.Higher absence rates
c.Less permanent attachment to jobs
D.A different distribution among various occupations
e.None of the above
51.From the point of view of economics, discrimination
A.Results in an actual GDP that is below potential GDP
b.Results in an actual GDP that is no different from potential GDP provided resources are fully employed
c.No longer exists in the U.S. economy
d.Provides incentives for minority groups to work harder at their jobs
e.Does none of the above
52.In the past, women were usually taught early in life to believe their economic role was unimportant. The effect of this was to
a.Freeze the wages of women
b.Reduce the mobility of women
C.Segregate women to certain occupations
d.Enhance the productivity of males
e.Do all of the above
53.Discrimination is indicated when
a.Whites are paid more than blacks
B.People having equal productivity receive unequal pay
c.Incomes differ between males and females
d.People are treated differently on the basis of individual merit
e.Older workers are paid more than younger workers
54.Discrimination occurs because
a.Some people have the power to discriminate
b.People are just not aware of it
c.People have the desire to discriminate
d.All of the above
E.Only (a) and (c)
55.Which of the following does not exhibit a high degree of occupational segregation?
A.Professional tennis players
b.Plumbers
c.Secretaries
d.Teachers
e.Nurses
56.Spending on education, training, and health are examples of
a.Nonmarket discrimination
B.Investments in human capital
c.Welfare
d.Transfer payments
e.None of the above
57.Discrimination means that
A.Equals are treated unequally
b.Unequals are treated unequally
c.Equals are treated equally
d.Individuals are treated differently
e.All of the above
58.Major sources of discrimination include
a.Competitive markets
b.Low wages
c.Labor mobility
D.Scarce labor market information
e.All of the above
59.Discrimination may be reduced by
a.Government subsidies
b.Investment in human capital
c.Vigorous enforcement of antimonopoly laws
d.Education related to tastes for discrimination
E.All of the above
60.Suppose that Group Z workers earn only 75% of what Group A workers earn. Discrimination is
a.Equal to 25%
b.Equal to the portion of the gap created by differences in personal characteristics
C.Equal to the portion of the gap that cannot be explained by productivity differences between the groups
d.Readily apparent between the two groups
e.Subject to a variety of different economic measurements
61.The major piece of legislation that makes it illegal to discriminate in the labor market on the basis of race, gender, or religion is the
a.Anti-Discrimination in Employment Act (ADEA)
B.Civil Rights Act of 1964
c.Affirmative Action Act
d.Sherman Anti-Trust Act
e.Equal Employment Opportunity Act
62.What is the primary source of an individual's taste for discrimination?
a.Monopoly power
b.The law of diminishing returns
C.Personal prejudice
d.Market imperfections
e.None of the above
63.Which of the following is charged with enforcing the federal government's anti-discrimination laws?
a.The OFCC
b.The Bureau of Labor Statistics
c.The U.S. Department of Justice
D.The EEOC
e.The U.S. Senate