Chapter 11: Income, Inequality, and Poverty

True or False: Income distribution in the United States has become more equal since 1975

false

Greater income equality achieved through redistribution of income comes at the opportunity cost of reduced total ____________. This is thee essence of the equality-efficiency trade-off.

income

Due to discrimination, labor supply will be artificially __________ in higher-pay occupation populated by preferred workers, ________ their wage rates and income.

reduced; raising

Entrepreneurs are willing to take on _________ in the hope of earning a high income.

risk

Which of the following are factors that contribute to income inequality in the united states? -differences in preferences for work and risks -transfer payments -education and training -luck and misfortune -market power

- differences in preferences for work and risks -education and training -luck and misfortune -market power

Which of the following are causes of income inequality in the United States? -differences in transfer payments -differences in ability and education -differences in preferences for work and risk -differences in income taxes

-differences in ability and education -differences in preferences for work and risk

Which of the following are associated with "rigging the market" -competitive market forces -strong labor unions -monopoly power -professional licensing -taxes and transfers

-strong labor union -monopoly power -professional licensing

Which of the following are major explanations for the growing income inequality in the U.S since 1975? -tendency of people with high earnings potential to marry each other -import competition in products that require less-skilled workers -export competition in products that require more-skilled workers -decreasing demand for high-skilled labor -increase in the number of households headed by single or divorced

-tendency of people with high earnings potential to marry each other -import competition in products that require less-skilled workers -increase in the number of households headed by single or divorced women

Which of the following provide support in favor of inequality? -that the distribution of income affects the size of total income -that inequality provides incentives for increasing output and income -that income equality maximizes the total income -that income equality provides an incentive to produce earn more income

-that the distribution of income affects the size of total income -that inequality provides incentives for increasing output and income

The assumption for the argument in support of income equality include which of the following? -that there is diminishing marginal utility from income -that income equality maximizes total and combines consumer satisfaction (utility) from any particular level of output and income -that the equal distribution of income affects the total income level -that there is increasing marginal utility for income

-that there is diminishing marginal utility from income -that income equality maximizes total and combines consumer satisfaction (utility) from any particular level of output and income

the assumptions for the argument in support of income equality include which of the following? -that there is increasing marginal utility for income -that there is diminishing marginal utility from income -that income equality maximizes total and combined consumer satisfaction (utility) from any particular level of output and income -that the equal distribution of income affects the total income level

-that there is diminishing marginal utility from income -that income equality maximizes total and combines consumer satisfaction (utility) from any particular level of output and income

True or False: In the distribution by quintiles method of showing income inequality, the total number of households is divided into four equally sized groups.

Fasle. WHY: a quintile represents 20% of a group of households. Therefore, five groups consisting of 20% each sums to 100% of a population.

True or False: One way to analyze income distribution in a nation in a nation is to look at the percentage of households in various income brackets.

True

True or False: in 2016 the poverty rate for african americans was 22%

True

True or False: some abilities are inherited and some are developed

True

_____________ represents an individual's stock of potential purchasing power.

Wealth

A majority of americans in the lowest income quintile, as well as a majority of Americans in poverty are: a) african americans b) hispanic c) asian americans d) white

a) african americans b) hispanics

Subsidized school lunches, housing subsidies, and other similar programs where the government provides some households with specific goods or services rather than cash are called: a) in-kind transfers b) kind transfers c) transfer payments d) cash transfers

a) in-kind transfers

In policy discussion regarding income inequality, there is a) no general agreement on the justifiable amount of inequality b) general consensus on how much inequality is necessary and justified

a) no general agreement on the justifiable amount of inequality

The basic argument for income inequality is that inequality a) provides an incentive to produce more output b) discourages people from producing more c) does not affect the total output and income

a) provides an incentive to produce more output

Which of the following statements is true? a) there is considerable debate among economists whether or not poverty exists in the United States b) economists generally agree that a significant amount of poverty exists in the united states

b) economists generally agree that a significant amount of poverty exists in the United States

Which of the following is a major explanation of growing income inequality in the United States since 1975? a) lesser demand for highly-skilled workers b) greater demand for highly skilled workers c) strengthening of labor unions over the period d) entrance of high-skilled baby boomers into the labor force in the 1970s and the 1980s

b) greater demand for highly skilled workers

The ability to "rig the market" on one's own behalf is referred to as: a) efficiency power b) market power c) competitive power d) government power

b) market power

Wealth is the accumulated ________ of a person over time. a) spending b) income c) assets d) liabilities

c) assets

Since 1975, income distribution in the United States has a) stayed constant b) become more equal c) become more unequal

c) become more unequal

Which of the following contributes to differences in individuals' capacities to earn income? a) diminishing marginal utility for income b) demand for a good c) education levels

c) education levels

Average household income in the United States in among the _______ in the world. a) lowest b) middle rankings c) highest

c) highest

Subsidized school lunches, housing subsidies, and other similar programs where the government provides some households with specific goods or services rather than cash are called: a) transfer payments b) cash transfers c) in-kind transfers d) kind transfers

c) in-kind transfers

The Gini ratio is a numerical measure of the... a) overall total income in the economy b) average household income in the economy c) overall dispersion of income

c) overall dispersion of income

The major social insurance program in the united state is the: a) medicaid program b) unemployment compensation program c) social security program d) food-stamp program

c) social security program

a quintile is _____ of the total number. a) 75% b) 50% c) 10% d) 20%

d) 20% (they are divided into 5 groups, 100/5=20)

Poverty is the problem of being unable to satisfy one's a) demand b) wants c) resources d) basic needs

d) basic needs

As of 2016, which group had the highest poverty rate a) women b) male households c) children under 18 d) female householders

d) female householders

Which of the following is a major explanation of growing income inequality in the United States since 1975? a) strengthening of labor unions over the period b) lesser demand for highly-skilled c) entrance of high-skilled baby-boomers into the labor force in the 1970s and the 1980s d) greater demand for highly skilled workers

d) greater demand for highly-skilled workers

The basic argument for an equal distribution of income is that: a) people have very different utility curves (utility functions) for income b) income equality maximizes marginal consumer utility in society c) there is increasing marginal utility from income d) income equality maximizes total consumer utility in society

d) income equality maximizes total consumer utility in society

Income mobility refers to: a) thee movement over time of households from one income source to another b) the movement over time of households from one job location to another c) the movement overtime of nations from one income quintile to another d) the movement over time of households from one income quintile to another

d) the movement over time of households from one income quintile to another

The Gini ratio is a numerical measure of the overall _____________ of income in the economy.

dispersion

The Gini ratio is a numerical measure of the overall ___________ of income in the economy.

distribution

Differences in the amount of __________ and training that individuals acquire influences their capacity to earn income.

education

When looking at income inequality based on income categories there is a wide dispersion of household ___________ and considerable ___________ of income in the united states.

income; inequality

When looking at income inequality based on income categories there is a wide dispersion of household _____________ and considerable ______________ of income in the United States.

income; inequality

If discrimination confines certain groups to lower-paying jobs, then the supply of workers for those jobs will _____________ and thus the wage rates in those jobs will _____________.

increase, decrease

If discrimination confines certain groups to lower-paying jobs, then the supply of workers for those jobs will ____________, and thus the wage rates in those jobs will ____________.

increase; decrease

The main policy issue concerning income inequality is how much necessary and _______.

justified

the main policy issue concerning income inequality is how much necessary and ____________.

justified

Workers who prefer _________ work relative to __________ work tend to earn more than workers with the opposite preference.

market; household

People are born with different ___________, ______________, and aesthetic talents, contributing to income inequality.

mental, physical

The movement of households from one income quintile to another over time is called income __________.

mobility

So-called "in-kind transfers" are also known as _________ transfers.

noncash

______________ is a condition where a family is unable to satisfy its basic needs

poverty

the essence of the income equality versus inequality debate is the belief that there is a fundamental trade-off between ___________ and ____________.

quality; efficiency

About two-thirds of the welfare program expenditures are funded by ___________ and the rest is paid for by __________.

the federal governments; the state governments

True or False: average household income in the united states is higher than in most other countries in the world.

true

___________ represents an individual's stock of potential purchasing power

wealth