Economics (McConnell) AP Edition, 19th Edition

Chapter 20: Income Inequality, Poverty, and Discrimination

Quiz

1
Use the following diagram to answer the next question.

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Refer to the diagram. Suppose the economy's income distribution is represented by line b. An increase in income inequality would be represented by a movement:
A)to line a
B)up and to the right along line b
C)to line c
D)down and to the left along line b
2
In 2008, approximately how much income was required for a household to reach the highest quintile?
A)$48,000
B)$100,000
C)$176,000
D)$475,000
3
Since 1970, the U.S. distribution of income has:
A)remained essentially the same, although the distribution of wealth has become substantially more unequal
B)exhibited a substantial decrease in income mobility
C)become less unequal, partly owing to the falling returns from education
D)become more unequal, partly owing to increased demand for highly skilled workers
4
Because economic discrimination arbitrarily blocks women and minorities from higher productivity jobs, discrimination:
A)creates inflation
B)reduces overall productivity
C)redistributes income but does not reduce it overall
D)moves an economy downward along its production possibilities frontier
5
In 2008, the share of income accruing to households in the bottom quintile was:
A)less than 1%
B)between 3% and 4%
C)larger than it was in 1970
D)the same as the share of income accruing to households in the middle quintile
6
One can make a logical case for redistributing income from rich to poor by arguing that:
A)the total utility of income for the rich exceeds that of the poor
B)the marginal utility of income for the poor exceeds that of the rich
C)income redistribution increases the incentives to work
D)income redistribution helps to fill up poor persons' leaky buckets
7
Compared to annual incomes, lifetime incomes exhibit:
A)less inequality, reflecting substantial income mobility
B)more inequality, reflecting substantial income mobility
C)more inequality, reflecting very little income mobility
D)about the same inequality, reflecting very little income mobility
8
Regarding the effect of taxes and transfer payments on the U.S. income distribution, data indicate that:
A)there is virtually no impact
B)the progressive tax system accounts for over half of the reduction in income inequality
C)tax rebates and credits account for over half of the income of those in the lowest quintile
D)most of the reduction in income inequality is attributable to transfer payments
9
Which of the following is the basic welfare program for low-income families in the U.S.?
A)OASDHI
B)SSI
C)TANF
D)EITC
10
Use the following diagram of the market for African American workers to answer the next question:

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Refer to the diagram: Suppose demand is initially given by D2. Which of the following would shift demand to D3?
A)A decrease in the productivity of African American workers
B)A reduction in white employers' discrimination coefficients
C)An increase in white employers' discrimination coefficients
D)A reduction in employment discrimination coupled with an increase in statistical discrimination
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