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True / False
1. In 1962, Michael Harrington argued in The Other America that there was chronic, severe poverty in America.
a.
True
b.
False
2. The "War on Poverty" was declared by President Ronald Reagan in 1982.
a.
True
b.
False
3. By 2012, the poverty line for a typical family of four stood at about $23,250.
a.
True
b.
False
4. In 1963, the government first adopted an official definition of poverty: families with incomes below $3,000.
a.
True
b.
False
5. In the United States, the incidence of poverty has declined since the 1970s.
a.
True
b.
False
6. Poverty is defined in two ways: the absolute concept of poverty and the relative concept of poverty.
a.
True
b.
False
7. The concept of absolute poverty states that anyone who falls too far behind the average income should be considered
poor.
a.
True
b.
False
8. Falling below a minimum standard of living illustrates the concept of absolute poverty.
a.
True
b.
False
9. The relative concept of poverty is based on how far behind average income a particular family gets.
a.
True
b.
False
10. The relative concept of poverty means that poverty will never be eliminated.
a.
True
b.
False
11. The concept of poverty is culturally determined, and hence people are defined as "poor" in relation to others.
a.
True
b.
False
12. Large income differences will be eradicated if the market mechanism is working well.
a.
True
b.
False
13. A market system tends to create inequality.
a.
True
b.
False
14. In 2012, the median income of U.S. families was about $86,000.
a.
True
b.
False
15. The lowest-income fifth of the population ordinarily earns about 20 percent of the income in the United States.
a.
True
b.
False
16. The highest-income fifth of the U.S. population earns more than 50 percent of all income.
a.
True
b.
False
17. The U.S. distribution of income was more unequal in 1990 and 1980 than in 1970.
a.
True
b.
False
18. The United States has less income inequality than most other developed countries.
a.
True
b.
False
19. Compared to most other industrialized nations, the United States has greater income inequality.
a.
True
b.
False
20. There are several reasons why incomes are unequal, including differences in luck, experience, and schooling.
a.
True
b.
False
21. If two individuals have identical schooling, their incomes will be equal.
a.
True
b.
False
22. In labor markets, risk taking accounts for some income differences.
a.
True
b.
False
23. Compensating wage differentials explain some income differences.
a.
True
b.
False
24. In their 1994 book, The Bell Curve, Murray and Herrnstein presented evidence that IQ is an important determinant of
economic success.
a.
True
b.
False
25. Economic discrimination occurs when two equal factors of production are paid differently.
a.
True
b.
False
26. Economic discrimination occurs when equivalent factors of production receive different payments for equal
contributions to output.
a.
True
b.
False
27. Discrimination exists when a man and a woman with the same levels of education earn different incomes.
a.
True
b.
False
28. The total amount of income in a society is independent of how income is distributed.
a.
True
b.
False
29. It is not optimal to have equal incomes.
a.
True
b.
False
30. Direct cash grand programs are thought to be an example of an efficient redistribution program.
a.
True
b.
False
31. TANF compels welfare recipients to go to work after a period of two years.
a.
True
b.
False
32. TANF sets a lifetime cap for benefits at 10 years.
a.
True
b.
False
33. Taken as a whole, antipoverty programs may actually put a poor family in a position in which the family becomes
worse off if its earnings rise.
a.
True
b.
False
34. Programs that reduce the incentive to work make income redistribution inefficient.
a.
True
b.
False
35. One benefit of a negative income tax is that it would increase work incentives.
a.
True
b.
False
36. For most welfare recipients, the negative income tax plan would increase incentives to work.
a.
True
b.
False
37. Although economists generally favor a negative income tax, there is little political support for it.
a.
True
b.
False
38. Actual experiments show that negative income taxes destroy work incentives.
a.
True
b.
False
39. Tax loopholes in the personal income tax benefit only very rich people.
a.
True
b.
False
40. Tax loopholes increase the progressivity of the federal income tax.
a.
True
b.
False
41. The U.S. income tax system is progressive.
a.
True
b.
False
42. Inheritance taxes tend to increase income inequality in the long run.
a.
True
b.
False
43. Inheritance taxes tend to increase income inequality in the long run.
a.
True
b.
False
44. Two policies to combat discrimination are affirmative action and right-to-work laws.
a.
True
b.
False
45. Affirmative action laws require employers to hire specified numbers of minorities.
a.
True
b.
False
46. Affirmative action laws require employers to search for qualified minority applicants, but not to necessarily give them
jobs.
a.
True
b.
False
47. In a market economy, incomes would be very equal if there was no discrimination.
a.
True
b.
False
48. Discrimination can come from many groups of people, including employers and fellow employees.
a.
True
b.
False
49. A minority candidate may not have the same chances as a white candidate for a job simply based on an employer's
misconceptions about minorities.
a.
True
b.
False
50. Competitive forces will reduce the effects of employers' discrimination over time.
a.
True
b.
False
51. An employer who refuses to hire women because of the chance they may quit for childbearing purposes is engaging in
statistical discrimination.
a.
True
b.
False
52. Nondiscriminatory firms hiring in the market place have a cost advantage.
a.
True
b.
False
53. If a female supervisor is discriminated against by one of her workers who refuses to cooperate, she may earn lower
wages.
a.
True
b.
False
54. Prejudice leads, inevitably, to economic discrimination.
a.
True
b.
False
55. Because of the book, The Other America, Michael Harrington was important in beginning the
a.
Peace Corps.
b.
"War on Poverty."
c.
regulation of industry.
d.
Environmental Protection Agency.
56. The poverty line is the income level
a.
earned by a worker employed full-time at the minimum wage.
b.
below which a family is officially considered "poor."
c.
above which a family is not entitled to government assistance.
d.
that is the average for American families.
57. The official dividing line between the poor and nonpoor is called the
a.
life threshold.
b.
life edge.
c.
poverty line.
d.
beginning line.
58. Compared to a nonpoor individual, a poor individual is more likely to be
a.
female.
b.
black.
c.
a child.
d.
All of the above are correct.
59. In 1964, the poverty line for a family stood at about which of the following figures?
a.
$2,100
b.
$3,000
c.
$4,500
d.
$7,500
60. Roughly what was the median level of household income in the U.S. in 2012?
a.
50,000
b.
60,000
c.
70,000
d.
80,000
61. Roughly what percentage of Americans were officially considered poor in 2012?
a.
2 percent
b.
9 percent
c.
15 percent
d.
22 percent
62. In 2012, the poverty line for a family of four was approximately
a.
$10,075
b.
$13,100.
c.
$15,700.
d.
$23,250.
63. An example of an in-kind benefit is
a.
a welfare payment.
b.
capital gains.
c.
a charitable contribution of money.
d.
public housing.
64. In 2012, what percentage of total income in the U.S. was earned by the richest fifth of all U.S. households?
a.
20%
b.
30%
c.
40%
d.
50%
65. About what percentage of the poor are children?
a.
13
b.
24
c.
36
d.
60
66. The national poverty rate in the United States reached a low in the
a.
early 1960s.
b.
early 1970s.
c.
late 1970s.
d.
early 1980s.
67. Which of the following observations concerning poverty rates in America is true?
a.
Major increase in poverty in the decade from 1963 to 1973.
b.
It hit an all-time low by 1983.
c.
The economic boom of the 1990s restored it almost to its 1970s levels.
d.
It decreased from 2007 to 2009.
68. If one includes in-kind income in the calculation, the
a.
official poverty rate becomes meaningless.
b.
incidence of poverty actually increases.
c.
poverty rate is unchanged.
d.
fraction of the population in poverty drops.
69. The relative concept of poverty is based on how far a family falls behind the
a.
average family income.
b.
top 20 percent of families.
c.
minimum in wages.
d.
any of the above.
70. Which of the following observations concerning the absolute definition of poverty is true?
a.
It is based on average income.
b.
It is an optimistic definition.
c.
It is not arbitrary in nature.
d.
It is a cultural definition.
71. If you fall short of a certain minimum standard of living, you are poor; once you pass this standard, you are no longer
poor. This refers to the ____ definition of poverty.
a.
average
b.
absolute
c.
relative
d.
threshold
72. The poor are those who fall too far behind the average income. This refers to the ____ definition of poverty.
a.
marginal
b.
absolute
c.
relative
d.
threshold
73. If income redistribution policy is based on the relative concept of poverty, the war on poverty
a.
will be won quite soon.
b.
is, by definition, unwinnable.
c.
has not helped at all.
