Deck 17: Income, Poverty, and Health Care

Question 1

Merely demonstrating that wages are lower for blacks and females does not in itself prove wage discrimination.

Answer 1

True

Question 2

Most Americans experience significant fluctuations in their economic well-being from one year to the next.

Answer 2

True

Question 3

Discrimination occurs when someone is denied employment on the basis of some non-economic factor such as race,religion,or gender.

Answer 3

True

Question 4

Many economists conclude that in-kind income programs have served to reduce levels of inequality significantly from the levels suggested by aggregate income statistics.

Question 5

Dramatically redistributing income from the rich to the poor could make society worse off.

Question 6

Currently,there are fewer male than female nurses.This is proof that there is sex discrimination in the nursing profession.

Question 7

If we consider age distribution,institutional factors,and in-kind transfer programs,income distribution is likely considerably more unequal than it appears from measured income.

Question 8

Income inequality is greater within nations than among nations.

Question 9

Many economists conclude that in-kind income programs have served to increase levels of inequality significantly from the levels suggested by aggregate income statistics.

Question 10

The permanent income hypothesis indicates that increased savings will cause an increase in long term income.

Question 11

There is a strong,positive correlation between educational attainment and lifetime earnings.

Question 12

Since the 1980s,the share of measured income received by the lowest fifth of families has risen.

Question 13

The principle of diminishing marginal utility can potentially be used to support policies that redistribute income.This principle suggests that increases in income for an individual will generate less additional happiness the higher the level of income.

Question 14

Police officers earn higher wages in part because of the dangers associated with their profession.

Question 15

The fact that Jackie received a higher raise than did Jamie,while processing 12 percent more customers at her bank teller line,is evidence of wage discrimination.

Question 16

At any moment in time,middle-age people tend to have higher incomes than both younger and older people do.

Question 17

Earnings differentials cannot be explained at all by differences in productivity.

Question 18

Individuals who are workaholics tend to have higher incomes than individuals who are not.

Question 19

Firms may choose to discriminate in order to reduce information costs associated with screening applicants.

Question 20

If substantial income mobility is present,then there is considerable movement of individuals up and down the income ladder over time.

Question 21

Investment in health care does bear similarities to investment in human or physical capital.

Question 22

Unlike those enrolled in a PPO,patients in an HMO can generally opt for nonparticipating physicians.

Question 23

The health services market differs from many others in that,because of insurance,the consumer often pays only a fraction of the direct cost of care.

Question 24

The typical 50-year-old male earns approximately ____ as a male in his early 20s.

A) twice as much
B) the same
C) half as much
D) 1/3 as much

Question 25

As a percentage of national income,the U.S.spends more money on health care than any other industrialized nation.

Question 26

Since the 1980s the proportion of income received by the top 5 percent of Americans has ____,and the measured income of Americans in the lowest fifth has ____.

A) risen; risen
B) risen; fallen
C) fallen; risen
D) fallen; fallen

Question 27

Exhibit 17-1 The Lorenz Curve Refer to Exhibit 17-1.The Gini coefficient,G,is obtained by:

A) adding area A and area B
B) dividing area A by area (B+C).
C) adding area A and area B.
D) dividing area A by area (A + B).

Question 28

The quantity of medical care demanded appears to be highly sensitive to changes in price.

Question 29

Since 1935,the proportion of income received by the top 5 percent of Americans has:

A) increased substantially.
B) increased minimally.
C) decreased minimally.
D) decreased substantially.

Question 30

Being that health care is a basic human right,there is no opportunity cost for the utilization of medical services.

Question 31

Which of the following observations regarding the Gini coefficient (G)is incorrect?

A) If G is one, the Lorenz curve would overlap the line of perfect income equality.
B) If G is zero, it represents perfect income equality
C) If G is one, it represents perfect income inequality
D) The closer G is to 1 the greater the degree of income inequality

Question 32

The demand curve for human organs is upward sloping.

Question 33

Evidence suggests that emergency care services are normal goods.

Question 34

Exhibit 17-1 The Lorenz Curve Refer to Exhibit 17-1.The 45 degree line in the figure represents:

A) the line of perfect inequality.
B) the line of perfect equality.
C) the nonwage income of households.
D) the actual distribution of income.

Question 35

Currently,the supply curve for human organs is perfectly inelastic.

Question 36

HMOs seek to contain health care costs by exerting control over patients' treatment options.

Question 37

Exhibit 17-1 The Lorenz Curve Refer to Exhibit 17-1.Which of the following represents the amount of income inequality?

A) Area A
B) Area B
C) Area C
D) Area (A + B)

Question 38

Shortages prevail in the market for organ transplants at zero price.

Question 39

The Lorenz curve represents:

A) the line of perfect inequality.
B) the line of perfect equality.
C) the nonwage income of households.
D) the actual distribution of income.

Question 40

Which of the following observations would be valid if the Gini coefficient is equal to zero?

A) Perfect income inequality
B) Greater degree of income inequality
C) Lorenz curve overlaps the line of perfect income equality
D) Unequal distribution of income

Question 41

An example of in-kind income is:

A) a welfare payment.
B) a cash grant.
C) a housing subsidy.
D) an unemployment check.

Question 42

Which of the following best explains why garbage collectors are paid a higher wage than many others with comparable skills?

A) because of the dangers associated with collecting trash
B) because garbage collectors work much longer hours on average than do those in other jobs
C) because of the unpleasantness associated with trash collection
D) because garbage collectors possess skills that are in relatively high demand

Question 43

Which of the following is likely to improve a person's income?

A) increased productivity
B) investing in human capital
C) possessing a special talent or skill
D) all of the above

Question 44

Which of the following government programs are likely to aid the poor more than those in upper income brackets?

A) subsidies to museums
B) state-subsidized higher education benefits
C) school lunch programs
D) government subsidies to airports

Question 45

Which of the following countries has the least degree of measured income inequality?

A) India
B) Brazil
C) Mexico
D) United States

Question 46

If every individual earned the same total income over his or her lifetime,there would still be observed inequality because:

A) people earn more in their youth.
B) people earn more in middle age.
C) people earn more when they are very old.
D) of none of the above.

Question 47

International comparisons of income inequality indicate that the degree of inequality is greatest in:

A) developing countries.
B) developed countries.
C) countries with a homogeneous population.
D) the United States.

Question 48

One reason scholars argue that government activity should be considered when evaluating the measured income distribution because:

A) the lowest-income quintile has benefited from state-subsidized higher education more than have middle-income and higher income quintiles.
B) the higher-income quintiles have benefited more than the poor from housing subsidies and Medicaid.
C) the middle and higher-income quintiles have benefited more than the poor from state-subsidized airports, airlines, operas, and museums.
D) the lowest-income quintile has benefited more than middle-income and upper-income quintiles from state-subsidized airports, airlines, operas, and museums.

Question 49

Differences in income can be accounted for by differences in:

A) age.
B) education.
C) preferences toward leisure.
D) all of the above.

Question 50

The ____ participate in the labor force to a greater extent than do the ____.

A) very young; middle-aged and very old
B) middle-aged; very young and very old
C) very old; very young and middle-aged
D) very young and very old; middle-aged

Question 51

Which of the following best explains why firefighters are generally paid higher wages than those with comparable skills?

A) Firefighting is dangerous work.
B) Firefighters work more hours each month than do workers in most other professions.
C) Firefighters value leisure less than the average person does.
D) Firefighters, on average, spend more years receiving training than do individuals in other professions.

Question 52

Which of the following factors leads to differences in income across individuals?

A) the level of skills possessed by an individual
B) the quality of human capital and education
C) preferences for work over leisure
D) all of the above

Question 53

It has been argued that state-subsidized ____ programs have benefited the middle and upper-income quintiles more than the poor.

A) food stamp
B) housing subsidy
C) higher education
D) Medicaid

Question 54

Which of the following government programs are likely to aid the rich more than the poor?

A) food stamps
B) school lunch programs
C) subsidies for the arts
D) public housing subsidies

Question 55

A typical 50-year-old male earns:

A) one-third more than a male in his early 20s.
B) nearly twice the income of a male in his early 20s.
C) one-third less than workers over 65.
D) nearly twice the income of workers over 65.

Question 56

Which of the following countries has the greatest degree of measured income inequality?

A) Canada
B) France
C) the United States
D) Japan

Question 57

It has been argued that state-subsidized ____ programs have benefited the poor more than middle and upper-income quintiles.

A) Medicaid
B) higher education
C) art museum
D) airport and airline subsidy

Question 58

Which of the following represents in-kind income?

A) food stamps
B) a public housing subsidy
C) a school lunch program
D) all of the above

Question 59

The measured distribution of income today appears more unequal than in the 1950s partly because of:

A) an increase in the rate of divorce.
B) an increase in the number of two-income families.
C) a reduction in the divorce rate.
D) both (a) and (b).

Question 60

On average,middle-aged people tend to have higher incomes than younger or older people do because:

A) they receive more money from the government than younger or older people do.
B) they are at an age where their productivity is at its peak.
C) they participate in the labor force to a lesser extent than do the young or the old.
D) they are subject to lower rates of taxation than are younger or older workers.

Question 61

When employers discriminate,they:

A) may believe that they have sound economic reasons for doing so.
B) may pay the price in lost earnings and productivity.
C) may subject themselves to civil action.
D) may be characterized by all of the above.

Question 62

In the Santa Rita mines in Arizona in 1870,Mexican miners received about $12 per month while "American" miners received $70.Although the wages of both groups tended to rise over time,the gap persisted until at least 1910.Mexican and American miners did the same work and were equally productive.Economists call this pay differential:

A) prejudicial differentials.
B) compensating differentials.
C) wage discrimination.
D) job entry discrimination.

Question 63

Taxes ____ the incentive to work,since they ____ an individual's after-tax earnings.

A) reduce; increase
B) increase; reduce
C) increase; increase
D) reduce; reduce

Question 64

The existence of differences between the average earnings of men and women:

A) proves the existence of discrimination.
B) may be partially due to factors other than wage discrimination.
C) proves that men on average invest more in human capital than do women.
D) indicates that men are on average smarter than women are.

Question 65

Which of the following is a source of inequality in incomes?

A) job preferences
B) willingness to take risks
C) differences in investment in human capital.
D) All of the above are correct.

Question 66

High school graduates in the United States earn roughly ____ of those with Bachelor's degrees.

A) one-third
B) one-fourth
C) one-half
D) two-thirds

Question 67

Wage discrimination occurs when people are paid different salaries based upon:

A) education.
B) ethnicity.
C) willingness to work.
D) talent.

Question 68

A valid argument against redistributing income to achieve complete equality is that:

A) income equality would destroy the social cohesiveness that exists among different income groupings.
B) this would eliminate the monetary incentives to work and produce.
C) the cost of obtaining the equality would be so deflationary as to promote economic instability.
D) income equality would imply class segregation based on factors such as sex or race, since income would be constant.

Question 69

A U.S.presidential candidate promises to redistribute income and encourage economic growth.Why might these goals be in conflict?

A) The poor, on average, save more than the rich. Taxing the incomes of the rich to transfer to the poor will result in an increase in total savings.
B) Taxing the incomes of the rich to transfer to the poor will result in the rich saving more.
C) Taxing the incomes of the rich to transfer to the poor will provide disincentives for work and capital accumulation.
D) Taxing the incomes of the rich to transfer to the poor will provide incentives for the rich to work more to make up for income lost to taxes.

Question 70

A relatively larger proportion of ____ work in unskilled jobs with lower pay than do ____.

A) females; Caucasian males
B) nonwhites; Caucasian males
C) Caucasian males; females
D) Both (a) and (b) are correct.

Question 71

Some employers choose to discriminate as a means of ____ information costs by hiring workers from a similar background as those that were ____ productive in the past.

A) increasing; more
B) reducing; more
C) increasing; less
D) reducing; less

Question 72

If labor markets are competitive,discriminating employers:

A) suffer no economic consequences from discrimination.
B) incur higher costs as a result of discrimination and are therefore at a competitive disadvantage.
C) incur lower costs than nondiscriminating employers and therefore have a competitive advantage.
D) enjoy higher profits.

Question 73

In the United States the degree of individual income mobility (that is,the degree to which people move from higher to lower,or lower to higher,income groupings)is:

A) rigid in both directions.
B) flexible in both directions.
C) flexible upward but rigid downward, since high income perpetuates itself from generation to generation.
D) flexible downward but rigid upward, since most low-income people never rise significantly above the poverty level.

Question 74

Longitudinal data on income inequality in the United States indicates that:

A) children of poor families stay poor, but children of rich families do not always stay rich.
B) children of poor families often escape poverty, but rich families invariably retain their wealth over time.
C) there is substantial movement among income groupings in the United States.
D) the rich are getting richer and the poor are getting poorer.

Question 75

Wage differentials between individuals may be partly explained by:

A) differences in education.
B) differences in productivity.
C) discrimination.
D) all of the above.

Question 76

Because of the owner's prejudice,a firm chooses to discriminate against hiring Asian workers.Compared to an otherwise identical,nondiscriminating firm in the same competitive market,the discriminating firm will:

A) incur higher costs.
B) receive lower profits.
C) receive higher profits.
D) be characterized by both (a) and (b).

Question 77

Unequal incomes can arise from:

A) discrimination.
B) worker preferences.
C) differences in educational backgrounds.
D) all of the above.

Question 78

In a market economy,differences in incomes:

A) reflect the relative scarcity of resources.
B) provide individuals with an incentive to supply resources that are valued by others.
C) determine the income distribution among market participants.
D) all of the above are correct.

Question 79

From a purely economic point of view,discrimination is established if:

A) black teenagers earn more than white teenagers do.
B) all factors are earning an amount equivalent to their marginal revenue product.
C) women earn less than men do.
D) equivalent factors earn different payments for equal contributions to output.

Question 80

On average,an individual with a college degree earns about ____ more each week than an individual who has not completed high school.

A) $8,000
B) $18,000
C) $33,000
D) $58,000