Question 1

Assume that a company has several male workers who do not give their full cooperation to female supervisors making them less effective as supervisors.Economists would refer to this type of situation as ____.

Accepted Answer

This situation is an example of discrimination by fellow workers, where the male workers' lack of cooperation with female supervisors due to their gender affects the supervisors' effectiveness. This type of discrimination arises from the attitudes or actions of coworkers rather than policies or practices of the employer.

Question 2

Tax loopholes serve to

Accepted Answer

Tax loopholes allow wealthy individuals and corporations to avoid paying their full share of taxes, which undermines the principle of a progressive income tax system where those who earn more pay a higher percentage of their income in taxes. This means that the burden of paying for essential services such as healthcare, education, and infrastructure falls more heavily on middle and lower-income taxpayers. Therefore, tax loopholes erode the progressivity of the income tax system.

Question 3

In the negative income tax plan, a guarantee of $5,000 and a tax rate of 50 percent imply a break-even income of which of the following figures?

Accepted Answer

The break-even income is the income level at which an individual pays taxes equal to the guaranteed income, thus receiving no net benefit from the negative income tax. With a guarantee of $5,000 and a tax rate of 50%, the break-even income is calculated as $5,000 / 0.5 = $10,000.

Question 4

Who would receive payments from the government under a negative income tax system?

Accepted Answer

In a negative income tax system, only people with incomes below a certain level would receive payments from the government. This is because the goal of the system is to provide support to those with low incomes who may be struggling to make ends meet, and not to provide additional income to those who are already earning enough to support themselves.

Question 5

Which of the following taxes tend to make income distribution in the United States more equal?

Accepted Answer

Personal income taxes tend to be progressive, meaning that those with higher incomes pay a higher percentage of their income in taxes. This helps to reduce income inequality. Sales (i.e., excise) taxes tend to be regressive, meaning that they take a larger percentage of income from those with lower incomes. Payroll taxes are also regressive, as they are capped at a certain income level and are not levied on investment income.

Question 6

Many economists believe that

Accepted Answer

Many economists believe that implementing a negative income tax system in place of the current welfare system would significantly increase economic efficiency without sacrificing economic equality. With a negative income tax, individuals and families below a certain income threshold would receive direct cash transfers from the government, which would encourage work and allow for a simpler and more streamlined approach to poverty reduction. Some economists believe that this system would be more efficient than the current complex welfare system, which can often discourage work and create disincentives for individuals and families to earn more income.

Question 7

With a negative income tax, the larger the difference between the break-even income level and the guaranteed level,

Accepted Answer

The larger the difference between the break-even income level (the income level at which no tax is owed) and the guaranteed level (the minimum income guarantee), the greater the incentive for people to work, as they can earn more without losing their benefit. This can lead to increased labor force participation and productivity. None of the other options are directly related to the size of the difference between break-even and guaranteed levels.

Question 8

A free market system tends to

Accepted Answer

A free market system tends to produce a relatively unequal distribution of income. This is because salaries and wages are determined by supply and demand, and some jobs are in higher demand and pay more than others. Additionally, individuals who have more education, skills, or experience can demand higher salaries in a free market system.

Question 9

Critics of affirmative action programs argue that they

Accepted Answer

The answer of Critics of affirmative action programs argue that...

Question 10

The basic idea behind a negative income tax is to

Accepted Answer

The basic idea behind negative income tax is to provide financial assistance to the poor without disincentivizing work. This is achieved by providing financial help through a tax credit or cash payment to those whose income levels fall below a certain threshold. This allows individuals to supplement their income without penalizing them for working since the assistance decreases as income increases. This helps to address poverty without creating a welfare dependency, making option D the best choice.

Question 11

A tax is more likely to promote economic equality if it is

Accepted Answer

A progressive tax system imposes higher tax rates on those with higher incomes and lower tax rates or no taxes on those with lower incomes. This type of system helps to redistribute wealth from the top earners to those who may need it more, promoting economic equality. A regressive tax system, on the other hand, imposes higher taxes on lower-income households, exacerbating economic inequality. A proportional tax system imposes the same tax rate on all income levels, which can also contribute to economic inequality depending on the specific rates and exemptions. An indirect tax, such as a sales tax, is not directly tied to income and may not have a significant impact on economic equality.

Question 12

The economic theory of discrimination suggests that the practice of apartheid in South Africa should have

Accepted Answer

The economic theory of discrimination highlights that discrimination on the basis of race or ethnicity leads to inefficiencies in the labor market by limiting competition and reducing the pool of available talent. Apartheid in South Africa was a systematic form of discrimination in which the majority black population was denied access to education, employment, and other economic opportunities. As a result, the South African economy was not fully utilizing its human capital potential, which limited overall economic growth and development. Hence, both whites as well as others were also severely affected by apartheid's discrimination in terms of their economic condition.

Question 13

In the negative income tax framework, a break-even point of $16,000 and a tax rate of 25 percent imply a guarantee of which of the following figures?

Accepted Answer

The guarantee is calculated as the break-even point multiplied by the tax rate, so $16,000 * 25% = $4,000.

Question 14

Affirmative action programs are intended to combat

Accepted Answer

Affirmative action programs are designed to address and correct historical and current discriminatory practices by employers based on race, gender, or other protected characteristics. They seek to promote equal opportunity and counteract past discrimination by ensuring that qualified individuals from underrepresented groups are given fair consideration for employment, education, and other opportunities. While poverty and economic inequality are related issues, affirmative action specifically targets discrimination, not just socio-economic status. Comparable worth refers to the principle that jobs should be compensated based on their value to the organization, rather than on the basis of gender or other personal characteristics, and is not directly linked to affirmative action programs.

Question 15

Affirmative action programs,

Accepted Answer

The answer of Affirmative action programs,
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Question 16

The public assistance program that economists believe can promote economic equality at the least cost in economic efficiency is

Accepted Answer

Economists believe that a negative income tax (NIT) is the public assistance program that can promote economic equality at the least cost in economic efficiency. NIT provides assistance to low-income individuals and families by supplementing their income up to a certain threshold. This system ensures that everyone has a basic level of income, regardless of whether or not they are employed. It avoids the high administrative costs associated with traditional welfare programs and promotes work incentives by reducing benefits as recipients earn more income.

Question 17

Economists favor a negative income tax because they believe

Accepted Answer

Economists believe that a negative income tax would be more efficient than the current welfare system because it would provide better work incentives. This is because the current welfare programs may disincentivize work due to their high marginal tax rates, which can result in some individuals choosing not to work or reduce their hours in order to qualify for benefits. With a negative income tax, the marginal tax rate would decrease as income increases, which would create a stronger incentive to work and earn a higher income.

Question 18

In the United States, the distribution of income after the income tax is ____ the distribution of income before the income tax.

Accepted Answer

The income tax system in the United States is designed to be progressive, meaning that those with higher incomes pay a higher percentage of their income in taxes. This helps to make the distribution of income slightly more equal after taxes are taken into account.

Question 19

With a negative income tax providing a minimum of $20,000 and a tax rate of 25 percent, what amount of supplement would the government pay to a household earning $10,000?

Accepted Answer

With a negative income tax providing a minimum of $20,000 and a tax rate of 25 percent, the effective tax rate would be 125 percent for individuals earning less than $20,000. If a household earns $10,000, they are $10,000 below the minimum income level and they would receive 125% of the difference which is $12,500. However, since the negative income tax provides a minimum of $20,000, the government would only pay the difference between the supplement and the minimum income level which is $20,000 - $12,500 = $7,500. Therefore, the government would pay a supplement of $7,500 to the household earning $10,000. Hence, the correct answer is option C.

Question 20

In the Santa Rita silver 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

Accepted Answer

The answer of In the Santa Rita silver mines in...

Quiz 20: Poverty Inequality and Discrimination