Q&A Hero

Q: A ________ is a work stoppage designed to aid a unions bargaining position.a. layoff b. hiatus c. binding arbitrationd. strikee. cessation

Q: ________ wages are higher than equilibrium wages, offered to increase worker productivity.a. Compensatory b. Supraequilibrium c. Efficiencyd. Productione. Altruistic

Q: Earnings gaps can be explained by all of the follow factors, EXCEPTa. life-cycle wage pattern. b. wage discrimination. c. personal savings.d. location and lifestyle.e. human capital.

Q: What two factors have to be balanced when developing poverty policies? a. a desire to help the poor and a need for the poor to eventually become self-sufficient b. the desire to give as much as possible and a preference to have certain people do certain jobs c. the desire to give as much as possible and a desire not to be involved in how the poor spend what they are given d. the desire to give as much as possible and a desire to control education levels e. the desire to give as much as possible and a desire to control family size

Q: ________ occurs when those who collect welfare benefits are then discouraged from working.a. Income mobility b. Poverty threshold c. A samaritans dilemmad. An in-kind transfere. Winner-take-all

Q: The country of Econoville has created a negative income tax for its residents. Tax liability in the country is determined by the following equation:Taxes owed = (20% of income) - $7,500If Olivias income is $60,000, what is her total tax owed (a positive number) or tax credit (a negative number)?a. -$16,500 b. -$12,000 c. $4,500d. $12,000e. $16,500

Q: An example of a negative income tax isa. the minimum wage. b. the income tax system. c. the earned income tax credit.d. food stamps.e. housing assistance.

Q: The earned income tax credit (EITC) representsa. a subsidy credit. b. a negative income tax. c. a government voucher.d. an in-kind transfer.e. income mobility.

Q: The antipoverty program in the United States that helps the greatest number of households is thea. college grants program. b. child-care assistance program. c. food-stamp program.d. earned income tax credit.e. housing assistance program.

Q: Erin has a theory that the largest cause of poverty is poor budgeting and financial planning. Her suggestion to provide budgeting and planning advice to the poor is similar to the reasoning behinda. the winner-take-all theory. b. in-kind transfers. c. efficiency wage theory.d. occupational crowding.e. compensating differentials.

Q: In the United States, households that have very little income are provided funds that can be used only for the purchase of food (more popularly known as food stamps). What do food stamps represent?a. a cash transfer b. a winner-take-all situation c. income mobilityd. in-kind transfere. a compensating differential

Q: Which of the following is an example of an in-kind transfer? a. a Social Security check b. cash intended for the purchase of food c. Medicaid d. cash intended for the purchase of housing e. the earned income tax credit

Q: Economists say that official poverty statistics do not accurately measure the true rate of poverty because the data fails to includea. income earned from investments. b. income earned by the elderly. c. income earned by teenagers.d. in-kind transfers.e. single-parent households.

Q: Government job initiatives have been generally unsuccessful at reducing the poverty rate because they a. discourage the formation of unions. b. discourage in-kind transfers. c. discourage efficiency wages from being paid. d. do little to provide education and retraining. e. discourage winner-take-all situations.

Q: An individual familys poverty threshold includes a. the income of tenants living in the household. b. cost-of-living adjustments. c. in-kind transfers. d. the income of relatives living outside the house who could contribute in the case of need. e. the income of the head of household.

Q: It is important to adjust the poverty threshold every year because of a. changes in the minimum wage. b. changes in the level of in-kind transfers. c. changes in taxes. d. changing prices. e. changes in family size.

Q: The approximate poverty rate for minority women who are heads of household in the United States is ________ percent.a. 10 b. 20 c. 38d. 50e. 75

Q: The approximate poverty rate for children in the United States is ________ percent.a. 0.5 b. 6 c. 10d. 20e. 31

Q: One of the causes of poverty in the United States is a. high worker productivity. b. low levels of education. c. antidiscrimination laws. d. government involvement in the marketplace. e. the existence of economic prosperity in the macroeconomy.

Q: As a recent college graduate, Dora has a temporary inability to pay her rent and is forced to move back to her old bedroom in her parents house. Doras parents, having taken an economics class decades ago, may be unconcerned with her current low-income situation because they think she a. lacks income mobility. b. is among the long-term poor. c. is among the marginal poor. d. is a victim of the samaritans dilemma. e. is a victim of corruption.

Q: In the United States, there is a strong belief that anyone willing to work hard is able to become rich. This belief reflects which of the following theories?a. efficiency wage b. income mobility c. samaritans dilemmad. compensating differentiale. occupational crowding

Q: Income mobility represents the ________ of a worker to ________. a. inability; move to a job. b. inability; be trained and earn less. c. inability; be trained and earn more. d. ability; move to a job where he or she can earn the most. e. ability; move up or down the economic ladder.

Q: The movement of individuals and households from one income range to another is calleda. income mobility. b. wealth mobility. c. in-kind transfers.d. the samaritans dilemma.e. a compensating differential.

Q: Which of the following represents an in-kind transfer? a. a scholarship b. an income tax refund c. a Social Security check d. an unemployment insurance check e. food supplements received through the Subsidized Nutrition Assistance Program

Q: Economists believe the level of inequality in less developed countries is overstated because it doesnt take ________ into account. a. corruption b. income from low-paying jobs c. investments in human capital d. goods and services produced within the home e. discrimination

Q: In a discussion with Tyrices mother, who is an economist, Tyrice says, I am living in poverty, I cannot be expected to buy you a birthday gift. She replies that technically Tyrice is not living in poverty because his income is above thea. poverty rate. b. poverty threshold. c. negative income tax rate.d. inequality ratio.e. in-kind transfer rate.

Q: Approximately ________ percent of income is earned by the poorest 20 percent of households in the United States?a. 3.2 b. 15.6 c. 20.1d. 25.3e. 10.4

Q: Approximately ________ percent of income is earned by the richest 20 percent of households in the United States?a. 90 b. 10 c. 50d. 80e. 20

Q: How does the level of income inequality in the United States compare to that in other countries? a. There is less income inequality in the United States when compared to other, more developed countries, and less in the United States when compared to less developed countries. b. There is greater income inequality in the United States when compared to other developed countries, and less in the United States when compared to less developed countries. c. There is less income inequality in the United States when compared to other, more developed countries, and greater income inequality in the United States when compared to less developed countries. d. There is greater income inequality in the United States when compared to other, more developed countries, and greater income inequality in the United States when compared to less developed countries. e. There are no differences in income inequality between the United States and most other countries in the world.

Q: The poverty rate is calculated as the percentage of the population a. who are not working. b. who are unable to pay their food and housing expenses. c. who are not earning sufficient income from labor. d. whose incomes are above a poverty threshold. e. whose incomes are below a poverty threshold.

Q: Given the following information, what is the inequality ratio? Level of Mean IncomeBottom quintile $2,000Second quintile$10,000Middle quintile$18,000Fourth quintile$60,000Top quintile$86,000a. 5 b. 86 c. 9d. 21e. 43

Q: Use the following table, which represents the distribution of income in the countries of Mircalla and Baldovinia, to answer the following questions:MircallaBaldovinia200 residents total2,000 residents total100 residents earn $12,000 each1,000 residents earn $8,000 each100 residents earn $60,000 each1,000 residents earn $60,000 eachWhat is the degree of income inequality in Baldovinia?a. .0075 b. 0.75 c. 7.5d. 750e. 7,500

Q: If households in the lowest income-earning bracket are doing relatively well compared to those in the highest income-earning bracket, the inequality ratio willa. fall. b. initially grow, but then fall. c. grow.d. initially fall, but then grow.e. be unaffected.

Q: Approximately ________ percent of the total national income is owned by the poorest 40 percent (bottom two quintiles) of households in the United States.a. 3 b. 7 c. 12d. 20e. 40

Q: What is the approximate inequality ratio (richest 20 percent poorest 20 percent) in the United States?a. 4.1 b. 15.5 c. 24.3d. 75.1e. 98.2

Q: What differentiates the U.S. income inequality ratio from that found in less-developed countries? a. It is higher than in less-developed countries due to the large number of poor people. b. In less-developed countries, the inequality ratio is lower than in the United States due to the large number of rich people. c. In the United States, it is lower than that found in less-developed countries because the poor in the United States earn more than the poor in less-developed countries. d. There is no significant difference between the inequality ratios in the United States and in less-developed countries. e. In the United States, it is lower than in less-developed countries due to corruption.

Q: Felicia has an idea to provide a grocery home-delivery service in the developing country of Mongolia. What role would corruption play in the success of her business? a. It would make the market more competitive. b. It would encourage her to work harder. c. It would encourage her to invest in her business. d. It would discourage her about investing in her business. e. It would have no effect on the success of her business.

Q: What role does corruption play in creating income inequality? a. It discourages mobility. b. It encourages human capital investments. c. It discourages winner-take-all situations. d. It discourages business investment. e. It discourages discrimination.

Q: How can a stronger legal system reduce income inequality? a. It encourages investment by removing corruption. b. It encourages the payment of efficiency wages. c. It encourages occupational crowding. d. It encourages winner-take-all situations. e. It discourages investments in human capital.

Q: Why is it unlikely that income inequality could ever be eliminated? a. Workers will always have the same skills, abilities, and productivities. b. All jobs are roughly equal in their attractiveness to workers. c. All workers are perfectly mobile. d. Workers will always have different skills, abilities, and productivities. e. Workers all share the goal of earning as much income as possible.

Q: The pay for journalists is quite varied. A top-tier journalist often receives a steady flow of assignments, such as two weekly columns, and so earns generous pay. A lower-tier journalist, however, often experiences sporadic work assignments with little to no pay. What economic theory explains this situation?a. winner-take-all b. in-kind transfers c. efficiency waged. occupational crowdinge. compensating differentials

Q: What theory can explain why a CEO might earn so much more than other managers with similar experience and education at the same company?a. efficiency wage b. winner-take-all c. human capitald. samaritans dilemmae. binding arbitration

Q: What is the name of the model that best explains why an actor in a nationally broadcast television program earns so much more than an actor who is equally talented and productive but who performs in a local play?a. occupational crowding b. winner-take-all c. income mobilityd. human capitale. life-cycle wage pattern

Q: What theory would suggest that a Nobel Prizewinning economist should earn significantly more than other economists?a. samaritans dilemma b. life-cycle wage pattern c. efficiency waged. compensating differentiale. winner-take-all

Q: As a male nurse, Gregory often complains about the low pay he receives despite the fact that he has a significant amount of education. What economic theory explains his suppressed wage?a. compensating differential b. human capital c. winner-take-alld. occupational crowdinge. efficiency wage

Q: If Tys daughter were to inform him that she wanted to be a bank teller and he were concerned about her ability to pay her bills, what economic theory could Ty use to convince his daughter to become an engineer instead?a. compensating differential b. life-cycle wage pattern c. winner-take-alld. occupational crowdinge. efficiency wage

Q: Which statement best represents the phenomenon of occupational crowding? a. Women tend to be overrepresented in certain jobs. b. Women and men are equally represented in all occupations. c. A woman might earn less than a man because she has less education. d. Women find themselves earning more than equally capable men. e. Women have their work career interrupted during their childbearing years.

Q: The occupational crowding model of discrimination predicts a. why men, in some cases, earn less than women. b. that firms will compete with one another for the best employee and that discrimination will be eliminated. c. that, unless the government gets involved, discrimination will become more severe. d. that mens wages will fall and womens wages will rise when certain jobs are no longer dominated by men. e. the financial advantages for women crowding into a single occupation.

Q: What theory can partially explain why pink-collar jobs, such as nurse and dental hygienist, earn so little despite the important services they provide?a. winner-take-all b. compensating differential c. samaritans dilemmad. occupational crowdinge. efficiency wage theory

Q: Besides overt sex discrimination, women also might earn less than men in the workplace because women a. have more human capital. b. tend to congregate in a narrow range of jobs that pay very little. c. have more years of work experience. d. work more hours per year. e. tend to receive an efficiency wage.

Q: Belinda expects that her wages will increase over time. What theory justifies this expectation?a. compensating differential b. life-cycle wage pattern c. efficiency waged. occupational crowdinge. samaritans dilemma

Q: The wages of those near retirement decrease slightly because these workers are a. gaining additional skills. b. becoming more productive. c. becoming more efficient. d. being discriminated against. e. gaining additional experience but are not keeping up with new technologies.

Q: Besides sex discrimination, women might earn less than men in the workplace because women a. have more human capital. b. have fewer years of work experience. c. have more years of work experience. d. work more hours per year. e. more frequently belong to a union.

Q: A white male from the Midwest earns $50,000 a year and a white female earns $40,000 a year. What can we conclude about this situation? a. There is no discrimination present. b. The white female is being discriminated against by $10,000. c. The white female is being discriminated against, but the amount is less than $10,000. d. The white female is being discriminated against, but the dollar amount is unclear. e. There is not enough information to know whether discrimination exists.

Q: When workers of the same ability are not paid the same amount because of a group characteristic such as ethnic origin or age, we call this a. efficiency wage theory. d. winner-take-all theory. b. wage discrimination. e. occupational crowding. c. compensating differential theory.

Q: Someone might expect a fast-food job to pay a wage higher than the minimum wage because it a. is boring and an efficiency wage is offered to reduce turnover. b. is safe. c. doesnt require a lot of education. d. is not unionized. e. is exciting and fast-paced.

Q: As an employee at a convenience store, Jorge is content to stay with his employer because his wage is 50 percent higher than the market rate. What economic theory could justify his employers willingness to pay above the market rate?a. samaritans dilemma b. winner-take-all c. human capitald. compensating differentiale. efficiency wage

Q: What theory would justify a job advertisement that reads: Help Wanted! Looking for a person willing to stay with the firm for a long time. Excellent pay?a. human capital b. life-cycle wage pattern c. compensating differentialsd. winner-take-alle. efficiency wage

Q: Using an efficiency wage theory, why do some individuals earn more than the market equilibrium wage? a. Workers who earn more are those who are more productive. b. Workers need to earn more to be willing to accept dangerous working conditions. c. Workers need to earn more to be willing to accept a safe indoor job. d. Workers who are more educated and better trained are able to earn more than the equilibrium wage. e. Workers who earn more tend to be concentrated in a single occupation.

Q: As an employer, Giselle wants productive employees who will stay with the firm for an extended period of time, so she should pay a. less because human capital theory suggests better-paid employees work harder and stay longer. b. less because of the existence of compensating differentials. c. more because human capital theory suggests better-paid employees work harder and stay longer. d. more because of the existence of compensating differentials. e. more because efficiency wage theory suggests that the employer will be able to secure more productive employees.

Q: What theory would suggest that an employee should receive a wage higher than the equilibrium wage rate?a. efficiency wage b. in-kind transfers c. occupational crowdingd. samaritans dilemmae. binding arbitration

Q: Between two unionized firms, one would expect workers to receive higher wages in a firm a. where the threat of a strike is low. b. where the threat of a strike is high. c. that can substitute labor with capital easily. d. that can relocate the production process easily. e. that has workers with low education levels.

Q: What is a significant difference between a union job and a nonunion job in terms of pay? a. Union jobs pay less than nonunion jobs because of efficiency wage theory. b. Nonunion jobs pay more than union jobs because of the winner-take-all theory. c. Union jobs pay more than nonunion jobs because of occupational crowding. d. Union jobs pay more than nonunion jobs because of the threat of a strike. e. Nonunion jobs pay more than union jobs because of binding arbitration.

Q: When comparing a union job to a nonunion job, we would expect to see a. higher wages being paid to the employee holding a nonunion job. b. lower wages being paid to the employee holding a union job. c. better pay and benefits being received by the employee holding a nonunion job. d. no difference in the pay and benefits received by the employees in the union and nonunion jobs. e. higher wages being paid for the employee holding a union job.

Q: As the owner of a television studio, Kelvin is concerned about the high wages he must pay his employees relative to wages paid by other television studio owners. A consultant has suggested that his location is a contributing factor to these higher wages because he has built his studio in a(n) a. sunny location in an urban area with a lot of good restaurants. b. rural location populated by friendly people. c. urban location that has very little crime and good schools. d. location that has frequent wildfires and floods. e. urban location populated by friendly people.

Q: As an Internet retailer, Luciana needs to find a location for her headquarters. If Luciana is primarily concerned with the cost of labor and wants to pay those she hires as little as possible, Luciana should establish her business in a(n) a. location with a lot of good restaurants. b. cold location in a rural area. c. urban location that has a lot of crime. d. rural location that has frequent wildfires and floods. e. urban location with a lot of earthquakes.

Q: If Hanna were the chief economics planner in Mitchell, South Dakota, a rural location that boasts the worlds largest corn palace, what would be her biggest challenge in encouraging economic development in terms of location? a. If the location is deemed undesirable by employees, employers will have to pay lower wages. b. If the location is deemed undesirable by employees, employers will have to pay higher wages. c. If the location has a low cost of living, employers will have to pay higher wages. d. If the location has a high cost of living, employers will have to pay lower wages. e. Its location should have no effect on wages.

Q: The cost of education at an Ivy League university is more than $50,000 per year. At a community college, the cost of education is only a few thousand dollars per year. What economic theory could justify enrolling in an Ivy League school?a. compensating differentials b. income mobility c. life-cycle wage patternd. signale. human capital

Q: What theory suggests that learning material on your own would not generate the same benefits as those achieved by formally attending classes and receiving a degree?a. human capitalb. signal c. compensating differentialsd. winner-take-alle. efficiency wage

Q: In recent decades, more women than men have received undergraduate degrees. Consequently, womens wages will ________ according to ________ theory.a. decrease; compensating differential b. increase; compensating differential c. decrease; human capitald. increase; human capitale. decrease; efficiency wage

Q: One frequently sees a strong relationship between median annual earnings and education level. What theory would suggest that education provides valuable skills?a. compensating differentials b. income mobility c. life-cycle wage patternd. signale. human capital

Q: Christines mother told her that she needed to go to college because it would be the only way she could get a high-paying job. What economic theory would justify her advice?a. efficiency wage b. compensating differential c. life-cycle wage patternd. human capitale. occupational crowding

Q: If Alexia is more educated and better trained than Felix, economists would use the ________ model to predict that Alexia should earn the higher wage.a. occupational crowding b. winner-take-all c. income mobilityd. human capitale. compensating differential

Q: Some employers are willing to provide job training for workers. The employer might be willing to pay for the training when a. the training is specific to the employer. b. the training is a general skill that could be used at any job for any employer. c. the training is of short length. d. the training is extensive. e. on its completion, the student receives a degree.

Q: Some employers are willing to provide job training for workers. However, an employer might require the worker to pay for the training when the training is a. specific to the employer. b. a general skill that could be used in any job for any employer. c. of short length. d. extensive. e. provided by a manager in the firm.

Q: When comparing individuals wages, differences in their levels of education and training a. can completely explain the existence of income inequality. b. can completely explain why some individuals are more productive than others. c. have no bearing on why some individuals are drawn to certain occupations. d. can partially explain why some individuals earn higher wages than others. e. have no bearing on income mobility.

Q: What theory would suggest that learning material on your own generates the same benefits as those achieved by formally attending classes and receiving a degree?a. human capital b. signal c. compensating differentialsd. winner-take-alle. efficiency wage

Q: An employee gains work experience by staying in a job for a long period of time. An economist would expect this employees wages to a. increase as experience is gained. b. decrease as experience is gained. c. increase, but then decrease over time as experience is gained. d. decrease, but then increase over time as experience is gained. e. stay the same since experience would have no effect on wages.

Q: What theory would lead someone to be suspicious of a job advertisement that reads: Help Wanted! Fun and exciting job with excellent pay?a. human capital b. life-cycle wage pattern c. winner-take-alld. compensating differentialse. efficiency wage theory

Q: As the mayor of a local town, Wang has the power to repeal workplace safety laws. For construction workers building the local school, the repeal of all workplace safety laws would a. reduce their wages because of less severe positive compensating differentials. b. increase their wages because of less severe positive compensating differentials. c. reduce their wages because of more severe positive compensating differentials. d. increase their wages because of more severe positive compensating differentials. e. result in no effect on their wages because of offsetting differentials.