Deck 21: Poverty, Inequality, and Discrimination

Question 1

Over the last 50 years, the rich have become _______ and the poor have become _______.

A)richer; poorer
B)richer; richer
C)relatively poorer; relatively richer
D)relatively poorer; relatively poorer

Answer 1

richer; richer

Question 2

The relative poverty line defines poverty:

A)in relation to the income of the rest of the population.
B)based on the expenditure on food relative to total income.
C)as the price of basic food, clothing, shelter, and utilities and adjusts for geographic differences in the cost of living.
D)None of these are true.

Answer 2

in relation to the income of the rest of the population.

Question 3

Because the U.S. poverty line is an absolute measure rather than a relative one, the official U.S. poverty rate:

A)increased steadily when economic growth raised the incomes of low-income families.
B)fell steadily when economic growth raised the incomes of low-income families.
C)fell steadily when economic growth caused inequality to grow among the population.
D)increased steadily when economic growth caused inequality to decline across the population.

Answer 3

fell steadily when economic growth raised the incomes of low-income families.

Question 4

Which of the following statements is true about the equality of a society?

A)The more equal a society is, the more the economy grows, so the best economy is the most equal.
B)The more equal a society is, the more everyone gains when the economy improves, but that doesn't mean the most equal society is the best society.
C)Economic growth will create imbalance in an otherwise equal society, and the government will need to work to equalize incomes.
D)Economic growth in an equal society will provide more resources for its disadvantaged members.

Question 5

An absolute poverty line is usually based on:

A)the cost of certain essential goods.
B)a certain percentage below the average income in a society.
C)the lowest quartile of income earners in a society.
D)the lowest 1 percent of all income earners in a society.

Question 6

Median income is the:

A)level earned by the household exactly in the middle of the national income distribution.
B)total national income divided by the total population.
C)total national income divided by the total number of households.
D)halfway point of the top quintile level of income.

Question 7

The poverty rate is defined as:

A)the percentage of the population that falls below the relative poverty line.
B)the percentage of the population that falls below the absolute poverty line.
C)the ratio of low income earners to high income earners.
D)the lowest one percent of all income earners.

Question 8

Critics of the U.S. definition of poverty claim that it is set too _______, because food prices are _______ relative to the prices of other essential goods and services.

A)low; low
B)high; high
C)low; high
D)high; low

Question 9

To understand how poverty, inequality, and discrimination affect an economy, _______ analysis is used. To determine whether a government should try to reduce inequality in the name of social justice, _______ analysis is used.

A)positive; objective
B)subjective; normative
C)normative; positive
D)positive; normative

Question 10

Since the 1950s, the U.S. poverty rate has:

A)been steadily declining by a few percentage points each decade.
B)dropped to nearly zero.
C)dropped by approximately half.
D)increased briefly but then returned to 1950s levels.

Question 11

Critics of the U.S. definition of poverty claim it is an inaccurate measure of the poor because:

A)it is a single number that does not capture regional differences in the cost of living.
B)the ratio of food consumption to total income is different now than when the definition of poverty was defined.
C)it fails to account accurately for expenditures other than food.
D)All of these are true.

Question 12

What changes regarding the inequality between the rich and the poor have occurred over the last 50 years?

A)The poor have become richer at a slower rate than the rich, and so inequality has grown.
B)The poor have become richer at a slower rate than the rich, and so inequality has decreased.
C)The poor have become richer at the same rate as the rich, and so inequality has stayed the same.
D)The poor have become poorer, while the rich have become richer, and so inequality has grown.

Question 13

When the United States experiences economic growth, the poverty rate will:

A)fall because growth benefits everyone.
B)rise because growth typically only benefits the richest one percent.
C)fall because growth typically helps the poor more than the wealthy.
D)rise, because growth benefits the wealthy more than the poor.

Question 14

Over the last 50 years, poverty has been _______ and inequality has been _______.

A)falling; rising
B)falling; falling
C)rising; rising
D)rising; falling

Question 15

The U.S. government began tracking poverty in the late:

A)1950s.
B)1960s.
C)1970s.
D)1940s.

Question 16

In the United States, the official poverty line is calculated by multiplying _______ for a family of a given size by _______.

A)the average expenditure on housing; three
B)the cost of food; three
C)the average expenditure on housing; two
D)the cost of food; two

Question 17

Since 1970, the U.S. poverty rate has largely fluctuated between:

A)5 and 10 percent.
B)0 and 5 percent.
C)15 and 25 percent.
D)10 and 15 percent.

Question 18

The absolute poverty line indicates _______ while the relative poverty line indicates _______.

A)who cannot afford the basic necessities; what people can afford compared to those around them
B)what people can afford compared to those around them; who cannot afford the basic necessities
C)the percentage of the population that falls within the lowest quartile of income earners; the percentage of the population that earns 40 percent less than the median income
D)the percentage of the population that falls within the lowest quartile of income earners; what people can afford compared to those around them

Question 19

In the United States, the official poverty line is based on:

A)the price of housing.
B)the price of clothing.
C)the price of food.
D)the average income of the lowest quartile of income earners.

Question 20

In 2011, the Census Bureau introduced an alternate poverty measure that is based on:

A)the price of food and adjusts for geographic differences in the cost of living.
B)the prices of food, clothing, shelter, and utilities and adjusts for geographic differences in the cost of living.
C)the price of housing and adjusts for geographic differences in the cost of living.
D)the average income of the lowest quartile of income earners.

Question 21

The PPP index describes the overall:

A)inequality present in one country compared to another.
B)difference in poverty levels between countries.
C)difference in prices of goods between countries.
D)None of these are true.

Question 22

The most common international poverty measure is the:

A)number of people living on less than $1.90 per day.
B)number of people living on less than $5 per day.
C)absolute poverty line, as defined by the U.S. Census Bureau.
D)poorest one percent of income earners within a given country.

Question 23

Which region contains the highest percentage of people who live on less than $1.90 a day?

A)Sub-Saharan Africa
B)South Asia
C)China
D)South America

Question 24

U.S. households headed by _______ are especially likely to be poor.

A)Hispanic males
B)those under age 18
C)single males
D)single women

Question 25

Today, black and Hispanic Americans have poverty rates _______ as high as white Americans.

A)three times
B)twice
C)half
D)four times

Question 26

The index that describes the overall difference in prices of goods between countries is the:

A)price parity purchasing index.
B)consumer price index.
C)consumer purchasing power index.
D)purchasing power parity index.

Question 27

More than a quarter of the U.S. population experienced _______ poverty at some point in their lives, perhaps due to losing a job or experiencing sickness or injury.

A)transient
B)abject
C)chronic
D)consecutive

Question 28

Programs such as unemployment insurance, disability or health insurance, and job training can be effective in fighting:

A)both transient and chronic poverty.
B)transient poverty, but not chronic poverty.
C)chronic poverty, but not transient poverty.
D)unemployment, but not poverty.

Question 29

The transient poor are people who spend _______ in poverty.

A)three or more consecutive years
B)at least two consecutive months
C)more than one year
D)at least six consecutive months

Question 30

Because the international poverty line is $1.90 a day at purchasing power parity, the poverty line in each country is the amount that will allow you to buy a basket of goods equivalent to what $1.90 would buy in the:

A)United States.
B)richest country that uses the index.
C)poorest country that uses the index.
D)average economy of all the countries that use the index.

Question 31

Which of the following programs can be used to fight transient poverty?

A)Unemployment insurance
B)Health insurance
C)Job training
D)All of these are effective at fighting transient poverty.

Question 32

Research from the United States has suggested that _______ of the people living under the poverty line in any given year were chronically poor.

A)a small percentage
B)about half
C)a large percentage
D)almost all

Question 33

The $1.90 (PPP)per day line was chosen by averaging the national poverty lines of 15 poor countries to represent _______ poverty by some globally comparable standard.

A)chronic
B)absolute
C)transient
D)relative

Question 34

Between 1960 and 1995, Social Security benefits _______, which _______ the poverty rate among the elderly.

A)rose; increased
B)fell; reduced
C)rose; reduced
D)fell; increased

Question 35

Which of the following programs is likely to reduce chronic poverty?

A)Unemployment insurance
B)Health insurance
C)Job training
D)None of these are likely to reduce chronic poverty.

Question 36

In the United States today, households headed by single women have higher poverty rates than:

A)married families.
B)black males.
C)Hispanic males.
D)All of these are true.

Question 37

Today, the greatest number of poor are _______ Americans, but the poverty rate for _______ Americans is higher.

A)white; black and Hispanic
B)black; white
C)black and Hispanic; white
D)white; Hispanic

Question 38

When measuring international poverty:

A)absolute measures of poverty are not used, because prices are different around the world.
B)economists typically compare the relative wealth of one country to another.
C)the purchasing power parity (PPP)index can be used to make absolute poverty measures comparable across countries.
D)we set the U.S. poverty rate to zero and view other country's rates as positive or negative relative to that of the United States.

Question 39

Which region contains the greatest number of people who live on less than $1.90 a day?

A)China
B)South Asia
C)Sub-Saharan Africa
D)South America

Question 40

The chronically poor are people who spend _______ in poverty.

A)three or more consecutive years
B)at least two consecutive months
C)more than one year
D)at least six consecutive months

Question 41

Which of the following statements is true about the causal link between human capital and poverty?

A)Low human capital causes poverty, but poverty also causes human capital.
B)Low human capital causes poverty, but not the other way around.
C)Poverty causes low human capital, but not the other way around.
D)There is no causal link between low human capital and poverty.

Question 42

Long-term solutions to community-wide poverty must involve:

A)ways to expand the range of opportunities available to the population.
B)increasing the value of the community's currency.
C)ways to reduce the taxes collected by local governments.
D)All of these are true.

Question 43

Community-wide poverty:

A)is nonexistent in the developed world.
B)creates problems beyond those faced by poor individuals living in wealthier communities.
C)only creates problems in less wealthy countries.
D)None of these are true.

Question 44

A credit constraint is the:

A)inability to get a loan even though a person expects to be able to repay the loan plus interest.
B)inability to repay a loan even though a person has acceptable credit history.
C)ability to take on more loans than one can repay.
D)maximum amount of loans one is entitled to take.

Question 45

Over the last few decades, income inequality in the United States has _______, mostly as a result of _______.

A)increased; the poor getting poorer
B)increased; gains by the rich
C)decreased; gains by the poor
D)decreased; general stagnation in the economy

Question 46

The set of skills, knowledge, experience, and talent that determine people's productivity as workers is called:

A)physical capital.
B)investment.
C)human capital.
D)educational training.

Question 47

Evidence shows that children from poor communities typically have _______ opportunities to acquire human capital.

A)increased
B)reduced
C)equal
D)no

Question 48

Self- reinforcing mechanisms that cause the poor to stay poor are called:

A)social aberrances.
B)social networks.
C)poverty traps.
D)societal traps.

Question 49

Over the last few decades, the poverty rate in the U.S. has:

A)increased.
B)decreased slightly.
C)changed little.
D)decreased dramatically.

Question 50

The poverty rate dropped most dramatically over the last 25 years in which country?

A)China
B)Chile
C)South Africa
D)India

Question 51

Bad health is an example of a:

A)social digression.
B)poverty trap.
C)societal trap.
D)None of these are true.

Question 52

Those who believe that overall economic growth is more important than the distribution of income believe that:

A)if everyone is getting richer, the relative speed of these gains isn't as important.
B)it is fundamentally unjust for some people to have so much when others have so little.
C)if a society is not getting richer, it can never become more equal.
D)All of these are true.

Question 53

If the population is split up into quintiles by income, the bottom quintile would include:

A)the poorest half of the population.
B)the poorest 60 percent of the population.
C)the richest half of the population.
D)the poorest 20 percent of the population.

Question 54

Overall, rapid economic growth over the last 25 years has _______ the global poverty rate by _______.

A)increased; fifty percent
B)decreased; nearly half
C)decreased; approximately two-thirds
D)increased; nearly double

Question 55

If the U.S. population were split into quintiles based on income, with the lowest quintile representing the poorest 20 percent, then those who earned the median income for the United States would be in the _______ quintile.

A)second
B)third
C)fourth
D)fifth

Question 56

Creating effective policy to fight poverty requires an understanding of:

A)why people are poor.
B)the correlation between education and income.
C)the correlation between income and geographic location.
D)the unintended consequences of reductions in the incentive to work.

Question 57

One of the biggest challenges facing the world's poorest families is:

A)they don't save any money to pay down debts.
B)their income fluctuates a lot, in addition to being low.
C)they often do not diversify their savings and have "all their eggs in one basket".
D)surrounding countries have higher economic growth.

Question 58

The more human capital someone has, the more likely they will:

A)be unemployable.
B)earn more money.
C)not benefit from specializing.
D)All of these are true.

Question 59

Human capital can be acquired by:

A)getting an education.
B)investing in health care.
C)gaining job experience.
D)All of these are true.

Question 60

Which region experienced the smallest change in its poverty rate over the last 25 years?

A)China
B)South Asia
C)India
D)Sub-Saharan Africa

Question 61

The graph shown displays a society's Lorenz curve. Which of the following statements is true?

A)This society would be more unequal if the curve was bowed outward instead of inward.
B)The top 20 percent of earners hold 10 percent of the total income.
C)The top 40 percent of earners hold 60 percent of the total income.
D)Households at the 50th percentile of the income distribution earn the same as households at the 60th percentile of the income distribution.

Question 62

Members of the top quintile of income earners in every country today earn disproportionately:

A)more than those in the bottom quintile.
B)less than they did 100 years ago.
C)less than those in the middle quintile.
D)All of these are true.

Question 63

The Gini coefficient measures:

A)income inequality.
B)poverty prevalence.
C)average income per person.
D)change in average income per person over time.

Question 64

The Lorenz curve maps:

A)the cumulative percentage of the population against the cumulative percentage of income earned.
B)each quintile of the population in order of income earned against the average income earned.
C)GDP per capita against what people really earn by quintile.
D)None of these are true.

Question 65

The graph shown displays the Lorenz curve for a society. If area A in the graph is equal to 1,200 and area B is equal to 3,800, what is the Gini coefficient?

A)3.17
B)0.32
C)0.24
D)0.76

Question 66

A Gini coefficient of zero indicates:

A)no income is being earned.
B)an error was made in the calculation.
C)perfect inequality exists.
D)perfect equality exists.

Question 67

The graph shown displays a Lorenz curve. Which of the following statements is true?

A)Curve B demonstrates a more equal society than curve A.
B)The top 10 percent of earners in the society represented by curve B earn a higher percentage of total income than the top 10 percent of earners in the society represented by curve A.
C)Curve B represents a more desirable society.
D)Individuals in the society represented by curve B must work longer hours than individuals in the society represented in curve A in order to reach the same income.

Question 68

The graph shown displays a Lorenz curve. Which of the following statements is true? The midpoint of each line demonstrates the area with least inequality.Curve A demonstrates a more equal society than curve B.On both curves, individuals in the 99th percentile of the income distribution earn more than 1 percent of the total income.

A)I only
B)II and III only
C)I and III only
D)I, II, and III

Question 69

The global pattern of inequality has:

A)remained surprisingly unchanged for the past several decades.
B)changed significantly after each World War.
C)been changing in recent decades.
D)not changed since the Great Depression redefined inequality for the world.

Question 70

The Gini coefficient is calculated by measuring the area between:

A)the line of perfect inequality and the Lorenz curve.
B)the line of perfect equality and the Lorenz curve.
C)the Lorenz curve and its x-axis.
D)the Lorenz curve and its y-axis.

Question 71

A perfectly straight Lorenz curve would indicate perfect _______, which _______.

A)inequality; does not exist in the real world
B)equality; does not exist in the real world
C)equality; is more common in wealthy, developed nations
D)inequality; is more common among developing nations

Question 72

The graph shown displays the Lorenz curves for three societies: A, B, and C. Which of the following statements is true? The Gini coefficient in Society A is zero.Inequality in Society A is lower than in Society B or C.The Gini coefficient is highest in Society C.

A)I only
B)II and III
C)III only
D)I, II, and III

Question 73

Which graph summarizes inequality visually?

A)Laffer curve
B)Income inequality curve
C)Gini curve
D)Lorenz curve

Question 74

Perfect income equality means everyone in a society:

A)earns exactly what they're worth.
B)earns the exact same amount.
C)earns the same amount, depending on the same job performed.
D)enjoys exactly the same standard of living.

Question 75

The graph shown displays the Lorenz curve for a society. If area A is equal to 3,100 and area B is equal to 1,900, what is the Gini coefficient?

A)1.22
B)0.62
C)0.38
D)1.63

Question 76

The _______ the Lorenz curve lies from the line of perfect equality, the _______ the Gini coefficient, and _______ income inequality exists.

A)farther; higher; less
B)farther; higher; more
C)closer; higher; less
D)closer; lower; less

Question 77

In the United States, the top 20 percent of income earners earn:

A)approximately 20 percent of total income.
B)over 70 percent of total income.
C)approximately 50 percent of total income.
D)less than 20 percent of total income.

Question 78

Most countries in the world have Gini coefficients ranging from:

A)85 to 95.
B)25 to 60.
C)05 to .2.
D)6 to 8.

Question 79

The Lorenz curve demonstrates inequality visually, in that the _______ linear the curve, the _______ inequality exists.

A)more; less
B)more; more
C)less; less
D)None of these are true.

Question 80

The _______ bowed inward the Lorenz curve is, the _______ inequality exists.

A)less; more
B)more; less
C)more; more
D)None of these are true.