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Chapter 07 - Poverty Problems and Discrimination: Why Are So Many Still So Poor?

Chapter 07
Poverty and Discrimination: Why Are So Many Still So Poor?

Multiple Choice Questions

1. The government's method of calculating the official poverty rate

a. Does not take into account differences in the cost of living in different parts of the country
b. Does not account for the value of in-kind benefits received by poor families
c. Is based on pre-tax household income
D. Does all of the above
e. Does none of the above

2. The incidence of poverty is highest among

a. Black families
B. Families headed by a female
c. Young families
d. White families
e. Small families

3. The percentage of the U.S. population living in poverty

a. Shows a long-term increase
B. Is holding steady over the long run
c. Is not a serious economic problem
d. Decreased significantly in the past decade
e. Fluctuates dramatically from year to year

4. The official U.S. poverty definition is an income sufficient to provide

a. Minimum biological needs
B. Three times the cost of an economy food budget
c. The income of the poorest 8% of the families
d. The average U.S. welfare allowance
e. None of the above

7-1
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Chapter 07 - Poverty Problems and Discrimination: Why Are So Many Still So Poor?

5. How is the official "poverty threshold" calculated?

a. Determine the minimum income necessary for a family to purchase clothing and shelter,
and then multiply by three
b. Determine the minimum income necessary for a family to live at a "subsistence level" in a
rural community
c. Determine the amount of income necessary for a family to live on without becoming
eligible for food stamps
D. Determine the minimum income necessary for a family to purchase an adequate diet, and
then multiply by three
e. None of the above

6. Which of the following demographic groups historically has the highest incidence of
poverty?
a. White, married couples with no children living at home
b. Black families, headed by a male income earner, with children living at home
C. Female headed black families with children living at home
d. Hispanic families in rural areas with children living at home
e. White, female headed families in urban areas with no children living at home

7. Critics have argued that the official definition of poverty should

a. Account for differences in the cost of living in different regions of the country
b. Be revised to reflect the fact that the average family now spends less than a third of its
income on food
c. Make allowances for in-kind benefits received by poor families
d. Be based on a family's after-tax income
E. All of the above

8. The incidence of poverty falls most heavily on

a. Families with a young person as head
b. Families with a female as head
c. Minority groups
d. Children
E. All of the above

7-2
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Poverty Problems and Discrimination: Why Are So Many Still So Poor?

9. Most poor people are poor because they

a. Are lazy
b. Are exploited
C. Own resources that are not worth much
d. Are old
e. Are all of the above

10. Poverty in the US occurs as a result of

a. Inadequate GDP
b. A shortage of resources
c. The occurrence of wars and natural disasters
D. Unequal distribution of income
e. None of the above

11. Since 1960, income inequality has

a. Stayed the same
B. Fallen, then risen
c. Steadily declined
d. Steadily increased
e. Decreased rapidly

12. The distribution of income among persons is determined by

a. The distribution of resource ownership
b. The prices paid for resources of different kinds in different employments
c. Government income-support programs
D. Both (a) and (b).
e. all of the above

13. Which of the following statements is true concerning income equality?

a. The share of income received by the top 5% remained declined between 1960 and 2000
B. The share of income received by the top 5% increased by about 20% between 1960 and
2000
c. The share of income received by the lower 20% of families increased significantly between
1960 and 2000
d. The United States has achieved true income inequality
e. None of the above

7-3
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Poverty Problems and Discrimination: Why Are So Many Still So Poor?

14. The official "poverty threshold" used by the U.S. government is based on a(n)
______________ definition of poverty.
a. Relative
b. Comparative
C. Absolute
d. Abstract
e. Economic

15. A number of reasons have been given to explain increasing income inequality in the US
over the last few decades. One of these is
A. The decline of the US manufacturing sector
b. The growth of unionization through the US
c. Increases in tax rates on the wealthy
d. Improvements in productivity
e. The use of computers in the workplace

16. The ownership of capital resources varies widely among individuals. Which of the
following is not a reason for this variation?
A. Ethnic background
b. Inheritance
c. Motivation to accumulate
d. Luck
e. All of the above

17. Which of the following best describes the trend in the share of income received by the
lowest 20% of families in the United States? The lowest 20% of families receive
a. 15% of the income, and their share has been rising since WWII
b. 25% of the income, and their share has been falling since the 1960s
C. Less than 5% of the income, and their share has been slowly declining since the 1970s
d. A share of income approximately equal to that received by the top 20% of families, and
their share has remained stable since the 1960s
e. 10% of the income, but their share has been falling since WWII

7-4
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 07 - Poverty Problems and Discrimination: Why Are So Many Still So Poor?

18. Skill levels vary among individuals because of

a. Differences in location
B. Differences in education and training
c. The industry the person works in
d. The capital labor ratio in the economy
e. All of the above

19. Why might an individual's labor resource holdings differ?

a. Mental talents are not equally distributed among people
b. Physical talents are not equally distributed among people
C. People have different preferences for income and leisure
d. Skill levels vary among individuals
e. All of the above

20. The income of a person depends on

a. The price of labor owned
b. The quantity of labor owned
c. The quantity of capital owned
D. All of the above
e. None of the above

21. Which of the following results in differences in labor resource ownership?

a. Preferences for work and leisure
b. Propensities to accumulate
c. Skill levels
D. Both (a) and (c)
e. All of the above

22. Which of the following factors contribute to differences in labor resource ownership
between people?
a. Unequal mental and physical genetic inheritances
b. Differences in skills due to human capital investments
c. Differences in attitudes toward working
D. All of the above
e. None of the above

7-5
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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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