Question

In: Economics

Consider a labor market in which employers discriminate against African Americans. Comparing the labor market equilibrium...

Consider a labor market in which employers discriminate against African Americans. Comparing the labor market equilibrium with no discrimination to the equilibrium with discrimination,

a.

The white wage rate is higher without discrimination than with discrimination.

b.

The African American wage rate and the white wage rate are equal with and without discrimination; only the number of workers differs.

c.

The African American wage rate is higher without discrimination than with discrimination.

d.

The number of African American workers hired is lower without discrimination than with discrimination.

Which of the following might decrease the supply curve of labor?

a.

Increasing discrimination against any group.

b.

Elimination of discrimination against females.

c.

Easing licensing requirements.

d.

Elimination of discrimination against blacks.

Sort the following into cash transfer programs and in-kind transfers:

- social security

- SNAP

- TANF

- Medicare

- Medicaid

- housing assistance

- earned income tax credit (EITC)

a.

cash transfers: social security, EITC, TANF; in-kind transfers: Medicare, Medicaid, SNAP, housing assistance

b.

cash transfers: EITC, TANF, SNAP; in-kind transfers: social security, Medicare, Medicaid, housing assistance

c.

cash transfers: social security, SNAP, TANF, and Medicare; in-kind transfers: Medicaid, housing assistance, EITC

d.

cash tranfers: social security, housing assistance, Medicare, and Medicaid; in-kind transfers: EITC, SNAP, TANF

The revenue in the Social Security Trust Fund first fell below the benefits it paid out in 2010. If this trend continues, the Trust Fund will be depleted. What change(s) occurred to cause the revenue to fall below the benefits?

a.

The age at which retired individuals could start collecting benefits was lowered.

b.

People were allowed to start privately investing some of their money in stocks and lost money through risky investments.

c.

Life expectancy is rising and a larger number of people are retiring.

d.

The U.S. Treasury Securities in which the Trust Fund is invested began paying out less interest.

Solutions

Expert Solution

1. When there is discrimination against African Americans, it means that the demand for African American labors will be less than that of Whites.

Hence, with discrimination, more Whites will be employed and also paid more than African Americans. African Americans will be less employed and also will be paid lower when there is discrimination than without it.

Hence, the correct option is C.

2. The correct option is A. When there is increasing discrimination against any group, the group will be demotivated and drop out of the labor force. Hence the supply of labor will decrease.

3. Cash transfer programs include Social Security (OASDHI), Earned Income Tax Credit (EITC), Unemployment Compensation and Temporary Assistance for Needy Families (TANF). Medicare,Medicaid, SNAP and housing assistance are part of in-kind transfer programs.

Thus, correct option is A.

4. The correct option is C. Due to larger life expectancy and following increase in number of retirees, the problem has emerged for the Social Security Trust Fund.


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