Question 1

Assortative mating means that

Accepted Answer

A)  poor women and rich men tend to marry. 
B)  rich women and rich men tend to marry. 
C)  rich women and poor men tend to marry. 
D)  there are limited incentives to marry anyone. 
A)  poor women and rich men tend to marry. 
B)  rich women and rich men tend to marry. 
C)  rich women and poor men tend to marry. 
D)  there are limited incentives to marry anyone.

Question 2

In the United States, the wealthiest 20 percent of households own about ________ of total wealth.

Accepted Answer

A)  44 percent 
B)  53 percent 
C)  62 percent 
D)  83 percent 
A)  44 percent 
B)  53 percent 
C)  62 percent 
D)  83 percent

Question 3

The wage rate for high-skilled labor is higher than that for low-skilled labor because

Accepted Answer

A)  both the demand for and the supply of high-skilled labor is greater than that for low-skilled labor. 
B)  the demand for high-skilled labor is greater than the demand for low-skilled labor and the supply of high-skilled labor is less than the supply of low-skilled labor. 
C)  the demand for high-skilled labor is less than the demand for low-skilled labor and the supply of high-skilled labor is greater than the supply of low-skilled labor. 
D)  both the demand for and the supply of high-skilled labor is less than that for low-skilled labor. 
A)  both the demand for and the supply of high-skilled labor is greater than that for low-skilled labor. 
B)  the demand for high-skilled labor is greater than the demand for low-skilled labor and the supply of high-skilled labor is less than the supply of low-skilled labor. 
C)  the demand for high-skilled labor is less than the demand for low-skilled labor and the supply of high-skilled labor is greater than the supply of low-skilled labor. 
D)  both the demand for and the supply of high-skilled labor is less than that for low-skilled labor.

Question 4

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. The difference between the two curves equals

Accepted Answer

A)  market income. 
B)  money income. 
C)  the redistribution of income. 
D)  the amount of taxes paid. 
A)  market income. 
B)  money income. 
C)  the redistribution of income. 
D)  the amount of taxes paid.

Question 5

The distribution of wealth is skewed in part because people with high wealth

Accepted Answer

A)  save very little. 
B)  tend to marry people with similar wealth. 
C)  have very little skills. 
D)  do not earn much more than those with low incomes. 
A)  save very little. 
B)  tend to marry people with similar wealth. 
C)  have very little skills. 
D)  do not earn much more than those with low incomes.

Question 6

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is ________, and his income is ________.

Accepted Answer

A)  $5 million a year; $100 million 
B)  $100 million; $5 million a year 
C)  $100 million; $105 million 
D)  $5 million a year; $100 million a year 
A)  $5 million a year; $100 million 
B)  $100 million; $5 million a year 
C)  $100 million; $105 million 
D)  $5 million a year; $100 million a year

Question 7

Alex, Bill, and Cid live in Souland. Their annual incomes and the amounts they pay in income tax are shown in the table below.   The income tax in Souland is

Accepted Answer

A)  proportional. 
B)  disproportional. 
C)  regressive. 
D)  progressive. 
A)  proportional. 
B)  disproportional. 
C)  regressive. 
D)  progressive.

Question 8

An income tax for which the average tax rate decreases with income is called a

Accepted Answer

A)  regressive income tax. 
B)  proportional income tax. 
C)  flat-rate income tax. 
D)  progressive income tax. 
A)  regressive income tax. 
B)  proportional income tax. 
C)  flat-rate income tax. 
D)  progressive income tax.

Question 9

-The "big tradeoff" refers to the tradeoff between

Accepted Answer

A)  money and market income. 
B)  equity and efficiency. 
C)  progressive and regressive taxes. 
D)  flat-rate and proportional taxes. 
A)  money and market income. 
B)  equity and efficiency. 
C)  progressive and regressive taxes. 
D)  flat-rate and proportional taxes.

Question 10

In the United States, income is more equally distributed than measured wealth.

Accepted Answer

A) True 
 B)False

Question 11

The distribution of U.S. income is not bell-shaped because

Accepted Answer

A)  there are more households with incomes below the mean income than above the mean income. 
B)  there are more households with incomes above the mean income than below the mean income. 
C)  the mode income equals the mean income. 
D)  the income distribution is bell shaped. 
A)  there are more households with incomes below the mean income than above the mean income. 
B)  there are more households with incomes above the mean income than below the mean income. 
C)  the mode income equals the mean income. 
D)  the income distribution is bell shaped.

Question 12

-In the figure above, the poorest 20 percent of all households receive what share of all income?

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  40 percent 
A)  10 percent 
B)  20 percent 
C)  30 percent 
D)  40 percent

Question 13

Because skills are costly to obtain, at a given wage rate, the

Accepted Answer

A)  quantity demanded of high-skilled labor is less than the quantity demanded of low-skilled labor. 
B)  quantity demanded of high-skilled labor is greater than the quantity demanded of low-skilled labor. 
C)  quantity supplied of high-skilled labor is less than the quantity supplied of low-skilled labor. 
D)  quantity supplied of high-skilled labor is greater than the quantity supplier of low-skilled labor. 
A)  quantity demanded of high-skilled labor is less than the quantity demanded of low-skilled labor. 
B)  quantity demanded of high-skilled labor is greater than the quantity demanded of low-skilled labor. 
C)  quantity supplied of high-skilled labor is less than the quantity supplied of low-skilled labor. 
D)  quantity supplied of high-skilled labor is greater than the quantity supplier of low-skilled labor.

Question 14

By human capital, economists mean

Accepted Answer

A)  machines that replace humans. 
B)  machines engineered to avoid operator injury. 
C)  the accumulated skill and knowledge of humans. 
D)  humans who perform repetitive tasks. 
A)  machines that replace humans. 
B)  machines engineered to avoid operator injury. 
C)  the accumulated skill and knowledge of humans. 
D)  humans who perform repetitive tasks.

Question 15

In the U.S. in 2012 the poverty level for a family of four was about

Accepted Answer

A)  $23,000. 
B)  $34,000. 
C)  $10,000. 
D)  $15,000. 
A)  $23,000. 
B)  $34,000. 
C)  $10,000. 
D)  $15,000.

Question 16

If income is equally distributed, the Gini ratio is zero.

Accepted Answer

A) True 
 B)False

Question 17

-The above figure shows two Lorenz curves. Lorenz curve A shows the distribution of income and Lorenz curve B shows the distribution of wealth. Which statement below is correct?

Accepted Answer

A)  The Lorenz curve for wealth shows that wealth is distributed less equally because wealth does not include human capital. 
B)  The Lorenz curve for income shows that income is distributed less equally because income does not include income from stocks and bonds. 
C)  The Lorenz curves show wealth is greater than income. 
D)  The Lorenz curves show income is greater than wealth. 
A)  The Lorenz curve for wealth shows that wealth is distributed less equally because wealth does not include human capital. 
B)  The Lorenz curve for income shows that income is distributed less equally because income does not include income from stocks and bonds. 
C)  The Lorenz curves show wealth is greater than income. 
D)  The Lorenz curves show income is greater than wealth.

Question 18

In the country of Wilkes, taxes are $5 million and benefits are $4 million. Income from labor is $25 million and income from capital is $15 million. What is market income?

Accepted Answer

A)  $20 million 
B)  $39 million 
C)  $40 million 
D)  $9 million 
A)  $20 million 
B)  $39 million 
C)  $40 million 
D)  $9 million

Question 19

In the United States, the median household income is ________ than the mean income, which means there are ________ households with low incomes than with high incomes.

Accepted Answer

A)  less; more 
B)  greater; more 
C)  greater; fewer 
D)  less; fewer 
A)  less; more 
B)  greater; more 
C)  greater; fewer 
D)  less; fewer

Question 20

A worker pays a tax for Social Security at a constant rate up until a certain level of income is reached. Beyond that income level, no more Social Security tax is paid. The Social Security tax is an example of a

Accepted Answer

A)  progressive tax. 
B)  regressive tax. 
C)  proportional tax. 
D)  sales tax. 
A)  progressive tax. 
B)  regressive tax. 
C)  proportional tax. 
D)  sales tax.

Exam 19: Economic Inequality

Assortative mating means that

In the United States, the wealthiest 20 percent of households own about ________ of total wealth.

The wage rate for high-skilled labor is higher than that for low-skilled labor because

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. The difference between the two curves equals

The distribution of wealth is skewed in part because people with high wealth

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is ________, and his income is ________.

Alex, Bill, and Cid live in Souland. Their annual incomes and the amounts they pay in income tax are shown in the table below. The income tax in Souland is

An income tax for which the average tax rate decreases with income is called a

-The "big tradeoff" refers to the tradeoff between

In the United States, income is more equally distributed than measured wealth.

The distribution of U.S. income is not bell-shaped because

-In the figure above, the poorest 20 percent of all households receive what share of all income?

Because skills are costly to obtain, at a given wage rate, the

By human capital, economists mean

In the U.S. in 2012 the poverty level for a family of four was about

If income is equally distributed, the Gini ratio is zero.

-The above figure shows two Lorenz curves. Lorenz curve A shows the distribution of income and Lorenz curve B shows the distribution of wealth. Which statement below is correct?

In the country of Wilkes, taxes are $5 million and benefits are $4 million. Income from labor is $25 million and income from capital is $15 million. What is market income?

In the United States, the median household income is ________ than the mean income, which means there are ________ households with low incomes than with high incomes.

A worker pays a tax for Social Security at a constant rate up until a certain level of income is reached. Beyond that income level, no more Social Security tax is paid. The Social Security tax is an example of a

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is , and his income is .

In the United States, the median household income is than the mean income, which means there are households with low incomes than with high incomes.