Question 1

A Lorenz curve can be used to illustrate

Accepted Answer

A)  the supply of labor. 
B)  the substitution effect. 
C)  the income effect. 
D)  the distribution of income. 
A)  the supply of labor. 
B)  the substitution effect. 
C)  the income effect. 
D)  the distribution of income.

Question 2

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups' perceived

Accepted Answer

A)  supply of labor. 
B)  value of marginal product. 
C)  marginal cost of labor. 
D)  minimum wage. 
A)  supply of labor. 
B)  value of marginal product. 
C)  marginal cost of labor. 
D)  minimum wage.

Question 3

Pamela Michelle Scott, a low income single mom, had just finished her monthly shopping to purchase 30 days' worth of meat from Hollins Market. She's reared five healthy children and said that she made good use of the free health clinics and food stamps. Pamela benefits from free health clinics which are ________ and food stamps which is a ________.

Accepted Answer

A)  Social Security programs; subsidized service 
B)  unemployment compensation programs; Social Security program 
C)  subsidized services; welfare program 
D)  welfare programs; unemployment compensation program 
A)  Social Security programs; subsidized service 
B)  unemployment compensation programs; Social Security program 
C)  subsidized services; welfare program 
D)  welfare programs; unemployment compensation program

Question 4

Which of the following would show the LEAST amount of inequality?

Accepted Answer

A)  Measured annual income. 
B)  Measured annual wealth. 
C)  Lifetime income. 
D)  Measured annual income and annual wealth are equally distributed and are more equally distributed than lifetime wealth. 
A)  Measured annual income. 
B)  Measured annual wealth. 
C)  Lifetime income. 
D)  Measured annual income and annual wealth are equally distributed and are more equally distributed than lifetime wealth.

Question 5

What is the main reason that the distribution of measured wealth is more unequal than the distribution of income?

Accepted Answer

The distribution of income sta

Question 6

The big tradeoff between equality and efficiency exists because

Accepted Answer

A)  redistribution uses resources and weakens incentives to work. 
B)  redistribution uses resources and strengthens incentives to work. 
C)  redistribution creates additional resources and weakens incentives to work. 
D)  redistribution creates additional resources and strengthens incentives to work. 
A)  redistribution uses resources and weakens incentives to work. 
B)  redistribution uses resources and strengthens incentives to work. 
C)  redistribution creates additional resources and weakens incentives to work. 
D)  redistribution creates additional resources and strengthens incentives to work.

Question 7

Which of the following is NOT a potential reason for wage differences by race or sex?

Accepted Answer

A)  discrimination 
B)  differences in human capital 
C)  differences in the degree of specialization 
D)  All of the above are potential reasons for wage differences by race or sex. 
A)  discrimination 
B)  differences in human capital 
C)  differences in the degree of specialization 
D)  All of the above are potential reasons for wage differences by race or sex.

Question 8

With a proportional tax,

Accepted Answer

A)  a poor household pays a larger percentage of its income in taxes than a rich one. 
B)  a rich household pays a larger percentage of its income in taxes than a poor one. 
C)  all households pay the same total amount of tax. 
D)  all households pay the same percentage of their income as taxes. 
A)  a poor household pays a larger percentage of its income in taxes than a rich one. 
B)  a rich household pays a larger percentage of its income in taxes than a poor one. 
C)  all households pay the same total amount of tax. 
D)  all households pay the same percentage of their income as taxes.

Question 9

The decrease in the incentive to work created by welfare payments programs

Accepted Answer

A)  only affects low income taxpayers. 
B)  only affects taxpayers but not welfare recipients. 
C)  only affects high income executives. 
D)  affects both taxpayers and welfare recipients. 
A)  only affects low income taxpayers. 
B)  only affects taxpayers but not welfare recipients. 
C)  only affects high income executives. 
D)  affects both taxpayers and welfare recipients.

Question 10

-In the above figure, the straight line between the lower left corner and the upper right corner shows

Accepted Answer

A)  perfect equality in income distribution. 
B)  perfect inequality in income distribution. 
C)  that wealth rises as income rises. 
D)  that household size rises as income rises. 
A)  perfect equality in income distribution. 
B)  perfect inequality in income distribution. 
C)  that wealth rises as income rises. 
D)  that household size rises as income rises.

Question 11

Netflix, an online DVD rental service, was established in 1997. In 2010, Netflix has more than 10 million subscribers. This technology has ________ in the labor market for computer software programmers.

Accepted Answer

A)  decreased demand 
B)  increased supply 
C)  decreased supply 
D)  increased demand 
A)  decreased demand 
B)  increased supply 
C)  decreased supply 
D)  increased demand

Question 12

-The above table shows the distribution of wealth and income for Miseria. What percent of wealth is owned by the poorest forty percent of the population?

Accepted Answer

A)  0 percent 
B)  2 percent 
C)  5 percent 
D)  10 percent 
A)  0 percent 
B)  2 percent 
C)  5 percent 
D)  10 percent

Question 13

The poor receive

Accepted Answer

A)  less in benefits than they pay in taxes, and so do the rich. 
B)  more in benefits than they pay in taxes, and so do the rich. 
C)  less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes. 
D)  more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes. 
A)  less in benefits than they pay in taxes, and so do the rich. 
B)  more in benefits than they pay in taxes, and so do the rich. 
C)  less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes. 
D)  more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes.

Question 14

The income distribution is a more accurate measure of economic inequality than the wealth distribution because income excludes human capital.

Accepted Answer

A) True 
 B)False

Question 15

If the area between the line of equality and the Lorenz curve is 1,000, the Gini ratio is

Accepted Answer

A)  0.8 
B)  0.2 
C)  0.1 
D)  0.5 
A)  0.8 
B)  0.2 
C)  0.1 
D)  0.5

Question 16

Which of the following is NOT an example of the opportunity cost of investing in human capital?

Accepted Answer

A)  lost wages while in school 
B)  lost wages while in on-the-job training 
C)  tuition payments 
D)  apartment rent while working and going to school part-time 
A)  lost wages while in school 
B)  lost wages while in on-the-job training 
C)  tuition payments 
D)  apartment rent while working and going to school part-time

Question 17

The entry of China and other developing countries into the global economy ________ the wages of low-skilled workers and ________ the wages of high-skilled workers in the United States.

Accepted Answer

A)  lowers; lowers 
B)  raises; raises 
C)  raises; lowers 
D)  lowers; raises 
A)  lowers; lowers 
B)  raises; raises 
C)  raises; lowers 
D)  lowers; raises

Question 18

What is a Lorenz curve and what does it show?

Accepted Answer

A Lorenz curve graphs the cumulative per

Question 19

-As a tool that is used to measure inequality in the distribution of income, the Lorenz curve graphs

Accepted Answer

A)  the cumulative percentage of income against the cumulative percentage of households. 
B)  the percentage of total income received by each given percentage of households. 
C)  the mean income, median income, and mode income against the percentage of households. 
D)  the mean income received by households over time. 
A)  the cumulative percentage of income against the cumulative percentage of households. 
B)  the percentage of total income received by each given percentage of households. 
C)  the mean income, median income, and mode income against the percentage of households. 
D)  the mean income received by households over time.

Question 20

A regressive income tax is defined as a tax for which

Accepted Answer

A)  total taxes paid increase with the level of income. 
B)  total taxes paid are independent of the level of income. 
C)  the average tax rate increases with the level of income. 
D)  the average tax rate decreases with the level of income. 
A)  total taxes paid increase with the level of income. 
B)  total taxes paid are independent of the level of income. 
C)  the average tax rate increases with the level of income. 
D)  the average tax rate decreases with the level of income.

Exam 19: Economic Inequality

A Lorenz curve can be used to illustrate

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups' perceived

Which of the following would show the LEAST amount of inequality?

What is the main reason that the distribution of measured wealth is more unequal than the distribution of income?

The big tradeoff between equality and efficiency exists because

Which of the following is NOT a potential reason for wage differences by race or sex?

With a proportional tax,

The decrease in the incentive to work created by welfare payments programs

-In the above figure, the straight line between the lower left corner and the upper right corner shows

Netflix, an online DVD rental service, was established in 1997. In 2010, Netflix has more than 10 million subscribers. This technology has ________ in the labor market for computer software programmers.

-The above table shows the distribution of wealth and income for Miseria. What percent of wealth is owned by the poorest forty percent of the population?

The poor receive

The income distribution is a more accurate measure of economic inequality than the wealth distribution because income excludes human capital.

If the area between the line of equality and the Lorenz curve is 1,000, the Gini ratio is

Which of the following is NOT an example of the opportunity cost of investing in human capital?

The entry of China and other developing countries into the global economy ________ the wages of low-skilled workers and ________ the wages of high-skilled workers in the United States.

What is a Lorenz curve and what does it show?

-As a tool that is used to measure inequality in the distribution of income, the Lorenz curve graphs

A regressive income tax is defined as a tax for which

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

The entry of China and other developing countries into the global economy the wages of low-skilled workers and the wages of high-skilled workers in the United States.