Question 1

Median household income in the United States has increased from $38,771 in 1967 to $50,054 in 2011. Based only on this fact, we can conclude that:

Accepted Answer

A)  Inequality is increasing in the United States. 
B)  Inequality is decreasing in the United States. 
C)  Inequality is not changing in the United States. 
D)  We cannot conclude anything about inequality in the United States without more information. 
A)  Inequality is increasing in the United States. 
B)  Inequality is decreasing in the United States. 
C)  Inequality is not changing in the United States. 
D)  We cannot conclude anything about inequality in the United States without more information.

Question 2

-In the figure above, the lowest 20 percent of all households receive ________ percent of all income, the next lowest 20 percent receive ________ percent of all income and the richest 20 percent receive ________ percent of all income.

Accepted Answer

A)  20; 20; 20 
B)  20; 40; 100 
C)  10; 20; 40 
D)  10; 10; 40 
A)  20; 20; 20 
B)  20; 40; 100 
C)  10; 20; 40 
D)  10; 10; 40

Question 3

The U.S. tax system at both the federal and state levels is ________.

Accepted Answer

A)  regressive 
B)  proportional 
C)  progressive 
D)  negative 
A)  regressive 
B)  proportional 
C)  progressive 
D)  negative

Question 4

What is the Gini ratio?

Accepted Answer

The Gini ratio is based on the

Question 5

-The Lorenz curves in the above figure imply that

Accepted Answer

A)  income is distributed more unequally than wealth. 
B)  wealth is distributed more unequally than income. 
C)  both wealth and income are distributed equally. 
D)  both wealth and income are distributed at the same level of inequality. 
A)  income is distributed more unequally than wealth. 
B)  wealth is distributed more unequally than income. 
C)  both wealth and income are distributed equally. 
D)  both wealth and income are distributed at the same level of inequality.

Question 6

-In the figure above, income

Accepted Answer

A)  is most equally distributed in country A. 
B)  is most equally distributed in country B. 
C)  is most equally distributed in country C. 
D)  is equally distributed in all three countries. 
A)  is most equally distributed in country A. 
B)  is most equally distributed in country B. 
C)  is most equally distributed in country C. 
D)  is equally distributed in all three countries.

Question 7

-The above figure shows the Lorenz curves for four different countries. Which of the following statements CAN be made on the basis of the graph?

Accepted Answer

A)  Country C has the best balance between equity and efficiency. 
B)  Country A is a socialist country. 
C)  The income distribution is more equal in country B than in country D. 
D)  all of the above 
A)  Country C has the best balance between equity and efficiency. 
B)  Country A is a socialist country. 
C)  The income distribution is more equal in country B than in country D. 
D)  all of the above

Question 8

A tax is regressive if the average tax rate

Accepted Answer

A)  increases as income increases. 
B)  increases as income decreases. 
C)  is negative. 
D)  is less than one. 
A)  increases as income increases. 
B)  increases as income decreases. 
C)  is negative. 
D)  is less than one.

Question 9

Redistribution programs create a disincentive to work among

Accepted Answer

A)  taxpayers only. 
B)  benefit recipients only. 
C)  both taxpayers and benefit recipients. 
D)  neither taxpayers nor benefit recipients. 
A)  taxpayers only. 
B)  benefit recipients only. 
C)  both taxpayers and benefit recipients. 
D)  neither taxpayers nor benefit recipients.

Question 10

Consider the country of Inland. In Inland, people's average tax rates decrease with the level of income. Inland has a ________ tax structure.

Accepted Answer

A)  progressive 
B)  regressive 
C)  proportional 
D)  flat-rate 
A)  progressive 
B)  regressive 
C)  proportional 
D)  flat-rate

Question 11

Which of the following is an example of a subsidized service?

Accepted Answer

A)  Social Security payments to retirees 
B)  Social Security payments to widows 
C)  welfare payments to the unemployed 
D)  Medicare reimbursements to hospitals 
A)  Social Security payments to retirees 
B)  Social Security payments to widows 
C)  welfare payments to the unemployed 
D)  Medicare reimbursements to hospitals

Question 12

The mean (average) U.S. family income in 2011 was approximately

Accepted Answer

A)  $13,000. 
B)  $70,000. 
C)  $93,000. 
D)  $150,000. 
A)  $13,000. 
B)  $70,000. 
C)  $93,000. 
D)  $150,000.

Question 13

Social Security is an example of

Accepted Answer

A)  a progressive income tax. 
B)  a subsidized service. 
C)  an income maintenance program. 
D)  an unemployment benefit. 
A)  a progressive income tax. 
B)  a subsidized service. 
C)  an income maintenance program. 
D)  an unemployment benefit.

Question 14

According to an Asian Development Bank report in 2007, China's Gini coefficient, a statistical measure of wealth distribution in society, soared to 47.3 in 2004 from 40.7 in 1993, putting the country at a level more typical of Latin America. China experienced ________.

Accepted Answer

A)  a decrease in income inequality 
B)  an increase in income inequality 
C)  a decrease in income 
D)  an increase in income 
A)  a decrease in income inequality 
B)  an increase in income inequality 
C)  a decrease in income 
D)  an increase in income

Question 15

The U.S. Gini ratio for income has ________ within recent decades, which means economic inequality has ________.

Accepted Answer

A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased 
A)  decreased; increased 
B)  decreased; decreased 
C)  increased; decreased 
D)  increased; increased

Question 16

Income (percent of total)  
-The table above shows the income distribution in the United States and Italy in a recent year.
a) Draw a Lorenz curve for the United States. According to your graph, what is the percentage of income received by the poorest 30 percent of households? The richest 10 percent?
b) On the same graph, draw a Lorenz curve for Italy. According to your graph, what is the percentage of income received by the poorest 30 percent of households? The richest 10 percent?
c) Draw the line of equality. How is it related to the Lorenz curve?
d) Is income distributed more equally in the United States or in Italy? Which country's Gini ratio is closer to zero? Explain your answers.

Accepted Answer

@#IMG-DLM& a) See the figure above. The percentage

Question 17

Money income is

Accepted Answer

A)  market income plus cash payments from government. 
B)  equal to market income. 
C)  market income plus cash payments from government minus taxes. 
D)  market income minus taxes. 
A)  market income plus cash payments from government. 
B)  equal to market income. 
C)  market income plus cash payments from government minus taxes. 
D)  market income minus taxes.

Question 18

-The table above shows the distribution of income in Swacko. The government of Swacko imposes a 20 percent tax on the people with the highest 40 percent of income. The government then distributes 50 percent of the tax collected to the lowest 20 percent and 25 percent to the second 20 percent and the middle 20 percent. Suppose that the before-tax group incomes remain as above. Before and after the distribution, what percentage of national income belongs to the lowest 20 percent?

Accepted Answer

A)  2 percent; 10 percent 
B)  20 percent; 20 percent 
C)  5 percent; 25 percent 
D)  2 percent; 2 percent 
A)  2 percent; 10 percent 
B)  20 percent; 20 percent 
C)  5 percent; 25 percent 
D)  2 percent; 2 percent

Question 19

Which of the following will NOT increase a worker's human capital?

Accepted Answer

A)  more work experience 
B)  more training 
C)  more schooling 
D)  a higher wage rate 
A)  more work experience 
B)  more training 
C)  more schooling 
D)  a higher wage rate

Question 20

Which of the following is true regarding the distribution of wealth and the distribution of income?

Accepted Answer

A)  The distribution of wealth is a less accurate measure of inequality because it excludes human capital. 
B)  The distribution of wealth is a more accurate measure of inequality because it includes houses. 
C)  The distribution of income is a less accurate measure of inequality because it excludes the value of things you own. 
D)  The distribution of income is a less accurate measure of inequality because not everyone has a job. 
A)  The distribution of wealth is a less accurate measure of inequality because it excludes human capital. 
B)  The distribution of wealth is a more accurate measure of inequality because it includes houses. 
C)  The distribution of income is a less accurate measure of inequality because it excludes the value of things you own. 
D)  The distribution of income is a less accurate measure of inequality because not everyone has a job.

Exam 19: Economic Inequality

Median household income in the United States has increased from $38,771 in 1967 to $50,054 in 2011. Based only on this fact, we can conclude that:

-In the figure above, the lowest 20 percent of all households receive ________ percent of all income, the next lowest 20 percent receive ________ percent of all income and the richest 20 percent receive ________ percent of all income.

The U.S. tax system at both the federal and state levels is ________.

What is the Gini ratio?

-The Lorenz curves in the above figure imply that

-In the figure above, income

-The above figure shows the Lorenz curves for four different countries. Which of the following statements CAN be made on the basis of the graph?

A tax is regressive if the average tax rate

Redistribution programs create a disincentive to work among

Consider the country of Inland. In Inland, people's average tax rates decrease with the level of income. Inland has a ________ tax structure.

Which of the following is an example of a subsidized service?

The mean (average) U.S. family income in 2011 was approximately

Social Security is an example of

According to an Asian Development Bank report in 2007, China's Gini coefficient, a statistical measure of wealth distribution in society, soared to 47.3 in 2004 from 40.7 in 1993, putting the country at a level more typical of Latin America. China experienced ________.

The U.S. Gini ratio for income has ________ within recent decades, which means economic inequality has ________.

Money income is

Which of the following will NOT increase a worker's human capital?

Which of the following is true regarding the distribution of wealth and the distribution of income?

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

-In the figure above, the lowest 20 percent of all households receive percent of all income, the next lowest 20 percent receive percent of all income and the richest 20 percent receive percent of all income.

The U.S. Gini ratio for income has within recent decades, which means economic inequality has .