Question 1

Market income is defined as wages, interest, rent, and profit earned in factor markets plus cash payments to households by the government.

Accepted Answer

A) True 
 B)False

Question 2

The public education system is an example of

Accepted Answer

A)  an income maintenance program. 
B)  a negative income tax. 
C)  the poor paying more than the market price for a service they receive. 
D)  a subsidized service. 
A)  an income maintenance program. 
B)  a negative income tax. 
C)  the poor paying more than the market price for a service they receive. 
D)  a subsidized service.

Question 3

An income tax in which the average tax rate increases 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 4

Market income is

Accepted Answer

A)  profit earned in factor markets. 
B)  interest earned in factor markets. 
C)  wages, interest, rent, and profit earned in factor markets. 
D)  wages, interest, rent, and profit earned in factor markets plus cash payments made to households by government. 
A)  profit earned in factor markets. 
B)  interest earned in factor markets. 
C)  wages, interest, rent, and profit earned in factor markets. 
D)  wages, interest, rent, and profit earned in factor markets plus cash payments made to households by government.

Question 5

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

Accepted Answer

A)  market income. 
B)  money income. 
C)  money income before taxes. 
D)  income after taxes. 
A)  market income. 
B)  money income. 
C)  money income before taxes. 
D)  income after taxes.

Question 6

High-skilled workers have

Accepted Answer

A)  a lower value of marginal product because they have higher wages. 
B)  the same labor supply curve as do low-skilled workers. 
C)  more human capital than do low-skilled workers. 
D)  None of the above answers is correct. 
A)  a lower value of marginal product because they have higher wages. 
B)  the same labor supply curve as do low-skilled workers. 
C)  more human capital than do low-skilled workers. 
D)  None of the above answers is correct.

Question 7

The 2010 Federal Personal Income six tax brackets range from 10 percent for individuals earning less than $8,025 to 35 percent for those earning over $357,700. The personal income tax system is

Accepted Answer

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

Question 8

-The Lorenz curve in the above figure implies that

Accepted Answer

A)  income is equally distributed. 
B)  the lowest fifth of households account for less than 20 percent of income. 
C)  the highest fifth of households account for less than 20 percent of income. 
D)  the lowest fifth of households account for more than 20 percent of income. 
A)  income is equally distributed. 
B)  the lowest fifth of households account for less than 20 percent of income. 
C)  the highest fifth of households account for less than 20 percent of income. 
D)  the lowest fifth of households account for more than 20 percent of income.

Question 9

-The above figure shows the demand and supply curves for high-skilled and low-skilled labor. The wage differential between high-skilled and low-skilled labor is

Accepted Answer

A)  $4.00. 
B)  $5.00. 
C)  $6.00. 
D)  $7.00. 
A)  $4.00. 
B)  $5.00. 
C)  $6.00. 
D)  $7.00.

Question 10

Education

Accepted Answer

A)  does not really add to one's human capital. 
B)  does not really affect one's income. 
C)  is a major factor affecting one's income. 
D)  explains all the differences in male-female incomes. 
A)  does not really add to one's human capital. 
B)  does not really affect one's income. 
C)  is a major factor affecting one's income. 
D)  explains all the differences in male-female incomes.

Question 11

An income tax system in which the average tax rate decreases with the level of income is called a

Accepted Answer

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

Question 12

Some economists argue that discrimination based on race and sex cannot lead to persistent wage differentials. What is their argument?

Accepted Answer

In short, wage differentials will lead t

Question 13

The table shows the distributions of market income and money income in the United States in 2007.  
-According to the table above, ________ percent of total income is redistributed to the lowest income group.

Accepted Answer

A)  4.7 
B)  2.3 
C)  1.5 
D)  3.8 
A)  4.7 
B)  2.3 
C)  1.5 
D)  3.8

Question 14

A government redistribution of income program is proposed with the aim of making the income distribution the same as the 45° line in a Lorenz curve diagram. What implications does the idea of the "big tradeoff" have for the program?

Accepted Answer

If the distribution of income was the sa

Question 15

Making the distribution of wealth ________ equal is ________.

Accepted Answer

A)  more; differences in degrees of specialization 
B)  less; differences in degrees of specialization 
C)  more; assortative mating 
D)  less; assortative mating 
A)  more; differences in degrees of specialization 
B)  less; differences in degrees of specialization 
C)  more; assortative mating 
D)  less; assortative mating

Question 16

Lee earns more than does Pat. Which of the following can explain why?

Accepted Answer

A)  Pat is discriminated against. 
B)  Lee has more human capital. 
C)  Lee has a greater degree of specialization in earning an income. 
D)  All of the above could be a factor leading to the wage difference. 
A)  Pat is discriminated against. 
B)  Lee has more human capital. 
C)  Lee has a greater degree of specialization in earning an income. 
D)  All of the above could be a factor leading to the wage difference.

Question 17

-In the above table, which tax plan is regressive?

Accepted Answer

A)  only plan A 
B)  only plan B 
C)  only plan C 
D)  both plan A and plan C 
A)  only plan A 
B)  only plan B 
C)  only plan C 
D)  both plan A and plan C

Question 18

-In the figure above, the poorest 40 percent of all households receive what share of income?

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  40 percent 
D)  60 percent 
A)  10 percent 
B)  20 percent 
C)  40 percent 
D)  60 percent

Question 19

The "big tradeoff" refers to the point that governmental redistribution of income causes

Accepted Answer

A)  less efficiency because it weakens incentives to work. 
B)  less efficiency because it strengthens incentives to work. 
C)  more efficiency because it weakens incentives to work. 
D)  more efficiency because it strengthens incentives to work. 
A)  less efficiency because it weakens incentives to work. 
B)  less efficiency because it strengthens incentives to work. 
C)  more efficiency because it weakens incentives to work. 
D)  more efficiency because it strengthens incentives to work.

Question 20

Assortative mating results in

Accepted Answer

A)  many people being able to marry their way out of poverty. 
B)  wealth becoming more concentrated among families. 
C)  the Lorenz curve moving rightward closer to the line of equality. 
D)  people marrying at a later age. 
A)  many people being able to marry their way out of poverty. 
B)  wealth becoming more concentrated among families. 
C)  the Lorenz curve moving rightward closer to the line of equality. 
D)  people marrying at a later age.

Exam 19: Economic Inequality

Market income is defined as wages, interest, rent, and profit earned in factor markets plus cash payments to households by the government.

The public education system is an example of

An income tax in which the average tax rate increases with income is called a

Market income is

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

High-skilled workers have

The 2010 Federal Personal Income six tax brackets range from 10 percent for individuals earning less than $8,025 to 35 percent for those earning over $357,700. The personal income tax system is

-The Lorenz curve in the above figure implies that

-The above figure shows the demand and supply curves for high-skilled and low-skilled labor. The wage differential between high-skilled and low-skilled labor is

Education

An income tax system in which the average tax rate decreases with the level of income is called a

Some economists argue that discrimination based on race and sex cannot lead to persistent wage differentials. What is their argument?

The table shows the distributions of market income and money income in the United States in 2007. -According to the table above, ________ percent of total income is redistributed to the lowest income group.

A government redistribution of income program is proposed with the aim of making the income distribution the same as the 45° line in a Lorenz curve diagram. What implications does the idea of the "big tradeoff" have for the program?

Making the distribution of wealth ________ equal is ________.

Lee earns more than does Pat. Which of the following can explain why?

-In the above table, which tax plan is regressive?

-In the figure above, the poorest 40 percent of all households receive what share of income?

The "big tradeoff" refers to the point that governmental redistribution of income causes

Assortative mating results in

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

Making the distribution of wealth equal is .