Question 1

Which of the following is a definition of poverty in absolute terms?

Accepted Answer

A)  A family is in poverty if it receives less than $10,000 a year in money income. 
B)  A family is in poverty if it receives an income that places it in the lowest 5 percent of family income recipients. 
C)  A family is in poverty if the majority of families receive more income than it receives. 
D)  a, b, and c 
A)  A family is in poverty if it receives less than $10,000 a year in money income. 
B)  A family is in poverty if it receives an income that places it in the lowest 5 percent of family income recipients. 
C)  A family is in poverty if the majority of families receive more income than it receives. 
D)  a, b, and c

Question 2

In 2009,the top 20 percent of households in the United States earned collectively approximately what percent of the total income of all households?

Accepted Answer

A)  20 percent 
B)  30 percent 
C)  40 percent 
D)  50 percent 
E)  60 percent 
A)  20 percent 
B)  30 percent 
C)  40 percent 
D)  50 percent 
E)  60 percent

Question 3

The Lorenz curve and the line of perfect income equality will be one and the same in an economy if 20% of all households receive 20% of all income.

Accepted Answer

A) True 
 B)False

Question 4

Country A has a Gini coefficient of 0.5 and country B has a Gini coefficient of 0.7.It follows that

Accepted Answer

A)  there is greater income inequality in country A than B. 
B)  there is greater income inequality in country B than A. 
C)  it is possible for the Lorenz curves in each country to be the same. 
D)  it is possible for the adjusted Gini coefficients to the same in each country. 
E)  none of the above 
A)  there is greater income inequality in country A than B. 
B)  there is greater income inequality in country B than A. 
C)  it is possible for the Lorenz curves in each country to be the same. 
D)  it is possible for the adjusted Gini coefficients to the same in each country. 
E)  none of the above

Question 5

A public good is

Accepted Answer

A)  a good that government provides to the public, such as roads, education, etc. 
B)  a good that is consumed in public, such as at a restaurant or ball park. 
C)  a good that if consumed by one person can be consumed by other persons to the same degree and the consumption of which cannot be denied to anyone. 
D)  a good that benefits the public more than it costs the public. 
E)  none of the above 
A)  a good that government provides to the public, such as roads, education, etc. 
B)  a good that is consumed in public, such as at a restaurant or ball park. 
C)  a good that if consumed by one person can be consumed by other persons to the same degree and the consumption of which cannot be denied to anyone. 
D)  a good that benefits the public more than it costs the public. 
E)  none of the above

Question 6

Smith and Jones work at very similar jobs,but Smith earns almost 30 percent more a day than Jones.This is a case of __________ discrimination.

Accepted Answer

A)  gender 
B)  religious 
C)  wage 
D)  ethnic 
E)  There is not enough information to answer the question. 
A)  gender 
B)  religious 
C)  wage 
D)  ethnic 
E)  There is not enough information to answer the question.

Question 7

Exhibit 29-1
  
-Refer to Exhibit 29-1.If the Gini coefficient equals 1,then the Lorenz curve is

Accepted Answer

A)  point B. 
B)  line OB. 
C)  the horizontal axis from 0 to A. 
D)  line AB. 
E)  the horizontal axis from 0 to A and the line AB. 
A)  point B. 
B)  line OB. 
C)  the horizontal axis from 0 to A. 
D)  line AB. 
E)  the horizontal axis from 0 to A and the line AB.

Question 8

Exhibit 29-1
  
-Refer to Exhibit 29-1.If the Gini coefficient equals 0,then the Lorenz curve is

Accepted Answer

A)  point A. 
B)  line OB. 
C)  the horizontal axis from 0 to A. 
D)  line AB. 
E)  the horizontal axis from 0 to A and the line AB. 
A)  point A. 
B)  line OB. 
C)  the horizontal axis from 0 to A. 
D)  line AB. 
E)  the horizontal axis from 0 to A and the line AB.

Question 9

There are more white persons in the United States living below the poverty line than African- American persons living below the poverty line.

Accepted Answer

A) True 
 B)False

Question 10

In 2010,approximately 15 percent of the total population in the United States were living below the poverty line.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is false?

Accepted Answer

A)  If people were more alike in terms of their marketable innate abilities and attributes, there would be less income inequality. 
B)  Some degree of income inequality can be attributed to the fact that some people consume less leisure than others. 
C)  Schooling is referred to as human capital. 
D)  Education differences are generally not reflected in income differences. 
A)  If people were more alike in terms of their marketable innate abilities and attributes, there would be less income inequality. 
B)  Some degree of income inequality can be attributed to the fact that some people consume less leisure than others. 
C)  Schooling is referred to as human capital. 
D)  Education differences are generally not reflected in income differences.

Question 12

The Gini coefficient measures the degree of

Accepted Answer

A)  racial discrimination. 
B)  age discrimination. 
C)  income inequality. 
D)  sex discrimination. 
E)  wage discrimination. 
A)  racial discrimination. 
B)  age discrimination. 
C)  income inequality. 
D)  sex discrimination. 
E)  wage discrimination.

Question 13

The closer the Gini coefficient is to zero,the

Accepted Answer

A)  greater the degree of income inequality. 
B)  less the degree of income inequality. 
C)  greater the degree of discrimination. 
D)  less the degree of discrimination. 
A)  greater the degree of income inequality. 
B)  less the degree of income inequality. 
C)  greater the degree of discrimination. 
D)  less the degree of discrimination.

Question 14

Which of the following statements is true?

Accepted Answer

A)  If the Gini coefficient is large, then the space between the Lorenz curve and the line of perfect income equality will be small. 
B)  If the Gini coefficient is 1.00, then the Lorenz curve and the line of perfect income equality coincide. 
C)  If the government succeeds in decreasing income inequality, then the Gini coefficient will decrease. 
D)  If the Gini coefficient is 0.50, then one-half of the households earn one-half of the income, and the other half of the households earn the other half. 
A)  If the Gini coefficient is large, then the space between the Lorenz curve and the line of perfect income equality will be small. 
B)  If the Gini coefficient is 1.00, then the Lorenz curve and the line of perfect income equality coincide. 
C)  If the government succeeds in decreasing income inequality, then the Gini coefficient will decrease. 
D)  If the Gini coefficient is 0.50, then one-half of the households earn one-half of the income, and the other half of the households earn the other half.

Question 15

Which of the following was not given as a reason for income differences in the text?

Accepted Answer

A)  luck 
B)  low minimum wage 
C)  wage discrimination 
D)  risk taking 
A)  luck 
B)  low minimum wage 
C)  wage discrimination 
D)  risk taking

Question 16

Which of the following statements is true?

Accepted Answer

A)  The people that make up the top 5 percent of all income earners are all millionaires. 
B)  In 2009, the lowest 20 percent of all income earners earned less than 5 percent of the total money income. 
C)  The income distribution in the United States is completely equal. 
D)  Between 1967 and 2009, the income distribution in the United States became more equal. 
A)  The people that make up the top 5 percent of all income earners are all millionaires. 
B)  In 2009, the lowest 20 percent of all income earners earned less than 5 percent of the total money income. 
C)  The income distribution in the United States is completely equal. 
D)  Between 1967 and 2009, the income distribution in the United States became more equal.

Question 17

According to economists Frank and Cook,one reason there are more winner-take-all markets today than in the past is because

Accepted Answer

A)  government has limited the choices that people can make when they are choosing what to buy. 
B)  changes in technology, communications, and transportation costs have made it possible for consumers to buy from a small handful of "the best" suppliers in the world. 
C)  changes in technology have lowered prices. 
D)  of the importance that today is placed on ideas instead of things. 
E)  a and b 
A)  government has limited the choices that people can make when they are choosing what to buy. 
B)  changes in technology, communications, and transportation costs have made it possible for consumers to buy from a small handful of "the best" suppliers in the world. 
C)  changes in technology have lowered prices. 
D)  of the importance that today is placed on ideas instead of things. 
E)  a and b

Question 18

If the Gini coefficient is equal to 2,we can conclude that

Accepted Answer

A)  2 percent of the households receive 100 percent of total income. 
B)  2 percent of the households receive 50 percent of total income. 
C)  50 percent of the households receive only 2 percent of total income. 
D)  b and c 
E)  None of the above, because the Gini coefficient cannot exceed 1. 
A)  2 percent of the households receive 100 percent of total income. 
B)  2 percent of the households receive 50 percent of total income. 
C)  50 percent of the households receive only 2 percent of total income. 
D)  b and c 
E)  None of the above, because the Gini coefficient cannot exceed 1.

Question 19

A winner-take-all market

Accepted Answer

A)  is one in which the top producer or performer in the market earns significantly more than others in the same market. 
B)  applies to the sports market and the entertainment market, exclusively. 
C)  the top producer earns all of the profits in that market. 
D)  a and b 
E)  b and c 
A)  is one in which the top producer or performer in the market earns significantly more than others in the same market. 
B)  applies to the sports market and the entertainment market, exclusively. 
C)  the top producer earns all of the profits in that market. 
D)  a and b 
E)  b and c

Question 20

Which of the following is an example of human capital?

Accepted Answer

A)  a computer 
B)  an electronic calculator 
C)  education 
D)  stocks and bonds 
E)  all of the above 
A)  a computer 
B)  an electronic calculator 
C)  education 
D)  stocks and bonds 
E)  all of the above

Exam 29: The Distribution of Income and Poverty

Which of the following is a definition of poverty in absolute terms?

In 2009,the top 20 percent of households in the United States earned collectively approximately what percent of the total income of all households?

The Lorenz curve and the line of perfect income equality will be one and the same in an economy if 20% of all households receive 20% of all income.

Country A has a Gini coefficient of 0.5 and country B has a Gini coefficient of 0.7.It follows that

A public good is

Smith and Jones work at very similar jobs,but Smith earns almost 30 percent more a day than Jones.This is a case of __________ discrimination.

Exhibit 29-1 -Refer to Exhibit 29-1.If the Gini coefficient equals 1,then the Lorenz curve is

Exhibit 29-1 -Refer to Exhibit 29-1.If the Gini coefficient equals 0,then the Lorenz curve is

There are more white persons in the United States living below the poverty line than African- American persons living below the poverty line.

In 2010,approximately 15 percent of the total population in the United States were living below the poverty line.

Which of the following statements is false?

The Gini coefficient measures the degree of

The closer the Gini coefficient is to zero,the

Which of the following statements is true?

Which of the following was not given as a reason for income differences in the text?

Which of the following statements is true?

According to economists Frank and Cook,one reason there are more winner-take-all markets today than in the past is because

If the Gini coefficient is equal to 2,we can conclude that

A winner-take-all market

Which of the following is an example of human capital?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

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