Question 1

Evidence seems to indicate that the distribution of income prior to adjusting for taxes and in-kind transfer payments is

Accepted Answer

A)  less equal than after adjusting for taxes and in-kind transfer payments. 
B)  more equal than after adjusting for taxes and in-kind transfer payments. 
C)  the same as after adjusting for taxes and in-kind transfer payments. 
D)  impossible to determine. 
A)  less equal than after adjusting for taxes and in-kind transfer payments. 
B)  more equal than after adjusting for taxes and in-kind transfer payments. 
C)  the same as after adjusting for taxes and in-kind transfer payments. 
D)  impossible to determine.

Question 2

"In-kind" transfer payments are made

Accepted Answer

A)  when the recipient performs some service in return for the payment. 
B)  in the form of goods and services. 
C)  in the form of lower taxes or tax breaks. 
D)  in the form of cash. 
A)  when the recipient performs some service in return for the payment. 
B)  in the form of goods and services. 
C)  in the form of lower taxes or tax breaks. 
D)  in the form of cash.

Question 3

In 2012 a woman won a $100 million lottery.Her income is (most likely)largely due to her

Accepted Answer

A)  hard work. 
B)  education. 
C)  highly marketable innate abilities. 
D)  good luck. 
E)  none of the above 
A)  hard work. 
B)  education. 
C)  highly marketable innate abilities. 
D)  good luck. 
E)  none of the above

Question 4

When the actual Lorenz curve is a 45-degree line,there is

Accepted Answer

A)  perfect income equality. 
B)  perfect income inequality. 
C)  a more equal distribution of income than before. 
D)  a less equal distribution of income than before. 
E)  the same distribution of income as before. 
A)  perfect income equality. 
B)  perfect income inequality. 
C)  a more equal distribution of income than before. 
D)  a less equal distribution of income than before. 
E)  the same distribution of income as before.

Question 5

If the Gini coefficient is 1,there is

Accepted Answer

A)  complete income inequality. 
B)  complete income equality. 
C)  relative income equality. 
D)  relative income inequality. 
A)  complete income inequality. 
B)  complete income equality. 
C)  relative income equality. 
D)  relative income inequality.

Question 6

In order to make the income distribution more equal,the federal government could

Accepted Answer

A)  increase taxes on the rich and increase transfer payments to the poor. 
B)  decrease transfer payments to the rich. 
C)  increase taxes on the poor. 
D)  increase taxes on the rich and increase transfer payments to the middle class. 
E)  a and d 
A)  increase taxes on the rich and increase transfer payments to the poor. 
B)  decrease transfer payments to the rich. 
C)  increase taxes on the poor. 
D)  increase taxes on the rich and increase transfer payments to the middle class. 
E)  a and d

Question 7

Exhibit 29-2
  
-Refer to Exhibit 29-2. This graph depicts the Lorenz curve for two countries,country 1 (Lorenz curve 1)and country 2 (Lorenz curve 2). Although the Gini coefficient is __________ in country 1 than in country 2,the bottom quintile in ____________ receives a larger share of income compared to the bottom quintile in _______________.

Accepted Answer

A)  lower; country 1; country 2 
B)  lower; country 2; country 1 
C)  higher; country 1; country 2 
D)  higher; country 2; country 1 
A)  lower; country 1; country 2 
B)  lower; country 2; country 1 
C)  higher; country 1; country 2 
D)  higher; country 2; country 1

Question 8

The closer the Gini coefficient is to 1,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 9

Consider the area between the line of perfect income equality and the Lorenz curve.In country A this area is larger than in country B.It follows that

Accepted Answer

A)  the bottom 20 percent income group receives a lower percentage of total income in country A than in country B. 
B)  the bottom 20 percent income group receives a lower percentage of total income in country B than in county A. 
C)  the top 20 percent income group receives a higher percentage of total income in country B than in country A. 
D)  the top 20 percent income group receives a higher percentage of total income in country A than in country B. 
E)  none of the above 
A)  the bottom 20 percent income group receives a lower percentage of total income in country A than in country B. 
B)  the bottom 20 percent income group receives a lower percentage of total income in country B than in county A. 
C)  the top 20 percent income group receives a higher percentage of total income in country B than in country A. 
D)  the top 20 percent income group receives a higher percentage of total income in country A than in country B. 
E)  none of the above

Question 10

The social insurance justification for government welfare assistance holds that

Accepted Answer

A)  individuals want to provide welfare assistance to the needy because this is the right thing to do. 
B)  individuals currently not receiving welfare think they might one day need welfare assistance and thus they support welfare programs today. 
C)  it is society's duty or obligation to provide health insurance to those who cannot afford it. 
D)  a person benefits from the alleviation of poverty even if he doesn't contribute to alleviating poverty. 
E)  none of the above 
A)  individuals want to provide welfare assistance to the needy because this is the right thing to do. 
B)  individuals currently not receiving welfare think they might one day need welfare assistance and thus they support welfare programs today. 
C)  it is society's duty or obligation to provide health insurance to those who cannot afford it. 
D)  a person benefits from the alleviation of poverty even if he doesn't contribute to alleviating poverty. 
E)  none of the above

Question 11

It is possible for everyone to be better off (in absolute terms)even though the income distribution has become more unequal.

Accepted Answer

A) True 
 B)False

Question 12

In the United States,the average household in the top quintile (of total money income)contains fewer persons than the average household in the bottom quintile.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an example of in-kind transfer payments?

Accepted Answer

A)  food stamps 
B)  subsidized public housing 
C)  subsidized public education 
D)  Aid to Families with Dependent Children (AFD
C)  
E)  Medicaid 
A)  food stamps 
B)  subsidized public housing 
C)  subsidized public education 
D)  Aid to Families with Dependent Children (AFD
C)  
E)  Medicaid

Question 14

A Gini coefficient of zero means there is

Accepted Answer

A)  perfect income equality. 
B)  perfect income inequality. 
C)  a more equal distribution of income than before. 
D)  a less equal distribution of income than before. 
E)  the same distribution of income as before. 
A)  perfect income equality. 
B)  perfect income inequality. 
C)  a more equal distribution of income than before. 
D)  a less equal distribution of income than before. 
E)  the same distribution of income as before.

Question 15

The practice of companies promoting from within is on the decline,possibly because of less regulated,increasingly competitive product markets.

Accepted Answer

A) True 
 B)False

Question 16

Based on the income data presented for the U.S.(in your text)the Gini coefficient was around 0.45 in 2007,which is higher than it was in 1947.

Accepted Answer

A) True 
 B)False

Question 17

Wage discrimination exists when individuals of __________ are paid different wage rates.

Accepted Answer

A)  varying ability and productivity 
B)  different ethnic origins 
C)  different religions 
D)  equal ability and productivity 
E)  b, c, and d 
A)  varying ability and productivity 
B)  different ethnic origins 
C)  different religions 
D)  equal ability and productivity 
E)  b, c, and d

Question 18

Which of the following statements is false?

Accepted Answer

A)  The Lorenz curve expresses the relationship between cumulative percentage of households and cumulative percentage of income. 
B)  If there were perfect income equality, the Lorenz curve would be a 45-degree line. 
C)  The Gini coefficient is a measurement of the degree of inequality in the income distribution. 
D)  The Gini coefficient is a number between 0 and 100. 
A)  The Lorenz curve expresses the relationship between cumulative percentage of households and cumulative percentage of income. 
B)  If there were perfect income equality, the Lorenz curve would be a 45-degree line. 
C)  The Gini coefficient is a measurement of the degree of inequality in the income distribution. 
D)  The Gini coefficient is a number between 0 and 100.

Question 19

The Gini coefficient is a number between

Accepted Answer

A)  0 and 1. 
B)  1 and 10. 
C)  0 and 100. 
D)  -1 and 1. 
A)  0 and 1. 
B)  1 and 10. 
C)  0 and 100. 
D)  -1 and 1.

Question 20

A Gini coefficient of 1 means there is

Accepted Answer

A)  perfect income equality. 
B)  perfect income inequality. 
C)  a more equal distribution of income than before. 
D)  a less equal distribution of income than before. 
E)  the same distribution of income as before. 
A)  perfect income equality. 
B)  perfect income inequality. 
C)  a more equal distribution of income than before. 
D)  a less equal distribution of income than before. 
E)  the same distribution of income as before.

Exam 29: The Distribution of Income and Poverty

Evidence seems to indicate that the distribution of income prior to adjusting for taxes and in-kind transfer payments is

"In-kind" transfer payments are made

In 2012 a woman won a $100 million lottery.Her income is (most likely)largely due to her

When the actual Lorenz curve is a 45-degree line,there is

If the Gini coefficient is 1,there is

In order to make the income distribution more equal,the federal government could

The closer the Gini coefficient is to 1,the

Consider the area between the line of perfect income equality and the Lorenz curve.In country A this area is larger than in country B.It follows that

The social insurance justification for government welfare assistance holds that

It is possible for everyone to be better off (in absolute terms)even though the income distribution has become more unequal.

In the United States,the average household in the top quintile (of total money income)contains fewer persons than the average household in the bottom quintile.

Which of the following is not an example of in-kind transfer payments?

A Gini coefficient of zero means there is

The practice of companies promoting from within is on the decline,possibly because of less regulated,increasingly competitive product markets.

Based on the income data presented for the U.S.(in your text)the Gini coefficient was around 0.45 in 2007,which is higher than it was in 1947.

Wage discrimination exists when individuals of __________ are paid different wage rates.

Which of the following statements is false?

The Gini coefficient is a number between

A Gini coefficient of 1 means there is

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

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Macroeconomic Measurements: Prices and Unemployment

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Classical Macroeconomics and the Self Regulating Economy

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

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The Financial Crisis of 2007-2009

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