Question 1

The demand for high-skilled labour is derived from the

Accepted Answer

A) exploitation of the low-skilled workers. 
B) marginal cost of production. 
C) lower wage of the labour. 
D) supply of the high-skilled labourers. 
E) value of marginal product of high-skilled labour. 
A) exploitation of the low-skilled workers. 
B) marginal cost of production. 
C) lower wage of the labour. 
D) supply of the high-skilled labourers. 
E) value of marginal product of high-skilled labour. E

Question 2

Use the figure below to answer the following question.
   
Figure 19.3.3
-Refer to Figure 19.3.3.At any given level of employment for high-skilled and low-skilled workers,the vertical distance between the two supply curves

Accepted Answer

A) disappears if there is free entry into the skill market. 
B) disappears if there is equal pay for work of equal value. 
C) is created by discrimination against low-skilled workers. 
D) is the compensation required for the cost of acquiring human capital. 
E) equals the value of marginal product of skill. 
A) disappears if there is free entry into the skill market. 
B) disappears if there is equal pay for work of equal value. 
C) is created by discrimination against low-skilled workers. 
D) is the compensation required for the cost of acquiring human capital. 
E) equals the value of marginal product of skill. D

Question 3

Comparing the distribution of income after taxes and benefits to the distribution of market income,it is true that the distribution of income after taxes and benefits is ________ the distribution of market income.

Accepted Answer

A) more equally distributed than 
B) less equally distributed than 
C) more equally distributed only for the middle quintile than 
D) as equally distributed as the 
E) more equally distributed for the bottom two quintiles and less equally distributed for the top three quintiles than 
A) more equally distributed than 
B) less equally distributed than 
C) more equally distributed only for the middle quintile than 
D) as equally distributed as the 
E) more equally distributed for the bottom two quintiles and less equally distributed for the top three quintiles than A

Question 4

A welfare trap occurs when the marginal tax rate is

Accepted Answer

A) negative. 
B) zero. 
C) 100% or more. 
D) positive. 
E) less than the average tax rate. 
A) negative. 
B) zero. 
C) 100% or more. 
D) positive. 
E) less than the average tax rate.

Question 5

Use the figure below to answer the following questions.
   
Figure 19.1.3
-In Figure 19.1.3,the richest 20 percent of all families receive what share of all income?

Accepted Answer

A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) none of the above 
A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) none of the above

Question 6

The low-income cutoff level is

Accepted Answer

A) a level of housing and food provided by the government. 
B) a fixed real income used to determine whether or not a household may qualify for welfare. 
C) the income level below which a family normally spends 73.6 percent or more of its income on food, shelter, and clothing. 
D) the income level below which a family normally spends 63.6 percent or more of its income on food, shelter, and clothing. 
E) a level of income below which starvation occurs. 
A) a level of housing and food provided by the government. 
B) a fixed real income used to determine whether or not a household may qualify for welfare. 
C) the income level below which a family normally spends 73.6 percent or more of its income on food, shelter, and clothing. 
D) the income level below which a family normally spends 63.6 percent or more of its income on food, shelter, and clothing. 
E) a level of income below which starvation occurs.

Question 7

The distribution of wealth

Accepted Answer

A) understates the degree of inequality because it does not take into account the family's stage in its life cycle. 
B) understates the degree of inequality because it does not take into account the distribution of human capital. 
C) overstates the degree of inequality because it does not take into account the family's stage in its life cycle. 
D) overstates the degree of inequality because it does not take into account the distribution of human capital. 
E) is an accurate measure of the degree of inequality. 
A) understates the degree of inequality because it does not take into account the family's stage in its life cycle. 
B) understates the degree of inequality because it does not take into account the distribution of human capital. 
C) overstates the degree of inequality because it does not take into account the family's stage in its life cycle. 
D) overstates the degree of inequality because it does not take into account the distribution of human capital. 
E) is an accurate measure of the degree of inequality.

Question 8

If each household made the same amount of income,then the Lorenz curve would be

Accepted Answer

A) not defined, because it measures income inequality not income equality. 
B) the line of poverty. 
C) the line of equality. 
D) a right angle. 
E) horizontal. 
A) not defined, because it measures income inequality not income equality. 
B) the line of poverty. 
C) the line of equality. 
D) a right angle. 
E) horizontal.

Question 9

In 2009,the poorest 20 percent of households received what percentage of the nation's after-tax income?

Accepted Answer

A) 10.6 percent 
B) 4.9 percent 
C) 24.0 percent 
D) 16.3 percent 
E) 17.4 percent 
A) 10.6 percent 
B) 4.9 percent 
C) 24.0 percent 
D) 16.3 percent 
E) 17.4 percent

Question 10

Incomes in China and India are a small fraction of incomes in Canada.But incomes in China and India are growing at more than twice the rate of those in Canada.As a result,the inequality in income between the people in China and India and people in Canada is ________ and the world Gini ratio is ________.

Accepted Answer

A) staying relatively constant;remaining constant 
B) increasing in some years and decreasing in other years;remaining constant 
C) decreasing;decreasing 
D) increasing;increasing 
E) decreasing;increasing 
A) staying relatively constant;remaining constant 
B) increasing in some years and decreasing in other years;remaining constant 
C) decreasing;decreasing 
D) increasing;increasing 
E) decreasing;increasing

Question 11

An income Lorenz curve

Accepted Answer

A) graphs the cumulative percentage of income against the cumulative percentage of households. 
B) measures the income among households ranked from the poorest to the richest. 
C) measures the income among households ranked from the richest to the poorest. 
D) measures the factor prices earned by the rich compared with the poor. 
E) is a downward-sloping curve. 
A) graphs the cumulative percentage of income against the cumulative percentage of households. 
B) measures the income among households ranked from the poorest to the richest. 
C) measures the income among households ranked from the richest to the poorest. 
D) measures the factor prices earned by the rich compared with the poor. 
E) is a downward-sloping curve.

Question 12

The distribution of annual income

Accepted Answer

A) understates the degree of inequality because it does not take into account the family's stage in its life cycle. 
B) understates the degree of inequality because it does not take into account the distribution of human capital. 
C) overstates the degree of inequality because it does not take into account the family's stage in its life cycle. 
D) overstates the degree of inequality because it does not take into account the distribution of human capital. 
E) is an accurate measure of the degree of inequality. 
A) understates the degree of inequality because it does not take into account the family's stage in its life cycle. 
B) understates the degree of inequality because it does not take into account the distribution of human capital. 
C) overstates the degree of inequality because it does not take into account the family's stage in its life cycle. 
D) overstates the degree of inequality because it does not take into account the distribution of human capital. 
E) is an accurate measure of the degree of inequality.

Question 13

Use the figure below to answer the following questions.
   
Figure 19.3.1
-Refer to Figure 19.3.1.At the equilibrium wage rates,

Accepted Answer

A) more high-skilled workers will be hired than low-skilled workers. 
B) more low-skilled workers will be hired than high-skilled workers. 
C) the horizontal distance between the two demand curves is the compensation for the cost of acquiring human capital. 
D) the horizontal distance between the two supply curves is the value of marginal product of skill. 
E) none of the above. 
A) more high-skilled workers will be hired than low-skilled workers. 
B) more low-skilled workers will be hired than high-skilled workers. 
C) the horizontal distance between the two demand curves is the compensation for the cost of acquiring human capital. 
D) the horizontal distance between the two supply curves is the value of marginal product of skill. 
E) none of the above.

Question 14

Table 19.4.2
  
-Refer to Table 19.4.2.The table shows three tax payment schemes.Which tax payment plan reduces inequality?

Accepted Answer

A) Plan A 
B) Plan A and Plan C 
C) Plan C 
D) Plan B 
E) Plan A, Plan B, and Plan C 
A) Plan A 
B) Plan A and Plan C 
C) Plan C 
D) Plan B 
E) Plan A, Plan B, and Plan C

Question 15

Which of the following three statements is true? Human capital

Accepted Answer

A) decreases your value of marginal product. 
B) lowers your wages. 
C) may reduce your income while you are accumulating it. 
D) All of the above statements are true. 
E) None of the above three statements are true. 
A) decreases your value of marginal product. 
B) lowers your wages. 
C) may reduce your income while you are accumulating it. 
D) All of the above statements are true. 
E) None of the above three statements are true.

Question 16

Use the figure below to answer the following questions.
   
Figure 19.3.5
-Refer to Figure 19.3.5.This figure shows the labour supply curves and the value of marginal product curves for high-skilled and low-skilled workers.If there is an increase in the supply of high-skilled workers and the supply of high-skilled workers is now equal to the supply of low-skilled workers,then

Accepted Answer

A) wages paid to high-skilled workers would fall to $4 an hour. 
B) wages paid to high-skilled workers would fall to $5 an hour. 
C) wages paid to high-skilled workers would fall to $6 an hour. 
D) there would be no change in the wages of high-skilled workers, because high-skilled workers always earn more than low-skilled workers. 
E) there would be no change in the wages of high-skilled workers, because their value of marginal product is unchanged. 
A) wages paid to high-skilled workers would fall to $4 an hour. 
B) wages paid to high-skilled workers would fall to $5 an hour. 
C) wages paid to high-skilled workers would fall to $6 an hour. 
D) there would be no change in the wages of high-skilled workers, because high-skilled workers always earn more than low-skilled workers. 
E) there would be no change in the wages of high-skilled workers, because their value of marginal product is unchanged.

Question 17

Discrimination ________ workers in the group being discriminated against and ________ workers in the group being favoured.

Accepted Answer

A) decreases the supply of;increases the supply of 
B) decreases the demand for and the supply of;increases the demand for and the supply of 
C) does not change the demand for;increases the demand for 
D) decreases the demand for;increases the demand for 
E) decreases the demand for;does not change the demand for 
A) decreases the supply of;increases the supply of 
B) decreases the demand for and the supply of;increases the demand for and the supply of 
C) does not change the demand for;increases the demand for 
D) decreases the demand for;increases the demand for 
E) decreases the demand for;does not change the demand for

Question 18

Use the figure below to answer the following questions.
   
Figure 19.1.1
-Refer to Figure 19.11.The middle 20 percent of households receive what share of total income?

Accepted Answer

A) 20 percent 
B) 25 percent 
C) 35 percent 
D) 15 percent 
E) 60 percent 
A) 20 percent 
B) 25 percent 
C) 35 percent 
D) 15 percent 
E) 60 percent

Question 19

Redistribution of income from the rich to the poor will lead to a reduction in total output.This is known as the

Accepted Answer

A) market distribution. 
B) Robin Hood principle. 
C) inheritance principle. 
D) big tradeoff. 
E) capitalist dilemma. 
A) market distribution. 
B) Robin Hood principle. 
C) inheritance principle. 
D) big tradeoff. 
E) capitalist dilemma.

Question 20

One important source of earnings differentials is the

Accepted Answer

A) style of dress of the employee. 
B) hair colour of the employee. 
C) type of car driven by the employee. 
D) number of years it takes the employee to graduate from college. 
E) education level of the employee. 
A) style of dress of the employee. 
B) hair colour of the employee. 
C) type of car driven by the employee. 
D) number of years it takes the employee to graduate from college. 
E) education level of the employee.

Exam 19: Economic Inequality

The demand for high-skilled labour is derived from the

Use the figure below to answer the following question. Figure 19.3.3 -Refer to Figure 19.3.3.At any given level of employment for high-skilled and low-skilled workers,the vertical distance between the two supply curves

Comparing the distribution of income after taxes and benefits to the distribution of market income,it is true that the distribution of income after taxes and benefits is ________ the distribution of market income.

A welfare trap occurs when the marginal tax rate is

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3,the richest 20 percent of all families receive what share of all income?

The low-income cutoff level is

The distribution of wealth

If each household made the same amount of income,then the Lorenz curve would be

In 2009,the poorest 20 percent of households received what percentage of the nation's after-tax income?

An income Lorenz curve

The distribution of annual income

Use the figure below to answer the following questions. Figure 19.3.1 -Refer to Figure 19.3.1.At the equilibrium wage rates,

Table 19.4.2 -Refer to Table 19.4.2.The table shows three tax payment schemes.Which tax payment plan reduces inequality?

Which of the following three statements is true? Human capital

Discrimination ________ workers in the group being discriminated against and ________ workers in the group being favoured.

Use the figure below to answer the following questions. Figure 19.1.1 -Refer to Figure 19.11.The middle 20 percent of households receive what share of total income?

Redistribution of income from the rich to the poor will lead to a reduction in total output.This is known as the

One important source of earnings differentials is the

What Is Economics?

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Elasticity

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Expenditure Multipliers: The Keynesian Model

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Discrimination workers in the group being discriminated against and workers in the group being favoured.