Question 1

In-kind transfer payments are transfer payments that are paid in

Accepted Answer

A) cash. 
B) a specific good or service. 
C) stocks and bonds. 
D) a and b 
E) all of the above 
A) cash. 
B) a specific good or service. 
C) stocks and bonds. 
D) a and b 
E) all of the above B

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. B

Question 3

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. D

Question 4

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

Question 5

One way to reduce the degree of income inequality is to

Accepted Answer

A) increase transfer payments going to people with low labor and asset incomes and increase taxes on people with high labor and asset incomes. 
B) decrease transfer payments going to people with low labor and asset incomes and decrease taxes on people with high labor and asset incomes. 
C) increase transfer payments going to people with low labor and asset incomes by less than taxes are increased on the same people. 
D) increase transfer payments going to people with high labor and asset incomes by more than taxes are increased on the same people. 
E) a and c 
A) increase transfer payments going to people with low labor and asset incomes and increase taxes on people with high labor and asset incomes. 
B) decrease transfer payments going to people with low labor and asset incomes and decrease taxes on people with high labor and asset incomes. 
C) increase transfer payments going to people with low labor and asset incomes by less than taxes are increased on the same people. 
D) increase transfer payments going to people with high labor and asset incomes by more than taxes are increased on the same people. 
E) a and c

Question 6

Exhibit 28-1
​
  
-Refer to Exhibit 28-1. If the Gini coefficient is some number greater than 0, but less than 1, then the Lorenz curve could be

Accepted Answer

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

Question 7

The Lorenz curve is a graph of the __________ of the population.

Accepted Answer

A) age distribution 
B) income distribution 
C) wealth distribution 
D) racial composition 
A) age distribution 
B) income distribution 
C) wealth distribution 
D) racial composition

Question 8

The Gini coefficients for countries A and B are 0.25 and 0.30, respectively. We can definitely conclude that

Accepted Answer

A) the lowest 20 percent family income groups in A and B receive 25 percent and 30 percent of total income, respectively. 
B) the lowest 50 percent family income groups in A and B receive 25 percent and 30 percent of total income, respectively. 
C) the lowest 20 percent family income group receives a greater share of total income in country A than in country B. 
D) the lowest 20 percent family income group receives a greater share of total income in country B than in country A. 
E) none of the above 
A) the lowest 20 percent family income groups in A and B receive 25 percent and 30 percent of total income, respectively. 
B) the lowest 50 percent family income groups in A and B receive 25 percent and 30 percent of total income, respectively. 
C) the lowest 20 percent family income group receives a greater share of total income in country A than in country B. 
D) the lowest 20 percent family income group receives a greater share of total income in country B than in country A. 
E) none of the above

Question 9

Suppose the data show that each year between 1964 and 2019, 10 percent of all income earners (in the United States) earned a low enough income to be considered poor. It follows that

Accepted Answer

A) the person who was part of the 10 percent poor in 1964 was also part of the 10 percent poor in 2019. 
B) the person who was part of the 10 percent poor in 1964 may or may not be part of the 10 percent poor in 2019. 
C) there is no upward income mobility in the United States. 
D) the income distribution in the United States (during this period of time) was unequal. 
E) b and d 
A) the person who was part of the 10 percent poor in 1964 was also part of the 10 percent poor in 2019. 
B) the person who was part of the 10 percent poor in 1964 may or may not be part of the 10 percent poor in 2019. 
C) there is no upward income mobility in the United States. 
D) the income distribution in the United States (during this period of time) was unequal. 
E) b and d

Question 10

If the Gini coefficient is zero, there is

Accepted Answer

A) relative income equality. 
B) complete income inequality. 
C) complete income equality. 
D) relative income inequality. 
E) none of the above 
A) relative income equality. 
B) complete income inequality. 
C) complete income equality. 
D) relative income inequality. 
E) none of the above

Question 11

Maria and Lourdes work for the same company. If Maria earns more than Lourdes, is this evidence of wage discrimination? Explain your answer.

Accepted Answer

Wage discrimination exists when individu

Question 12

A factor that does not contribute to income inequality is

Accepted Answer

A) innate abilities and attributes. 
B) the amount of work a person chooses to do. 
C) education and training. 
D) luck. 
E) none of the above; that is, all factors contribute to income inequality. 
A) innate abilities and attributes. 
B) the amount of work a person chooses to do. 
C) education and training. 
D) luck. 
E) none of the above; that is, all factors contribute to income inequality.

Question 13

Which of the following statements is true?

Accepted Answer

A) Some degree of income inequality is due to the fact that individuals are innately different and make different choices. 
B) No income inequality is due to good or bad luck. 
C) People who agree on the factors that cause income inequality may not agree on the importance of the different factors. 
D) a and c 
E) a, b, and c 
A) Some degree of income inequality is due to the fact that individuals are innately different and make different choices. 
B) No income inequality is due to good or bad luck. 
C) People who agree on the factors that cause income inequality may not agree on the importance of the different factors. 
D) a and c 
E) a, b, and c

Question 14

Exhibit 28-1
​
  
-Refer to Exhibit 28-1. 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 15

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 16

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 17

If we define poverty as income below $10,000 per year, we have set a(n) __________ definition of poverty.

Accepted Answer

A) relative 
B) constrained 
C) absolute 
D) denominated 
A) relative 
B) constrained 
C) absolute 
D) denominated

Question 18

When the actual Lorenz curve is as far away from the 45-degree line as possible, 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. 
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.

Question 19

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 curve in country A is the same as the Lorenz curve in country B. 
D) it is possible that the adjusted Gini coefficient in country A is equal to the Gini coefficient in country B. 
E) c and d 
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 curve in country A is the same as the Lorenz curve in country B. 
D) it is possible that the adjusted Gini coefficient in country A is equal to the Gini coefficient in country B. 
E) c and d

Question 20

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.

Exam 28: The Distribution of Income and Poverty

In-kind transfer payments are transfer payments that are paid in

"In-kind" transfer payments are made

Which of the following statements is false?

Which of the following is an example of human capital?

One way to reduce the degree of income inequality is to

Exhibit 28-1 ​ -Refer to Exhibit 28-1. If the Gini coefficient is some number greater than 0, but less than 1, then the Lorenz curve could be

The Lorenz curve is a graph of the __________ of the population.

The Gini coefficients for countries A and B are 0.25 and 0.30, respectively. We can definitely conclude that

Suppose the data show that each year between 1964 and 2019, 10 percent of all income earners (in the United States) earned a low enough income to be considered poor. It follows that

If the Gini coefficient is zero, there is

Maria and Lourdes work for the same company. If Maria earns more than Lourdes, is this evidence of wage discrimination? Explain your answer.

A factor that does not contribute to income inequality is

Which of the following statements is true?

Exhibit 28-1 ​ -Refer to Exhibit 28-1. If the Gini coefficient equals 0, then the Lorenz curve is

The social insurance justification for government welfare assistance holds that

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.

If we define poverty as income below $10,000 per year, we have set a(n) __________ definition of poverty.

When the actual Lorenz curve is as far away from the 45-degree line as possible, there is

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

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

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Exhibit 28-1 -Refer to Exhibit 28-1. If the Gini coefficient is some number greater than 0, but less than 1, then the Lorenz curve could be

Exhibit 28-1 -Refer to Exhibit 28-1. If the Gini coefficient equals 0, then the Lorenz curve is