Question 1

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 2

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 3

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 4

When income distribution data for the United States is adjusted for taxes and in-kind transfer payments the distribution is more equal than before such an adjustment is made.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Based on the income data presented for the United States (in the textbook), it follows that the Gini coefficient for the United States is

Accepted Answer

A) greater than 0 and less than 1. 
B) definitely less than 1, but it may be 0. 
C) definitely greater than 0, but it may be 1. 
D) definitely 1. 
E) approximately 2.3. 
A) greater than 0 and less than 1. 
B) definitely less than 1, but it may be 0. 
C) definitely greater than 0, but it may be 1. 
D) definitely 1. 
E) approximately 2.3.

Question 7

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 8

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 9

In 2015, 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) 21 percent 
B) 31 percent 
C) 41 percent 
D) 51 percent 
E) 61 percent 
A) 21 percent 
B) 31 percent 
C) 41 percent 
D) 51 percent 
E) 61 percent

Question 10

By itself, knowing a country's Gini coefficient does not tell one anything about the income distribution of a particular quintile within that country.

Accepted Answer

A) True 
 B)False

Question 11

The income level below which a family or person is considered poor and living in poverty is termed the income poverty threshold.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

The Lorenz curve of perfect income equality is a

Accepted Answer

A) vertical line. 
B) horizontal line. 
C) 45-degree line. 
D) downward-sloping line. 
E) line with a slope of negative 1. 
A) vertical line. 
B) horizontal line. 
C) 45-degree line. 
D) downward-sloping line. 
E) line with a slope of negative 1.

Question 15

Compared to those people who prefer to play it safe, individuals who are more comfortable taking risks are more likely to reach the top of the income distribution, or to hit the bottom, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 16

The Gini coefficient would be

Accepted Answer

A) 1 if there were perfect income equality. 
B) zero if there were perfect income equality. 
C) -l if there were complete income inequality. 
D) zero if there were complete income inequality. 
E) a and d 
A) 1 if there were perfect income equality. 
B) zero if there were perfect income equality. 
C) -l if there were complete income inequality. 
D) zero if there were complete income inequality. 
E) a and d

Question 17

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 18

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 19

In country A the income shares (in percent) received by the lowest fifth of income groups to the highest fifth of income groups is, respectively, 10, 15, 20, 25, and 30. In country B the income shares (in percent) received by the lowest fifth of income groups to the highest fifth of income groups is, respectively, 5, 12, 20, 25 and 38. It follows that the

Accepted Answer

A) income distribution is more equal in country B than A. 
B) income distribution is less unequal in country B than A. 
C) Lorenz curve in country B is nearly the same as the line of perfect income equality in country A, but not in country B. 
D) income distribution is less equal in country B than A. 
E) a and b 
A) income distribution is more equal in country B than A. 
B) income distribution is less unequal in country B than A. 
C) Lorenz curve in country B is nearly the same as the line of perfect income equality in country A, but not in country B. 
D) income distribution is less equal in country B than A. 
E) a and b

Question 20

Differences in income result from differences in

Accepted Answer

A) innate abilities and attributes. 
B) education and other training. 
C) attitudes toward risk. 
D) a and b 
E) a, b, and c 
A) innate abilities and attributes. 
B) education and other training. 
C) attitudes toward risk. 
D) a and b 
E) a, b, and c

Exam 28: The Distribution of Income and Poverty

A Gini coefficient of zero means there is

The closer the Gini coefficient is to zero, the

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

When income distribution data for the United States is adjusted for taxes and in-kind transfer payments the distribution is more equal than before such an adjustment is made.

The Gini coefficient is a number between

Based on the income data presented for the United States (in the textbook), it follows that the Gini coefficient for the United States is

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

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

In 2015, the top 20 percent of households in the United States earned collectively approximately what percent of the total income of all households?

By itself, knowing a country's Gini coefficient does not tell one anything about the income distribution of a particular quintile within that country.

The income level below which a family or person is considered poor and living in poverty is termed the income poverty threshold.

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.

A winner-take-all market

The Lorenz curve of perfect income equality is a

Compared to those people who prefer to play it safe, individuals who are more comfortable taking risks are more likely to reach the top of the income distribution, or to hit the bottom, ceteris paribus.

The Gini coefficient would be

Which of the following statements is false?

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

Differences in income result from differences in

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