Question 1

-Using the table provided above, which of the following statements is TRUE?

Accepted Answer

A)  Income inequality is decreasing. 
B)  Incomes are increasing. 
C)  Incomes are decreasing. 
D)  Income inequality is increasing. 
A)  Income inequality is decreasing. 
B)  Incomes are increasing. 
C)  Incomes are decreasing. 
D)  Income inequality is increasing. D

Question 2

Which is distributed more equally: income or wealth?

Accepted Answer

The income distribution is much more equal than the wealth distribution. The poorest 50 percent of wealth holders own only 1.1 percent of wealth and the richest 10 percent own about 75 percent of wealth. For income, the poorest 40 percent of households receive about 11 percent of total income and the richest 20 percent of households receive about 50 percent of total income.

Question 3

-The above table shows the distribution of income in two imaginary countries, Alpha and Beta.
a) What does the table tell you about the second 20 percent group in each country?
b) Calculate the cumulative percentage for both countries.
c) Interpret the cumulative percentage for the third 20 percent group in both countries.

Accepted Answer

a) The second 20 percent group earns 10 percent of the income in country Alpha and 6 percent of the income in country Beta.
   b) The table above has the cumulative percentages.
c) In country Alpha, the poorest 60 percent of households earns 35 percent of income. In country Beta, the poorest 60 percent of households earns 21 percent of income.

Question 4

The Lorenz curve

Accepted Answer

A)  explains why some households have different incomes. 
B)  explains why income is equally distributed. 
C)  graphically shows the degree of income inequality. 
D)  graphically shows the amount of wealth in a country. 
A)  explains why some households have different incomes. 
B)  explains why income is equally distributed. 
C)  graphically shows the degree of income inequality. 
D)  graphically shows the amount of wealth in a country.

Question 5

A proportional income tax is defined as a tax for which

Accepted Answer

A)  total taxes paid increase with the level of income. 
B)  total taxes paid are independent of the level of income. 
C)  the average tax rate increases with the level of income. 
D)  the average tax rate is the same at all levels of income. 
A)  total taxes paid increase with the level of income. 
B)  total taxes paid are independent of the level of income. 
C)  the average tax rate increases with the level of income. 
D)  the average tax rate is the same at all levels of income.

Question 6

-In the figure above, the richest 40 percent of households receive ________ of total income.

Accepted Answer

A)  70 percent 
B)  30 percent 
C)  60 percent 
D)  80 percent 
A)  70 percent 
B)  30 percent 
C)  60 percent 
D)  80 percent

Question 7

-The above figure shows the demand and supply curves for high-skilled and low-skilled labor. The wage rate

Accepted Answer

A)  of high-skilled labor is $14 and of low-skilled labor is $12. 
B)  of high-skilled labor is $18 and of low-skilled labor is $14. 
C)  of high-skilled labor is $12 and of low-skilled labor is $8. 
D)  of high-skilled labor is $18 and of low-skilled labor is $8. 
A)  of high-skilled labor is $14 and of low-skilled labor is $12. 
B)  of high-skilled labor is $18 and of low-skilled labor is $14. 
C)  of high-skilled labor is $12 and of low-skilled labor is $8. 
D)  of high-skilled labor is $18 and of low-skilled labor is $8.

Question 8

A Lorenz curve measures

Accepted Answer

A)  the benefits received through welfare programs. 
B)  the actual income distribution and compares it to an equal income distribution. 
C)  the degree to which income taxes are regressive. 
D)  the effect of flat taxes on income distribution. 
A)  the benefits received through welfare programs. 
B)  the actual income distribution and compares it to an equal income distribution. 
C)  the degree to which income taxes are regressive. 
D)  the effect of flat taxes on income distribution.

Question 9

-The above figure shows the Lorenz curves for four different countries. Which of the following statements is FALSE?

Accepted Answer

A)  Country A has an income distribution that is not perfectly equal. 
B)  Country D's income distribution is the most unequal of the four countries. 
C)  The distribution of income is more unequal in country A than in country B. 
D)  The distribution of income is more unequal in country D than in country C. 
A)  Country A has an income distribution that is not perfectly equal. 
B)  Country D's income distribution is the most unequal of the four countries. 
C)  The distribution of income is more unequal in country A than in country B. 
D)  The distribution of income is more unequal in country D than in country C.

Question 10

In the United States the richest 20 percent of households receive about ________ of total income.

Accepted Answer

A)  10 percent 
B)  20 percent 
C)  50 percent 
D)  80 percent 
A)  10 percent 
B)  20 percent 
C)  50 percent 
D)  80 percent

Question 11

-The government in the country of Zappoo is trying to decide which tax plan to implement. The table above shows three alternative plans. If the government decides to implement a proportional income tax, it will implement tax plan

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  either A or B.. 
A)  A. 
B)  B. 
C)  C. 
D)  either A or B..

Question 12

For the United States, Lorenz curves show that

Accepted Answer

A)  income is more equally distributed than wealth. 
B)  income is less equally distributed than wealth. 
C)  incomes have increased over time. 
D)  blacks and Hispanics became better off in the 1990s. 
A)  income is more equally distributed than wealth. 
B)  income is less equally distributed than wealth. 
C)  incomes have increased over time. 
D)  blacks and Hispanics became better off in the 1990s.

Question 13

-The above table shows the distribution of income and wealth in Miseria. What percent of income is earned by the richest 40 percent of the population?

Accepted Answer

A)  20 percent 
B)  30 percent 
C)  55 percent 
D)  70 percent 
A)  20 percent 
B)  30 percent 
C)  55 percent 
D)  70 percent

Question 14

-The above figure shows the Lorenz curve for wealth for the nation of Rusha. If the government were to confiscate all of the wealth from the poorest twenty percent of the population and give it to the wealthiest twenty percent, the Lorenz curve would

Accepted Answer

A)  not change. 
B)  shift farther away from the line of equality. 
C)  shift closer to the line of equality. 
D)  flip above the line of equality. 
A)  not change. 
B)  shift farther away from the line of equality. 
C)  shift closer to the line of equality. 
D)  flip above the line of equality.

Question 15

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. The figure shows that high-skilled workers earn a wage rate greater than low-skilled workers because

Accepted Answer

A)  the supply of high-skilled labor is greater than the supply of low-skilled labor. 
B)  high-skilled labor has a lower value of marginal product. 
C)  of both the cost of acquiring skills and the differences in the value of marginal products. 
D)  of discrimination. 
A)  the supply of high-skilled labor is greater than the supply of low-skilled labor. 
B)  high-skilled labor has a lower value of marginal product. 
C)  of both the cost of acquiring skills and the differences in the value of marginal products. 
D)  of discrimination.

Question 16

-In the above table, which tax plan is progressive?

Accepted Answer

A)  only plan A 
B)  only plan B 
C)  only plan C 
D)  both plan B and plan C 
A)  only plan A 
B)  only plan B 
C)  only plan C 
D)  both plan B and plan C

Question 17

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

Accepted Answer

A)  market income. 
B)  money income. 
C)  money income before taxes. 
D)  income after taxes. 
A)  market income. 
B)  money income. 
C)  money income before taxes. 
D)  income after taxes.

Question 18

Because of assortative mating, wealth becomes ________ and the distribution of wealth becomes more ________.

Accepted Answer

A)  more concentrated in a small number of families; equal 
B)  more concentrated in a small number of families; unequal 
C)  spread out among more families; equal 
D)  spread out among more families; unequal 
A)  more concentrated in a small number of families; equal 
B)  more concentrated in a small number of families; unequal 
C)  spread out among more families; equal 
D)  spread out among more families; unequal

Question 19

If one person has all the income and everyone else has none, the Gini ratio is zero.

Accepted Answer

A) True 
 B)False

Question 20

From left to right, the horizontal axis of the Lorenz curve ranks households from

Accepted Answer

A)  smallest to largest. 
B)  largest to smallest. 
C)  poorest to richest. 
D)  richest to poorest. 
A)  smallest to largest. 
B)  largest to smallest. 
C)  poorest to richest. 
D)  richest to poorest.

-Using the table provided above, which of the following statements is TRUE?

Which is distributed more equally: income or wealth?

The Lorenz curve

A proportional income tax is defined as a tax for which

-In the figure above, the richest 40 percent of households receive ________ of total income.

-The above figure shows the demand and supply curves for high-skilled and low-skilled labor. The wage rate

A Lorenz curve measures

-The above figure shows the Lorenz curves for four different countries. Which of the following statements is FALSE?

In the United States the richest 20 percent of households receive about ________ of total income.

-The government in the country of Zappoo is trying to decide which tax plan to implement. The table above shows three alternative plans. If the government decides to implement a proportional income tax, it will implement tax plan

For the United States, Lorenz curves show that

-The above table shows the distribution of income and wealth in Miseria. What percent of income is earned by the richest 40 percent of the population?

-The above figure shows the Lorenz curve for wealth for the nation of Rusha. If the government were to confiscate all of the wealth from the poorest twenty percent of the population and give it to the wealthiest twenty percent, the Lorenz curve would

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. The figure shows that high-skilled workers earn a wage rate greater than low-skilled workers because

-In the above table, which tax plan is progressive?

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

Because of assortative mating, wealth becomes and the distribution of wealth becomes more .

If one person has all the income and everyone else has none, the Gini ratio is zero.

From left to right, the horizontal axis of the Lorenz curve ranks households from

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Uncertainty and Information

Filters

Exam 19: Economic Inequality

-Using the table provided above, which of the following statements is TRUE?

Which is distributed more equally: income or wealth?

The Lorenz curve

A proportional income tax is defined as a tax for which

-In the figure above, the richest 40 percent of households receive ________ of total income.

-The above figure shows the demand and supply curves for high-skilled and low-skilled labor. The wage rate

A Lorenz curve measures

-The above figure shows the Lorenz curves for four different countries. Which of the following statements is FALSE?

In the United States the richest 20 percent of households receive about ________ of total income.

-The government in the country of Zappoo is trying to decide which tax plan to implement. The table above shows three alternative plans. If the government decides to implement a proportional income tax, it will implement tax plan

For the United States, Lorenz curves show that

-The above table shows the distribution of income and wealth in Miseria. What percent of income is earned by the richest 40 percent of the population?

-The above figure shows the Lorenz curve for wealth for the nation of Rusha. If the government were to confiscate all of the wealth from the poorest twenty percent of the population and give it to the wealthiest twenty percent, the Lorenz curve would

-The above figure shows the supply and demand curves for high-skilled and low-skilled labor. The figure shows that high-skilled workers earn a wage rate greater than low-skilled workers because

-In the above table, which tax plan is progressive?

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

Because of assortative mating, wealth becomes ________ and the distribution of wealth becomes more ________.

If one person has all the income and everyone else has none, the Gini ratio is zero.

From left to right, the horizontal axis of the Lorenz curve ranks households from

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Uncertainty and Information

Filters

Because of assortative mating, wealth becomes and the distribution of wealth becomes more .