Question 1

If income is equally distributed, the Gini ratio is 1.

Accepted Answer

A) True 
 B)False

Question 2

If Bianca earns 5 percent on her wealth and that income amounts to $40,000, what is Bianca's wealth?

Accepted Answer

Bianca's w

Question 3

What is the Gini ratio?

Accepted Answer

The Gini ratio is based on the

Question 4

-The Lorenz curve in the above figure implies that

Accepted Answer

A)  income is equally distributed. 
B)  the lowest fifth of households account for less than 20 percent of income. 
C)  the highest fifth of households account for less than 20 percent of income. 
D)  the lowest fifth of households account for more than 20 percent of income. 
A)  income is equally distributed. 
B)  the lowest fifth of households account for less than 20 percent of income. 
C)  the highest fifth of households account for less than 20 percent of income. 
D)  the lowest fifth of households account for more than 20 percent of income.

Question 5

A progressive income tax is one that

Accepted Answer

A)  taxes income so that the average tax rate decreases with the level of income. 
B)  taxes all income above the guaranteed minimum at an average rate that decreases with income. 
C)  taxes income so that the average tax rate increases with the level of income. 
D)  taxes income at a constant rate, regardless of the level of income. 
A)  taxes income so that the average tax rate decreases with the level of income. 
B)  taxes all income above the guaranteed minimum at an average rate that decreases with income. 
C)  taxes income so that the average tax rate increases with the level of income. 
D)  taxes income at a constant rate, regardless of the level of income.

Question 6

The U.S. tax system at both the federal and state levels is

Accepted Answer

A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  negative. 
A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  negative.

Question 7

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is ________, and his income is ________.

Accepted Answer

A)  $5 million a year; $100 million 
B)  $100 million; $5 million a year 
C)  $100 million; $105 million 
D)  $5 million a year; $100 million a year 
A)  $5 million a year; $100 million 
B)  $100 million; $5 million a year 
C)  $100 million; $105 million 
D)  $5 million a year; $100 million a year

Question 8

-In the figure above, 10 percent of income in country A is distributed to the

Accepted Answer

A)  richest 10 percent of the households. 
B)  poorest 10 percent of the households. 
C)  richest 30 percent of the households. 
D)  poorest 30 percent of the households. 
A)  richest 10 percent of the households. 
B)  poorest 10 percent of the households. 
C)  richest 30 percent of the households. 
D)  poorest 30 percent of the households.

Question 9

Discrimination ________ the group being discriminated against and ________ the group being favored.

Accepted Answer

A)  decreases the demand for; increases the demand for 
B)  increases the demand for; decreases the demand for 
C)  decreases the supply of; increases the supply of 
D)  increases the supply of; decreases the supply of 
A)  decreases the demand for; increases the demand for 
B)  increases the demand for; decreases the demand for 
C)  decreases the supply of; increases the supply of 
D)  increases the supply of; decreases the supply of

Question 10

In the United States, the wealthiest 10 percent of households own about ________ of total wealth.

Accepted Answer

A)  40 percent 
B)  66 percent 
C)  90 percent 
D)  55 percent 
A)  40 percent 
B)  66 percent 
C)  90 percent 
D)  55 percent

Question 11

Market income is defined as wages, interest, rent, and profit earned in factor markets plus cash payments to households by the government.

Accepted Answer

A) True 
 B)False

Question 12

The "big tradeoff" refers to the point that governmental redistribution of income causes

Accepted Answer

A)  less efficiency because it weakens incentives to work. 
B)  less efficiency because it strengthens incentives to work. 
C)  more efficiency because it weakens incentives to work. 
D)  more efficiency because it strengthens incentives to work. 
A)  less efficiency because it weakens incentives to work. 
B)  less efficiency because it strengthens incentives to work. 
C)  more efficiency because it weakens incentives to work. 
D)  more efficiency because it strengthens incentives to work.

Question 13

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

Accepted Answer

A)  $8. 
B)  $10. 
C)  $12. 
D)  $14. 
A)  $8. 
B)  $10. 
C)  $12. 
D)  $14.

Question 14

An income tax system in which the average tax rate decreases with the level of income is called a

Accepted Answer

A)  progressive income tax system. 
B)  proportional income tax system. 
C)  regressive income tax system. 
D)  flat-rate income tax system. 
A)  progressive income tax system. 
B)  proportional income tax system. 
C)  regressive income tax system. 
D)  flat-rate income tax system.

Question 15

The income that measures a household's earnings in the absence of government redistribution is called

Accepted Answer

A)  market income. 
B)  real income. 
C)  money income. 
D)  cash income. 
A)  market income. 
B)  real income. 
C)  money income. 
D)  cash income.

Question 16

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will ________ and the wage rate of low-skilled workers will ________.

Accepted Answer

A)  rise; fall 
B)  fall; rise 
C)  fall; fall 
D)  rise; rise 
A)  rise; fall 
B)  fall; rise 
C)  fall; fall 
D)  rise; rise

Question 17

Sue has human capital worth $500,000 and nonhuman capital of $100,000. Todd has human capital worth $10,000 and nonhuman capital of $50,000. The return on each type of capital is 10 percent a year. Sue's income is ________ and Todd's income is ________.

Accepted Answer

A)  $10,000; $5,000 
B)  $50,000; $1,000 
C)  $600,000; $60,000 
D)  $60,000; $6,000 
A)  $10,000; $5,000 
B)  $50,000; $1,000 
C)  $600,000; $60,000 
D)  $60,000; $6,000

Question 18

-Using the table provided above, what can be concluded about the Gini ratio and what does this mean for income equality?

Accepted Answer

A)  The Gini ratio is increasing which means there is greater income inequality. 
B)  The Gini ratio is increasing which means there is greater income equality. 
C)  The Gini ratio is decreasing which means there is greater income equality. 
D)  The Gini ratio is decreasing which means there is greater income inequality. 
A)  The Gini ratio is increasing which means there is greater income inequality. 
B)  The Gini ratio is increasing which means there is greater income equality. 
C)  The Gini ratio is decreasing which means there is greater income equality. 
D)  The Gini ratio is decreasing which means there is greater income inequality.

Question 19

The big tradeoff between equality and efficiency exists because

Accepted Answer

A)  redistribution uses resources and weakens incentives to work. 
B)  redistribution uses resources and strengthens incentives to work. 
C)  redistribution creates additional resources and weakens incentives to work. 
D)  redistribution creates additional resources and strengthens incentives to work. 
A)  redistribution uses resources and weakens incentives to work. 
B)  redistribution uses resources and strengthens incentives to work. 
C)  redistribution creates additional resources and weakens incentives to work. 
D)  redistribution creates additional resources and strengthens incentives to work.

Question 20

The entry of China and other developing countries into the global economy ________ the wages of low-skilled workers and ________ the wages of high-skilled workers in the United States.

Accepted Answer

A)  lowers; lowers 
B)  raises; raises 
C)  raises; lowers 
D)  lowers; raises 
A)  lowers; lowers 
B)  raises; raises 
C)  raises; lowers 
D)  lowers; raises

If income is equally distributed, the Gini ratio is 1.

If Bianca earns 5 percent on her wealth and that income amounts to $40,000, what is Bianca's wealth?

What is the Gini ratio?

-The Lorenz curve in the above figure implies that

A progressive income tax is one that

The U.S. tax system at both the federal and state levels is

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is , and his income is .

-In the figure above, 10 percent of income in country A is distributed to the

Discrimination the group being discriminated against and the group being favored.

In the United States, the wealthiest 10 percent of households own about ________ of total wealth.

Market income is defined as wages, interest, rent, and profit earned in factor markets plus cash payments to households by the government.

The "big tradeoff" refers to the point that governmental redistribution of income causes

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

An income tax system in which the average tax rate decreases with the level of income is called a

The income that measures a household's earnings in the absence of government redistribution is called

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will and the wage rate of low-skilled workers will .

Sue has human capital worth $500,000 and nonhuman capital of $100,000. Todd has human capital worth $10,000 and nonhuman capital of $50,000. The return on each type of capital is 10 percent a year. Sue's income is and Todd's income is .

-Using the table provided above, what can be concluded about the Gini ratio and what does this mean for income equality?

The big tradeoff between equality and efficiency exists because

The entry of China and other developing countries into the global economy the wages of low-skilled workers and the wages of high-skilled workers in the United States.

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

If income is equally distributed, the Gini ratio is 1.

If Bianca earns 5 percent on her wealth and that income amounts to $40,000, what is Bianca's wealth?

What is the Gini ratio?

-The Lorenz curve in the above figure implies that

A progressive income tax is one that

The U.S. tax system at both the federal and state levels is

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is ________, and his income is ________.

-In the figure above, 10 percent of income in country A is distributed to the

Discrimination ________ the group being discriminated against and ________ the group being favored.

In the United States, the wealthiest 10 percent of households own about ________ of total wealth.

Market income is defined as wages, interest, rent, and profit earned in factor markets plus cash payments to households by the government.

The "big tradeoff" refers to the point that governmental redistribution of income causes

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

An income tax system in which the average tax rate decreases with the level of income is called a

The income that measures a household's earnings in the absence of government redistribution is called

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will ________ and the wage rate of low-skilled workers will ________.

Sue has human capital worth $500,000 and nonhuman capital of $100,000. Todd has human capital worth $10,000 and nonhuman capital of $50,000. The return on each type of capital is 10 percent a year. Sue's income is ________ and Todd's income is ________.

-Using the table provided above, what can be concluded about the Gini ratio and what does this mean for income equality?

The big tradeoff between equality and efficiency exists because

The entry of China and other developing countries into the global economy ________ the wages of low-skilled workers and ________ the wages of high-skilled workers in the United States.

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

Mr. Scrooge owns assets worth $100 million. The rate of return on his assets is 5 percent per year. Mr. Scrooge's wealth is , and his income is .

Discrimination the group being discriminated against and the group being favored.

-In the figure above, if information technologies are introduced that are complements for high-skilled workers and substitutes for low-skilled workers, the wage rate of high-skilled workers will and the wage rate of low-skilled workers will .

Sue has human capital worth $500,000 and nonhuman capital of $100,000. Todd has human capital worth $10,000 and nonhuman capital of $50,000. The return on each type of capital is 10 percent a year. Sue's income is and Todd's income is .

The entry of China and other developing countries into the global economy the wages of low-skilled workers and the wages of high-skilled workers in the United States.