Question 1

A ________ tax is one that taxes income at an average rate that decreases with the level of income.

Accepted Answer

A)  regressive 
B)  progressive 
C)  flat 
D)  Social Security 
E)  proportional 
A)  regressive 
B)  progressive 
C)  flat 
D)  Social Security 
E)  proportional

Question 2

The highest-income household in the United States today is likely to be a college-educated

Accepted Answer

A)  married white couple. 
B)  single white female. 
C)  married Asian couple. 
D)  single black male. 
E)  single black female. 
A)  married white couple. 
B)  single white female. 
C)  married Asian couple. 
D)  single black male. 
E)  single black female.

Question 3

A Lorenz curve for income shows the

Accepted Answer

A)  demand for Lorenz cough drops. 
B)  average income graphed against the average number of people in the household. 
C)  cumulative percentage of income graphed against cumulative percentage of households. 
D)  relationship between income and wealth. 
E)  total amount of income graphed against the total number of households. 
A)  demand for Lorenz cough drops. 
B)  average income graphed against the average number of people in the household. 
C)  cumulative percentage of income graphed against cumulative percentage of households. 
D)  relationship between income and wealth. 
E)  total amount of income graphed against the total number of households.

Question 4

The more costly it is to acquire a skill,the

Accepted Answer

A)  more people will go to school to learn the skill. 
B)  less employers are willing to pay for the skill. 
C)  greater the wage differential between high-skilled and low-skilled workers. 
D)  smaller the wage differential between high-skilled and low-skilled workers. 
E)  more the demand for workers with that skill exceeds the demand for workers without that skill. 
A)  more people will go to school to learn the skill. 
B)  less employers are willing to pay for the skill. 
C)  greater the wage differential between high-skilled and low-skilled workers. 
D)  smaller the wage differential between high-skilled and low-skilled workers. 
E)  more the demand for workers with that skill exceeds the demand for workers without that skill.

Question 5

-In the figure above,the nation with the least equal distribution of income is nation

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  The distribution of income is the same in all three nations because their Lorenz curves can be plotted on the same diagram. 
E)  It is impossible to determine with the information given. 
A)  A. 
B)  B. 
C)  C. 
D)  The distribution of income is the same in all three nations because their Lorenz curves can be plotted on the same diagram. 
E)  It is impossible to determine with the information given.

Question 6

If buyers discriminate against women and minorities,
i.the value of marginal product of women and minorities is less than otherwise.
ii.the wage rate paid to women and minorities is less than otherwise.
iii.more women and minorities are hired than otherwise.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii

Question 7

Which of the following characterizes the negative income tax concept?

Accepted Answer

A)  It is a flat tax that lower-income households do not pay. 
B)  It is a progressive tax structure with enough deductions to provide refunds to some. 
C)  It is a regressive tax with low-income earners getting a refund back when taxes are filed. 
D)  It is a guaranteed annual income with earned incomes taxed at a flat rate. 
E)  It is an income tax that eliminates all the inefficiency that occurs with the current tax system. 
A)  It is a flat tax that lower-income households do not pay. 
B)  It is a progressive tax structure with enough deductions to provide refunds to some. 
C)  It is a regressive tax with low-income earners getting a refund back when taxes are filed. 
D)  It is a guaranteed annual income with earned incomes taxed at a flat rate. 
E)  It is an income tax that eliminates all the inefficiency that occurs with the current tax system.

Question 8

Which is distributed more equally: income or wealth?

Accepted Answer

The income distribution is much more equ

Question 9

$$\begin{array} { | c | c | c | } 
\hline \text { Tax Payer } & \text { Income } & \text { Income Taxes Owed } \
\hline \text { Angela } & \$ 10,000 & \$ 1,000 \
\hline \text { Bob } & \$ 100,000 & \$ 10,000 \
\hline \text { Carmen } & \$ 1,000,000 & \$ 100,000 \
\hline
\end{array}$$
The table above shows three taxpayers,their incomes,and taxes owed.The data reflect a ________ income tax system because people pay ________.

Accepted Answer

A)  regressive; a larger portion of their income as taxes 
B)  progressive; a smaller portion of their income as taxes 
C)  proportional; the same proportion of their income as taxes regardless of their level of income. 
D)  flat rate; the same amount of taxes regardless of their income 
E)  negative; a smaller portion of their income as taxes 
A)  regressive; a larger portion of their income as taxes 
B)  progressive; a smaller portion of their income as taxes 
C)  proportional; the same proportion of their income as taxes regardless of their level of income. 
D)  flat rate; the same amount of taxes regardless of their income 
E)  negative; a smaller portion of their income as taxes

Question 10

Looking at the Lorenz curves for income distribution in all the world's nations,we would find that

Accepted Answer

A)  some nations have Lorenz curves that lie above the 45° line, other nations have Lorenz curves that lie below the 45° line, but no nation has a Lorenz curve that lie on the 45° line. 
B)  all nations have Lorenz curves that lie above the 45° line. 
C)  all nations have Lorenz curves that lie below the 45° line. 
D)  some nations have Lorenz curves that lie above the 45° line, other nations have Lorenz curves that lie below the 45° line, and still other nations have a Lorenz curve that lies on the 45° line. 
E)  None of the above answers is correct. 
A)  some nations have Lorenz curves that lie above the 45° line, other nations have Lorenz curves that lie below the 45° line, but no nation has a Lorenz curve that lie on the 45° line. 
B)  all nations have Lorenz curves that lie above the 45° line. 
C)  all nations have Lorenz curves that lie below the 45° line. 
D)  some nations have Lorenz curves that lie above the 45° line, other nations have Lorenz curves that lie below the 45° line, and still other nations have a Lorenz curve that lies on the 45° line. 
E)  None of the above answers is correct.

Question 11

How does the demand for high-skilled workers compare to the demand for low-skilled workers? Why does this difference exist?

Accepted Answer

The demand for high-skilled workers exce

Question 12

The median voter theory predicts income redistribution ________ occur because the median voter ________.

Accepted Answer

A)  will; wants to be made as well off as possible 
B)  will; will only vote for the political party that supports a utilitarian proposal 
C)  will not; has his/her disposable income reduced to inefficient levels 
D)  will not; faces the big tradeoff 
E)  will not; usually favors a negative income tax 
A)  will; wants to be made as well off as possible 
B)  will; will only vote for the political party that supports a utilitarian proposal 
C)  will not; has his/her disposable income reduced to inefficient levels 
D)  will not; faces the big tradeoff 
E)  will not; usually favors a negative income tax

Question 13

The three main ways that governments in the United States redistribute income are

Accepted Answer

A)  using the rule of law, subsidized services, and income taxes. 
B)  private property rights, income taxes and the minimum wage. 
C)  income taxes, income maintenance programs, and subsidized services. 
D)  income taxes, rent control, and food stamps. 
E)  sales taxes, food stamps, and subsidized services. 
A)  using the rule of law, subsidized services, and income taxes. 
B)  private property rights, income taxes and the minimum wage. 
C)  income taxes, income maintenance programs, and subsidized services. 
D)  income taxes, rent control, and food stamps. 
E)  sales taxes, food stamps, and subsidized services.

Question 14

In the United States,do the poorest 20 percent of the households receive more or less than 5 percent of money income?

Accepted Answer

The poorest 20 perce

Question 15

$$\begin{array} { l c c } 
 { \begin{array} { l } 
\text { Household } \
\text { percentage }
\end{array} } & \begin{array} { c } 
\text { Percent of } \
\text { income } \
\text { Alpha }
\end{array} & \begin{array} { c } 
\text { Percent of } \
\text { income } \
\text { Beta }
\end{array} \
\hline \text { Lowest 20 percent } & 9 & 5 \
\text { Second 20 percent } & 10 & 5 \
\text { Third 20 percent } & 12 & 10 \
\text { Fourth 20 percent } & 29 & 20 \
\text { Highest 20 percent } & 40 & 60 \
\hline
\end{array}$$
-The above table shows the distribution of income in two countries,Alpha and Beta.Based on these distributions of income,

Accepted Answer

A)  Country Beta has more equal income distribution than does Country Alpha. 
B)  both countries have equal distributions because 100 percent of the incomes are accounted for. 
C)  the Lorenz Curve for country Beta is closer to the line of equality. 
D)  Country Alpha has a more equal distribution of income than does Country Beta. 
E)  It is impossible to answer the question without more information. 
A)  Country Beta has more equal income distribution than does Country Alpha. 
B)  both countries have equal distributions because 100 percent of the incomes are accounted for. 
C)  the Lorenz Curve for country Beta is closer to the line of equality. 
D)  Country Alpha has a more equal distribution of income than does Country Beta. 
E)  It is impossible to answer the question without more information.

Question 16

Is the poverty rate the lowest among Hispanic households,black households,or white households?

Accepted Answer

The poverty rate is lowest amo

Question 17

Skills are costly to acquire.What forms do these costs take?
i.out-of-pocket expenditures to pay for more education
ii.a higher value of marginal product
iii.forgone earnings while attending higher education

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii

Question 18

Differences in skills
i.can arise partly from differences in education and/or partly from differences in on-the-job training.
ii.can lead to large differences in earnings.
iii.result in different demand curves for high-skilled and low-skilled labor.

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and iii 
E)  i, ii, and iii

Question 19

Which of the following is (are)a difference between high-skilled workers and low-skilled workers?
i.High-skilled workers have a higher value of marginal product.
ii.High-skilled workers have incurred lower opportunity costs to acquire their skills.
iii.The demand for high-skilled workers exceeds that for low-skilled workers.

Accepted Answer

A)  i only 
B)  ii and iii 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii and iii 
C)  i and ii 
D)  i and iii 
E)  i, ii, and iii

Question 20

Describe how a negative income tax works.

Accepted Answer

A negative income tax provides every hou

A ________ tax is one that taxes income at an average rate that decreases with the level of income.

The highest-income household in the United States today is likely to be a college-educated

A Lorenz curve for income shows the

The more costly it is to acquire a skill,the

-In the figure above,the nation with the least equal distribution of income is nation

If buyers discriminate against women and minorities, i.the value of marginal product of women and minorities is less than otherwise. ii.the wage rate paid to women and minorities is less than otherwise. iii.more women and minorities are hired than otherwise.

Which of the following characterizes the negative income tax concept?

Which is distributed more equally: income or wealth?

Tax Payer Income Income Taxes Owed Angela \ 10,000 \ 1,000 Bob \ 100,000 \ 10,000 Carmen \ 1,000,000 \ 100,000 The table above shows three taxpayers,their incomes,and taxes owed.The data reflect a income tax system because people pay .

Looking at the Lorenz curves for income distribution in all the world's nations,we would find that

How does the demand for high-skilled workers compare to the demand for low-skilled workers? Why does this difference exist?

The median voter theory predicts income redistribution occur because the median voter .

The three main ways that governments in the United States redistribute income are

In the United States,do the poorest 20 percent of the households receive more or less than 5 percent of money income?

Is the poverty rate the lowest among Hispanic households,black households,or white households?

Skills are costly to acquire.What forms do these costs take? i.out-of-pocket expenditures to pay for more education ii.a higher value of marginal product iii.forgone earnings while attending higher education

Differences in skills i.can arise partly from differences in education and/or partly from differences in on-the-job training. ii.can lead to large differences in earnings. iii.result in different demand curves for high-skilled and low-skilled labor.

Describe how a negative income tax works.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Filters

Exam 20: Economic Inequality

A ________ tax is one that taxes income at an average rate that decreases with the level of income.

The highest-income household in the United States today is likely to be a college-educated

A Lorenz curve for income shows the

The more costly it is to acquire a skill,the

-In the figure above,the nation with the least equal distribution of income is nation

If buyers discriminate against women and minorities, i.the value of marginal product of women and minorities is less than otherwise. ii.the wage rate paid to women and minorities is less than otherwise. iii.more women and minorities are hired than otherwise.

Which of the following characterizes the negative income tax concept?

Which is distributed more equally: income or wealth?

Tax Payer Income Income Taxes Owed Angela \ 10,000 \ 1,000 Bob \ 100,000 \ 10,000 Carmen \ 1,000,000 \ 100,000 The table above shows three taxpayers,their incomes,and taxes owed.The data reflect a ________ income tax system because people pay ________.

Looking at the Lorenz curves for income distribution in all the world's nations,we would find that

How does the demand for high-skilled workers compare to the demand for low-skilled workers? Why does this difference exist?

The median voter theory predicts income redistribution ________ occur because the median voter ________.

The three main ways that governments in the United States redistribute income are

In the United States,do the poorest 20 percent of the households receive more or less than 5 percent of money income?

Is the poverty rate the lowest among Hispanic households,black households,or white households?

Skills are costly to acquire.What forms do these costs take? i.out-of-pocket expenditures to pay for more education ii.a higher value of marginal product iii.forgone earnings while attending higher education

Differences in skills i.can arise partly from differences in education and/or partly from differences in on-the-job training. ii.can lead to large differences in earnings. iii.result in different demand curves for high-skilled and low-skilled labor.

Describe how a negative income tax works.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Filters

Tax Payer Income Income Taxes Owed Angela \ 10,000 \ 1,000 Bob \ 100,000 \ 10,000 Carmen \ 1,000,000 \ 100,000 The table above shows three taxpayers,their incomes,and taxes owed.The data reflect a income tax system because people pay .

The median voter theory predicts income redistribution occur because the median voter .