Question 1

"If the distribution of income was equal,the Lorenz curve would be a straight,45° line." Is the previous statement correct or incorrect?

Accepted Answer

The statem

Question 2

Which of the following statements correctly describes how taxes redistribute income across different households in an economy?

Accepted Answer

A)  The richest 40 percent of households increase their share of income. 
B)  The poorest 60 percent of households increase their share of income. 
C)  Taxes have no effect on the distribution of income. 
D)  The poorest 20 percent of households receive 20 percent of their income from the government. 
E)  The richest 20 percent of households increase their share of income and the poorest 20 percent decrease their share of income. 
A)  The richest 40 percent of households increase their share of income. 
B)  The poorest 60 percent of households increase their share of income. 
C)  Taxes have no effect on the distribution of income. 
D)  The poorest 20 percent of households receive 20 percent of their income from the government. 
E)  The richest 20 percent of households increase their share of income and the poorest 20 percent decrease their share of income.

Question 3

Since 1970 in the United States,the distribution of income has changed and the group that benefited the most has been the

Accepted Answer

A)  better educated. 
B)  less educated. 
C)  low-skilled workers. 
D)  middle class, that is the group in the middle 20 percent of the income distribution. 
E)  None of the above answers is correct because all groups benefited equally. 
A)  better educated. 
B)  less educated. 
C)  low-skilled workers. 
D)  middle class, that is the group in the middle 20 percent of the income distribution. 
E)  None of the above answers is correct because all groups benefited equally.

Question 4

What is the difference between wealth and income?

Accepted Answer

Wealth is a stock of assets,that is,weal

Question 5

"Over the past two decades,the distribution of income in the United States has become more equal." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect.In recent yea

Question 6

With a negative income tax that has a $10,000 guaranteed income and a 25 percent tax rate,a household that has a market income of $4,000 has a total income of

Accepted Answer

A)  $15,000. 
B)  $14,000. 
C)  $13,000. 
D)  $10,000. 
E)  $7,000. 
A)  $15,000. 
B)  $14,000. 
C)  $13,000. 
D)  $10,000. 
E)  $7,000.

Question 7

________ is a component of welfare programs.

Accepted Answer

A)  A progressive income tax 
B)  Unemployment compensation 
C)  Medicaid 
D)  Social Security payroll taxes 
E)  The negative income tax 
A)  A progressive income tax 
B)  Unemployment compensation 
C)  Medicaid 
D)  Social Security payroll taxes 
E)  The negative income tax

Question 8

Measured annual income inequality overstates actual lifetime inequality because

Accepted Answer

A)  poverty levels vary across states. 
B)  homeless people are not always counted. 
C)  different households are in different stages in the life cycle. 
D)  people tend to overstate their incomes. 
E)  people differ in the amount of education they have attained. 
A)  poverty levels vary across states. 
B)  homeless people are not always counted. 
C)  different households are in different stages in the life cycle. 
D)  people tend to overstate their incomes. 
E)  people differ in the amount of education they have attained.

Question 9

A negative income tax

Accepted Answer

A)  is a regressive income tax. 
B)  is currently in use in the United States. 
C)  makes the redistribution of income efficient. 
D)  provides every household with a guaranteed minimum annual income. 
E)  cannot be enacted in the United States because it is unconstitutional. 
A)  is a regressive income tax. 
B)  is currently in use in the United States. 
C)  makes the redistribution of income efficient. 
D)  provides every household with a guaranteed minimum annual income. 
E)  cannot be enacted in the United States because it is unconstitutional.

Question 10

The three major types of income maintenance programs are

Accepted Answer

A)  Social Security programs, unemployment compensation, and welfare programs. 
B)  food stamps, unemployment compensation, and agricultural price supports. 
C)  student loans, rent control, and welfare programs. 
D)  corporate welfare, minimum wages, and affirmative action laws. 
E)  minimum wages, food stamps, and student loans. 
A)  Social Security programs, unemployment compensation, and welfare programs. 
B)  food stamps, unemployment compensation, and agricultural price supports. 
C)  student loans, rent control, and welfare programs. 
D)  corporate welfare, minimum wages, and affirmative action laws. 
E)  minimum wages, food stamps, and student loans.

Question 11

In the United States,since 1970 the share of income received by the richest 20 percent of households has ________ and the share received by the other 80 percent of households has ________.

Accepted Answer

A)  increased; increased 
B)  increased; decreased 
C)  decreased; increased 
D)  not changed; not changed 
E)  increased; not changed 
A)  increased; increased 
B)  increased; decreased 
C)  decreased; increased 
D)  not changed; not changed 
E)  increased; not changed

Question 12

Describe the effect education and training have on outcomes in the labor market.

Accepted Answer

Education and training affect both the s

Question 13

Describe the characteristics of the typical lowest income household in the United States and the characteristics of the typical richest household in the United States.

Accepted Answer

The typical lowest income household has

Question 14

A Lorenz curve

Accepted Answer

A)  is identical to the straight line sloping up at a 45° angle. 
B)  lies above the straight line sloping up at a 45° angle. 
C)  lies below the straight line sloping up at a 45° angle. 
D)  starts below the straight line sloping up at a 45° angle and then ends above this line. 
E)  starts above the straight line sloping up at a 45° angle and then ends below this line. 
A)  is identical to the straight line sloping up at a 45° angle. 
B)  lies above the straight line sloping up at a 45° angle. 
C)  lies below the straight line sloping up at a 45° angle. 
D)  starts below the straight line sloping up at a 45° angle and then ends above this line. 
E)  starts above the straight line sloping up at a 45° angle and then ends below this line.

Question 15

If the Lorenz curve for income moves upward toward the 45° line,then the

Accepted Answer

A)  distribution of income has become more unequal. 
B)  distribution of income has become more equal. 
C)  mean (average) household income increased. 
D)  total household income increased. 
E)  total household income decreased. 
A)  distribution of income has become more unequal. 
B)  distribution of income has become more equal. 
C)  mean (average) household income increased. 
D)  total household income increased. 
E)  total household income decreased.

Question 16

As a tool that is used to measure inequality in the distribution of income,the Lorenz curve graphs

Accepted Answer

A)  the cumulative percentage of money income against the cumulative percentage of households. 
B)  the percentage of total money income received by each given percentage of households. 
C)  the mean income, median income, and mode income against the percentage of households. 
D)  the mean money income received by households over time. 
E)  the cumulative percentage of money income against the mean and median money income. 
A)  the cumulative percentage of money income against the cumulative percentage of households. 
B)  the percentage of total money income received by each given percentage of households. 
C)  the mean income, median income, and mode income against the percentage of households. 
D)  the mean money income received by households over time. 
E)  the cumulative percentage of money income against the mean and median money income.

Question 17

The rates of return on high school and college educations have

Accepted Answer

A)  not been estimated, but are assumed to be high. 
B)  been estimated as negative, but these are still good options for most. 
C)  been estimated at 50 percent per year. 
D)  been estimated at between 5 to 10 percent per year. 
E)  been estimated to be essentially zero. 
A)  not been estimated, but are assumed to be high. 
B)  been estimated as negative, but these are still good options for most. 
C)  been estimated at 50 percent per year. 
D)  been estimated at between 5 to 10 percent per year. 
E)  been estimated to be essentially zero.

Question 18

The wage rate that high-skilled workers receive is ________ the wage rate that low-skill workers receive.

Accepted Answer

A)  greater than or equal to 
B)  equal to 
C)  less than or equal to 
D)  greater than 
E)  less than 
A)  greater than or equal to 
B)  equal to 
C)  less than or equal to 
D)  greater than 
E)  less than

Question 19

Fully explain why it is a good idea for young people who are considering dropping out of high school to stay in school if the U.S.government pursues more liberal immigration policies over the next 20 years.

Accepted Answer

Over the past several years,the number o

Question 20

Of all the characteristics that lead to income inequality,the factor with the largest impact is

Accepted Answer

A)  race. 
B)  sex. 
C)  age. 
D)  education. 
E)  location. 
A)  race. 
B)  sex. 
C)  age. 
D)  education. 
E)  location.

"If the distribution of income was equal,the Lorenz curve would be a straight,45° line." Is the previous statement correct or incorrect?

Which of the following statements correctly describes how taxes redistribute income across different households in an economy?

Since 1970 in the United States,the distribution of income has changed and the group that benefited the most has been the

What is the difference between wealth and income?

"Over the past two decades,the distribution of income in the United States has become more equal." Is the previous statement correct or incorrect? Briefly explain your answer.

With a negative income tax that has a $10,000 guaranteed income and a 25 percent tax rate,a household that has a market income of $4,000 has a total income of

________ is a component of welfare programs.

Measured annual income inequality overstates actual lifetime inequality because

A negative income tax

The three major types of income maintenance programs are

In the United States,since 1970 the share of income received by the richest 20 percent of households has and the share received by the other 80 percent of households has .

Describe the effect education and training have on outcomes in the labor market.

Describe the characteristics of the typical lowest income household in the United States and the characteristics of the typical richest household in the United States.

A Lorenz curve

If the Lorenz curve for income moves upward toward the 45° line,then the

As a tool that is used to measure inequality in the distribution of income,the Lorenz curve graphs

The rates of return on high school and college educations have

The wage rate that high-skilled workers receive is ________ the wage rate that low-skill workers receive.

Fully explain why it is a good idea for young people who are considering dropping out of high school to stay in school if the U.S.government pursues more liberal immigration policies over the next 20 years.

Of all the characteristics that lead to income inequality,the factor with the largest impact is

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

"If the distribution of income was equal,the Lorenz curve would be a straight,45° line." Is the previous statement correct or incorrect?

Which of the following statements correctly describes how taxes redistribute income across different households in an economy?

Since 1970 in the United States,the distribution of income has changed and the group that benefited the most has been the

What is the difference between wealth and income?

"Over the past two decades,the distribution of income in the United States has become more equal." Is the previous statement correct or incorrect? Briefly explain your answer.

With a negative income tax that has a $10,000 guaranteed income and a 25 percent tax rate,a household that has a market income of $4,000 has a total income of

________ is a component of welfare programs.

Measured annual income inequality overstates actual lifetime inequality because

A negative income tax

The three major types of income maintenance programs are

In the United States,since 1970 the share of income received by the richest 20 percent of households has ________ and the share received by the other 80 percent of households has ________.

Describe the effect education and training have on outcomes in the labor market.

Describe the characteristics of the typical lowest income household in the United States and the characteristics of the typical richest household in the United States.

A Lorenz curve

If the Lorenz curve for income moves upward toward the 45° line,then the

As a tool that is used to measure inequality in the distribution of income,the Lorenz curve graphs

The rates of return on high school and college educations have

The wage rate that high-skilled workers receive is ________ the wage rate that low-skill workers receive.

Fully explain why it is a good idea for young people who are considering dropping out of high school to stay in school if the U.S.government pursues more liberal immigration policies over the next 20 years.

Of all the characteristics that lead to income inequality,the factor with the largest impact is

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

In the United States,since 1970 the share of income received by the richest 20 percent of households has and the share received by the other 80 percent of households has .