Question 1

The figure above shows Lorenz curves for a nation.
-Based on the figure above,

Accepted Answer

A)  wealth is distributed more equally than income. 
B)  the Lorenz curve for wealth shows that the poorest 40 percent of households receive about 40 percent of the nation's wealth. 
C)  average income exceeds average wealth. 
D)  average wealth exceeds average income. 
E)  the Lorenz curve for income shows that the richest 20 percent of households receive about 50 percent of the nation's income. 
A)  wealth is distributed more equally than income. 
B)  the Lorenz curve for wealth shows that the poorest 40 percent of households receive about 40 percent of the nation's wealth. 
C)  average income exceeds average wealth. 
D)  average wealth exceeds average income. 
E)  the Lorenz curve for income shows that the richest 20 percent of households receive about 50 percent of the nation's income. E

Question 2

In the United States,the poorest 20 percent of the household receive approximately ________ percent of total money income.

Accepted Answer

A)  3.3 
B)  9.5 
C)  11.8 
D)  17.6 
E)  20.0 
A)  3.3 
B)  9.5 
C)  11.8 
D)  17.6 
E)  20.0 A

Question 3

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. D

Question 4

The table gives the distribution of income in Miseria.
-What percent of income is earned by the richest 80 percent of the population?

Accepted Answer

A)  25 percent 
B)  95 percent 
C)  100 percent 
D)  5 percent 
E)  More information is needed to answer the question. 
A)  25 percent 
B)  95 percent 
C)  100 percent 
D)  5 percent 
E)  More information is needed to answer the question.

Question 5

If a firm is willing to pay a high-skilled worker $25 per hour and a low-skilled worker $10 per hour then the value of marginal product of skill is

Accepted Answer

A)  $15. 
B)  $40. 
C)  $10. 
D)  $25 
E)  There is not enough information to answer this question. 
A)  $15. 
B)  $40. 
C)  $10. 
D)  $25 
E)  There is not enough information to answer this question.

Question 6

What is "human capital" and why is it considered an investment?

Accepted Answer

Human capital is the accumulated skill a

Question 7

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 8

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 9

The measured inequality of annual income ________ the actual inequality of lifetime income because ________.

Accepted Answer

A)  overstates; different households are at different stages in the life cycle 
B)  overstates; the Lorenz curves differ for income and wealth 
C)  understates; people live in different geographic areas 
D)  understates; people have different levels of education 
E)  overstates; different households have different amounts of wealth 
A)  overstates; different households are at different stages in the life cycle 
B)  overstates; the Lorenz curves differ for income and wealth 
C)  understates; people live in different geographic areas 
D)  understates; people have different levels of education 
E)  overstates; different households have different amounts of wealth

Question 10

High-skilled workers earn more than low-skilled workers in part because the high-skilled workers have

Accepted Answer

A)  a higher value of marginal product. 
B)  a lower value of marginal product. 
C)  better health. 
D)  fewer deductions. 
E)  a greater supply than do low-skilled workers. 
A)  a higher value of marginal product. 
B)  a lower value of marginal product. 
C)  better health. 
D)  fewer deductions. 
E)  a greater supply than do low-skilled workers.

Question 11

________ is the single biggest factor affecting income distribution in the United States.

Accepted Answer

A)  Location of household 
B)  Type of household 
C)  Education 
D)  Age of household 
E)  Gender 
A)  Location of household 
B)  Type of household 
C)  Education 
D)  Age of household 
E)  Gender

Question 12

Discrimination

Accepted Answer

A)  can be corrected by imposing a negative income tax. 
B)  cannot explain economic inequality. 
C)  immediately results in an unequal ownership of capital. 
D)  is more likely to occur in a business where customers come into contact with minority employees. 
E)  means that the costs paid by people who discriminate are lower than otherwise. 
A)  can be corrected by imposing a negative income tax. 
B)  cannot explain economic inequality. 
C)  immediately results in an unequal ownership of capital. 
D)  is more likely to occur in a business where customers come into contact with minority employees. 
E)  means that the costs paid by people who discriminate are lower than otherwise.

Question 13

In the United States,it is the case that

Accepted Answer

A)  both income and wealth are equally distributed. 
B)  wealth is equally distributed but income is distributed unequally. 
C)  income is equally distributed but wealth is distributed unequally. 
D)  both income and wealth are unequally distributed and wealth is distributed more unequally than is income. 
E)  both income and wealth are unequally distributed and income is distributed more unequally than is wealth. 
A)  both income and wealth are equally distributed. 
B)  wealth is equally distributed but income is distributed unequally. 
C)  income is equally distributed but wealth is distributed unequally. 
D)  both income and wealth are unequally distributed and wealth is distributed more unequally than is income. 
E)  both income and wealth are unequally distributed and income is distributed more unequally than is wealth.

Question 14

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers.
-In the figure above,if the value of the marginal product of skill increased,then the

Accepted Answer

A)  SL curve shifts leftward. 
B)  SH curve shifts leftward. 
C)  DH curve shifts rightward. 
D)  DH curve shifts leftward. 
E)  DL curve shifts leftward. 
A)  SL curve shifts leftward. 
B)  SH curve shifts leftward. 
C)  DH curve shifts rightward. 
D)  DH curve shifts leftward. 
E)  DL curve shifts leftward.

Question 15

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups'

Accepted Answer

A)  supply of labor. 
B)  value of marginal product. 
C)  marginal cost of labor. 
D)  minimum wage. 
E)  opportunity cost of acquiring skills. 
A)  supply of labor. 
B)  value of marginal product. 
C)  marginal cost of labor. 
D)  minimum wage. 
E)  opportunity cost of acquiring skills.

Question 16

A regressive income tax is a tax for which the average tax rate

Accepted Answer

A)  increases as income increases. 
B)  becomes negative as income decreases. 
C)  decreases as income increases. 
D)  stays the same regardless of the income level. 
E)  first increases and then decreases as income increases. 
A)  increases as income increases. 
B)  becomes negative as income decreases. 
C)  decreases as income increases. 
D)  stays the same regardless of the income level. 
E)  first increases and then decreases as income increases.

Question 17

Social Security is a ________ program paid for by ________.

Accepted Answer

A)  compulsory; payroll taxes 
B)  compulsory; government money 
C)  voluntary; payroll taxes 
D)  voluntary; income taxes 
E)  compulsory; voluntary taxes on income 
A)  compulsory; payroll taxes 
B)  compulsory; government money 
C)  voluntary; payroll taxes 
D)  voluntary; income taxes 
E)  compulsory; voluntary taxes on income

Question 18

Of the following major characteristics that lead to income disparity,the factor with the smallest impact is

Accepted Answer

A)  sex. 
B)  race. 
C)  region of the country. 
D)  education. 
E)  number of people in the household. 
A)  sex. 
B)  race. 
C)  region of the country. 
D)  education. 
E)  number of people in the household.

Question 19

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 20

Other things being equal,the demand curve for low-skilled workers ________ the demand curve for high-skilled workers.

Accepted Answer

A)  lies below 
B)  lies above 
C)  is the same as 
D)  is not comparable to 
E)  at high wages lies below and at low wages lies above 
A)  lies below 
B)  lies above 
C)  is the same as 
D)  is not comparable to 
E)  at high wages lies below and at low wages lies above

The figure above shows Lorenz curves for a nation. -Based on the figure above,

In the United States,the poorest 20 percent of the household receive approximately ________ percent of total money income.

The rates of return on high school and college educations have

The table gives the distribution of income in Miseria. -What percent of income is earned by the richest 80 percent of the population?

If a firm is willing to pay a high-skilled worker $25 per hour and a low-skilled worker $10 per hour then the value of marginal product of skill is

What is "human capital" and why is it considered an investment?

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

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

The measured inequality of annual income the actual inequality of lifetime income because .

High-skilled workers earn more than low-skilled workers in part because the high-skilled workers have

________ is the single biggest factor affecting income distribution in the United States.

Discrimination

In the United States,it is the case that

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,if the value of the marginal product of skill increased,then the

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups'

A regressive income tax is a tax for which the average tax rate

Social Security is a program paid for by .

Of the following major characteristics that lead to income disparity,the factor with the smallest impact is

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

Other things being equal,the demand curve for low-skilled workers ________ the demand curve for high-skilled workers.

Getting Started

The Usand 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

The figure above shows Lorenz curves for a nation. -Based on the figure above,

In the United States,the poorest 20 percent of the household receive approximately ________ percent of total money income.

The rates of return on high school and college educations have

The table gives the distribution of income in Miseria. -What percent of income is earned by the richest 80 percent of the population?

If a firm is willing to pay a high-skilled worker $25 per hour and a low-skilled worker $10 per hour then the value of marginal product of skill is

What is "human capital" and why is it considered an investment?

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

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

The measured inequality of annual income ________ the actual inequality of lifetime income because ________.

High-skilled workers earn more than low-skilled workers in part because the high-skilled workers have

________ is the single biggest factor affecting income distribution in the United States.

Discrimination

In the United States,it is the case that

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,if the value of the marginal product of skill increased,then the

Discrimination by customers creates a wage differential between two groups by creating a difference in the two groups'

A regressive income tax is a tax for which the average tax rate

Social Security is a ________ program paid for by ________.

Of the following major characteristics that lead to income disparity,the factor with the smallest impact is

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

Other things being equal,the demand curve for low-skilled workers ________ the demand curve for high-skilled workers.

Getting Started

The Usand 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

The measured inequality of annual income the actual inequality of lifetime income because .

Social Security is a program paid for by .