Question 1

Country A has a more equal distribution of income than country B if

Accepted Answer

A)  country A's Lorenz curve is closer to the line of equality than is country B's Lorenz curve. 
B)  country B's Lorenz curve is closer to the line of equality than is country A's Lorenz curve. 
C)  country A's Lorenz curve is just as close to the line of equality as is country B's Lorenz curve. 
D)  country A's Lorenz curve lies below country B's Lorenz curve at low levels of income and above it at high levels of income. 
E)  None of the above because it is impossible to compare income inequalities across countries. 
A)  country A's Lorenz curve is closer to the line of equality than is country B's Lorenz curve. 
B)  country B's Lorenz curve is closer to the line of equality than is country A's Lorenz curve. 
C)  country A's Lorenz curve is just as close to the line of equality as is country B's Lorenz curve. 
D)  country A's Lorenz curve lies below country B's Lorenz curve at low levels of income and above it at high levels of income. 
E)  None of the above because it is impossible to compare income inequalities across countries.

Question 2

The table below shows the distribution of market income in an economy.The government redistributes income by collecting income taxes and paying benefits shown in the table.
a.Calculate the income shares of each 20 percent of households after tax and redistribution.
   
b.In the figure below,draw the Lorenz curves for this economy,both before and after taxes and benefits.

Accepted Answer

@#IMG-DLM& 
a.The completed ta

Question 3

The ________ distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the ________.

Accepted Answer

A)  horizontal; value of marginal product of skill 
B)  horizontal; compensation for cost of acquiring skill 
C)  vertical; value of marginal product of skill 
D)  vertical; compensation for cost of acquiring skill 
E)  vertical; difference in the price of the product produced b y high-skilled labor minus the price of the product produced by low-skilled labor 
A)  horizontal; value of marginal product of skill 
B)  horizontal; compensation for cost of acquiring skill 
C)  vertical; value of marginal product of skill 
D)  vertical; compensation for cost of acquiring skill 
E)  vertical; difference in the price of the product produced b y high-skilled labor minus the price of the product produced by low-skilled labor

Question 4

Which of the following is(are)an example of an income maintenance program?
i.unemployment compensation
ii.welfare programs
iii.social security programs

Accepted Answer

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

Question 5

Increased discrimination results in ________ of the workers discriminated against being hired and being paid ________ wage rates.

Accepted Answer

A)  more; higher 
B)  more; lower 
C)  fewer; higher 
D)  fewer; lower 
E)  the same number; lower 
A)  more; higher 
B)  more; lower 
C)  fewer; higher 
D)  fewer; lower 
E)  the same number; lower

Question 6

A progressive 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 slowly decreases and then rapidly increases 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 slowly decreases and then rapidly increases as income increases.

Question 7

Looking at the U.S.poverty rate by race,we see that

Accepted Answer

A)  the poverty rates by race are now equal. 
B)  whites have a higher poverty rate than do blacks. 
C)  Hispanics and blacks have a higher poverty rate than whites. 
D)  whites have a nearly zero poverty rate while Hispanics and blacks are near 20 percent. 
E)  whites and blacks have higher poverty rates than do Hispanics. 
A)  the poverty rates by race are now equal. 
B)  whites have a higher poverty rate than do blacks. 
C)  Hispanics and blacks have a higher poverty rate than whites. 
D)  whites have a nearly zero poverty rate while Hispanics and blacks are near 20 percent. 
E)  whites and blacks have higher poverty rates than do Hispanics.

Question 8

Of the following types of income tax systems,the one that provides the greatest amount of redistribution from the rich to the poor is a

Accepted Answer

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

Question 9

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 10

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 11

Poverty for a household is defined as the state of

Accepted Answer

A)  having a total income that is below the median total income. 
B)  having an income that can be spent on food, shelter, and clothing that is below the median for food, shelter, and clothing. 
C)  income below what is thought fair. 
D)  income below what is thought necessary for food, shelter, and clothing. 
E)  having an income that is below average. 
A)  having a total income that is below the median total income. 
B)  having an income that can be spent on food, shelter, and clothing that is below the median for food, shelter, and clothing. 
C)  income below what is thought fair. 
D)  income below what is thought necessary for food, shelter, and clothing. 
E)  having an income that is below average.

Question 12

A household's income earned from the markets for factors of production and with no government redistribution is

Accepted Answer

A)  money income. 
B)  welfare. 
C)  market income. 
D)  exploitative income. 
E)  factored income. 
A)  money income. 
B)  welfare. 
C)  market income. 
D)  exploitative income. 
E)  factored income.

Question 13

The above table shows the distribution of income in two imaginary countries,Alpha and Beta.
a.In the figure below,draw the Lorenz curves for Alpha and Beta.
   
b.Compare the distribution of income in Alpha with that in Beta.Which distribution is more unequal?
c.What would be the distribution of income in a country with perfect income equality?

Accepted Answer

@#IMG-DLM& 
a.The Lorenz curves are above.
b.The d

Question 14

Suppose a supply curve for high-skilled labor is drawn in the same graph as a supply curve for low-skilled labor.The vertical distance between these two curves represents the

Accepted Answer

A)  wage rate paid to a high-skilled worker. 
B)  wage rate paid to a low-skilled worker. 
C)  compensation the high-skilled worker requires for the cost of acquiring the skill. 
D)  number of high-skill workers that will be hired. 
E)  difference in the value of marginal product between the high-skilled workers and the low-skilled workers. 
A)  wage rate paid to a high-skilled worker. 
B)  wage rate paid to a low-skilled worker. 
C)  compensation the high-skilled worker requires for the cost of acquiring the skill. 
D)  number of high-skill workers that will be hired. 
E)  difference in the value of marginal product between the high-skilled workers and the low-skilled workers.

Question 15

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)  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)  the demand for workers with that skill exceeds the demand for workers without that skill.

Question 16

Which of the following statements about poverty is (are)correct?
i.Blacks and Hispanics have higher poverty rates than whites.
ii.Over the last 40 years,poverty rates for all groups have generally increased.
iii.Most household spells of poverty last well beyond 9 months.

Accepted Answer

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

Question 17

-The above table shows the distribution of income in two countries,Alpha and Beta.In Country Beta,the richest 40 percent of households receive ________ percent of total income.

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
E)  100 
A)  20 
B)  40 
C)  60 
D)  80 
E)  100

Question 18

One reason why economists earn more than Taco Bell workers is because economists have a ________ value of marginal product of labor than Taco Bell workers.

Accepted Answer

A)  lower 
B)  higher 
C)  similar 
D)  more convex 
E)  more concave 
A)  lower 
B)  higher 
C)  similar 
D)  more convex 
E)  more concave

Question 19

Assume a negative income tax is set up with a 20 percent tax rate on market income and a guaranteed minimum income of $9,000.
a.What is the amount of taxes a household with $23,000 of market income pays or the amount of taxes this household receives?
b.What is the amount of taxes a household with $65,000 of market income pays or the amount of taxes this household receives?

Accepted Answer

a.The taxes paid with market income of $

Question 20

Compared to low-skilled workers,high-skilled workers have a ________ value of marginal product and ________ opportunity cost of obtaining their skills.

Accepted Answer

A)  higher; a higher 
B)  higher; a lower 
C)  lower; a higher 
D)  lower; a lower 
E)  higher; the same 
A)  higher; a higher 
B)  higher; a lower 
C)  lower; a higher 
D)  lower; a lower 
E)  higher; the same

Country A has a more equal distribution of income than country B if

The distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the .

Which of the following is(are)an example of an income maintenance program? i.unemployment compensation ii.welfare programs iii.social security programs

Increased discrimination results in of the workers discriminated against being hired and being paid wage rates.

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

Looking at the U.S.poverty rate by race,we see that

Of the following types of income tax systems,the one that provides the greatest amount of redistribution from the rich to the poor is a

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

A negative income tax

Poverty for a household is defined as the state of

A household's income earned from the markets for factors of production and with no government redistribution is

Suppose a supply curve for high-skilled labor is drawn in the same graph as a supply curve for low-skilled labor.The vertical distance between these two curves represents the

The more costly it is to acquire a skill,the

Which of the following statements about poverty is (are)correct? i.Blacks and Hispanics have higher poverty rates than whites. ii.Over the last 40 years,poverty rates for all groups have generally increased. iii.Most household spells of poverty last well beyond 9 months.

-The above table shows the distribution of income in two countries,Alpha and Beta.In Country Beta,the richest 40 percent of households receive ________ percent of total income.

One reason why economists earn more than Taco Bell workers is because economists have a ________ value of marginal product of labor than Taco Bell workers.

Compared to low-skilled workers,high-skilled workers have a value of marginal product and opportunity cost of obtaining their skills.

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

Country A has a more equal distribution of income than country B if

The ________ distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the ________.

Which of the following is(are)an example of an income maintenance program? i.unemployment compensation ii.welfare programs iii.social security programs

Increased discrimination results in ________ of the workers discriminated against being hired and being paid ________ wage rates.

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

Looking at the U.S.poverty rate by race,we see that

Of the following types of income tax systems,the one that provides the greatest amount of redistribution from the rich to the poor is a

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

A negative income tax

Poverty for a household is defined as the state of

A household's income earned from the markets for factors of production and with no government redistribution is

Suppose a supply curve for high-skilled labor is drawn in the same graph as a supply curve for low-skilled labor.The vertical distance between these two curves represents the

The more costly it is to acquire a skill,the

Which of the following statements about poverty is (are)correct? i.Blacks and Hispanics have higher poverty rates than whites. ii.Over the last 40 years,poverty rates for all groups have generally increased. iii.Most household spells of poverty last well beyond 9 months.

-The above table shows the distribution of income in two countries,Alpha and Beta.In Country Beta,the richest 40 percent of households receive ________ percent of total income.

One reason why economists earn more than Taco Bell workers is because economists have a ________ value of marginal product of labor than Taco Bell workers.

Compared to low-skilled workers,high-skilled workers have a ________ value of marginal product and ________ opportunity cost of obtaining their skills.

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 distance between the supply curve of low-skilled labor and the supply curve of high-skilled labor is the .

Increased discrimination results in of the workers discriminated against being hired and being paid wage rates.

Compared to low-skilled workers,high-skilled workers have a value of marginal product and opportunity cost of obtaining their skills.