Question 1

Use the figure below to answer the following questions.
   
Figure 19.1.3
-In Figure 19.1.3, the second richest 20 percent of all families receive what share of income?

Accepted Answer

A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) 50 percent 
A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) 50 percent

Question 2

The low-income cutoff level is

Accepted Answer

A) a level of housing and food provided by the government. 
B) a fixed real income used to determine whether or not a household may qualify for welfare. 
C) the income level below which a family normally spends 73.6 percent or more of its income on food, shelter, and clothing. 
D) the income level below which a family normally spends 63.6 percent or more of its income on food, shelter, and clothing. 
E) a level of income below which starvation occurs. 
A) a level of housing and food provided by the government. 
B) a fixed real income used to determine whether or not a household may qualify for welfare. 
C) the income level below which a family normally spends 73.6 percent or more of its income on food, shelter, and clothing. 
D) the income level below which a family normally spends 63.6 percent or more of its income on food, shelter, and clothing. 
E) a level of income below which starvation occurs.

Question 3

Which of the following statements is false? Human capital

Accepted Answer

A) is the accumulated skill and knowledge of human beings. 
B) is costly to acquire. 
C) increases from on-the-job training. 
D) increases from higher wages. 
E) increases from education. 
A) is the accumulated skill and knowledge of human beings. 
B) is costly to acquire. 
C) increases from on-the-job training. 
D) increases from higher wages. 
E) increases from education.

Question 4

The distribution of wealth

Accepted Answer

A) understates the degree of inequality because it does not take into account the family's stage in its life cycle. 
B) understates the degree of inequality because it does not take into account the distribution of human capital. 
C) overstates the degree of inequality because it does not take into account the family's stage in its life cycle. 
D) overstates the degree of inequality because it does not take into account the distribution of human capital. 
E) is an accurate measure of the degree of inequality. 
A) understates the degree of inequality because it does not take into account the family's stage in its life cycle. 
B) understates the degree of inequality because it does not take into account the distribution of human capital. 
C) overstates the degree of inequality because it does not take into account the family's stage in its life cycle. 
D) overstates the degree of inequality because it does not take into account the distribution of human capital. 
E) is an accurate measure of the degree of inequality.

Question 5

Measured wealth distributions that do not consider the distribution of human capital

Accepted Answer

A) overstate the equality of the income distribution. 
B) understate the inequality of the income distribution. 
C) are correct since human capital is difficult to accurately measure. 
D) overstate the inequality of the wealth distribution. 
E) are correct because the distribution of human capital is about the same as the distribution of non-human wealth. 
A) overstate the equality of the income distribution. 
B) understate the inequality of the income distribution. 
C) are correct since human capital is difficult to accurately measure. 
D) overstate the inequality of the wealth distribution. 
E) are correct because the distribution of human capital is about the same as the distribution of non-human wealth.

Question 6

A progressive income tax

Accepted Answer

A) taxes lower income people a larger percentage than higher income people. 
B) taxes income at an average rate that increases with income. 
C) receives more tax from rich people, but taxes them at the same rate as poor people. 
D) taxes everyone at the same rate. 
E) is rarely used in advanced economies. 
A) taxes lower income people a larger percentage than higher income people. 
B) taxes income at an average rate that increases with income. 
C) receives more tax from rich people, but taxes them at the same rate as poor people. 
D) taxes everyone at the same rate. 
E) is rarely used in advanced economies.

Question 7

In an economy in 2011, 3 million people had full-time managerial and professional jobs that paid an average of $800 a week. At the same time, 1 million people had full-time sales positions that paid an average of $530 a week. Managers and professionals are paid more than salespeople because

Accepted Answer

A) the supply curve of managers and professionals lies above that of salespeople. 
B) the demand curve for managers and professionals lies above that of salespeople. 
C) managers and professionals have a a higher value of marginal product. 
D) the typical manager or professional has incurred a higher cost of education. 
E) all of the above 
A) the supply curve of managers and professionals lies above that of salespeople. 
B) the demand curve for managers and professionals lies above that of salespeople. 
C) managers and professionals have a a higher value of marginal product. 
D) the typical manager or professional has incurred a higher cost of education. 
E) all of the above

Question 8

In Canada, the low-income cut-off level for a family is when ________ or more of income is spent on food, shelter, and clothing.

Accepted Answer

A) 33.6 percent 
B) 43.6 percent 
C) 53.6 percent 
D) 63.6 percent 
E) 73.6 percent 
A) 33.6 percent 
B) 43.6 percent 
C) 53.6 percent 
D) 63.6 percent 
E) 73.6 percent

Question 9

If the average tax rate increases as income increases, the income tax is

Accepted Answer

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

Question 10

Among Canada, Finland, and South Africa, income is distributed most equally in ________ and least equally in ________.

Accepted Answer

A) South Africa; Finland 
B) Canada; South Africa 
C) South Africa; Canada 
D) Finland; Canada 
E) Finland; South Africa 
A) South Africa; Finland 
B) Canada; South Africa 
C) South Africa; Canada 
D) Finland; Canada 
E) Finland; South Africa

Question 11

Comparing the distribution of income after taxes and benefits to the distribution of market income, it is true that the distribution of income after taxes and benefits is ________ the distribution of market income.

Accepted Answer

A) more equally distributed than 
B) less equally distributed than 
C) more equally distributed only for the middle quintile than 
D) as equally distributed as the 
E) more equally distributed for the bottom two quintiles and less equally distributed for the top three quintiles than 
A) more equally distributed than 
B) less equally distributed than 
C) more equally distributed only for the middle quintile than 
D) as equally distributed as the 
E) more equally distributed for the bottom two quintiles and less equally distributed for the top three quintiles than

Question 12

Use the figure below to answer the following questions.
   
Figure 19.1.1
-Refer to Figure 19.1.1. The richest 20 percent of households receive what share of total income?

Accepted Answer

A) 10 percent 
B) 30 percent 
C) 40 percent 
D) 60 percent 
E) 100 percent 
A) 10 percent 
B) 30 percent 
C) 40 percent 
D) 60 percent 
E) 100 percent

Question 13

Use the figure below to answer the following questions.
   
Figure 19.1.3
-In Figure 19.1.3, the second poorest 20 percent of all families receive what share of income?

Accepted Answer

A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) 50 percent 
A) 10 percent 
B) 20 percent 
C) 30 percent 
D) 40 percent 
E) 50 percent

Question 14

A welfare trap occurs when the marginal tax rate is

Accepted Answer

A) negative. 
B) zero. 
C) 100% or more. 
D) positive. 
E) less than the average tax rate. 
A) negative. 
B) zero. 
C) 100% or more. 
D) positive. 
E) less than the average tax rate.

Question 15

Complete the following sentence. Passing on wealth from one generation to another

Accepted Answer

A) can decrease the inequality of wealth. 
B) will decrease the inequality of income. 
C) is limited since the government taxes this at a very high marginal tax rate. 
D) is one of the main causes of social unrest. 
E) will make the distribution of wealth more closely match the distribution of human capital. 
A) can decrease the inequality of wealth. 
B) will decrease the inequality of income. 
C) is limited since the government taxes this at a very high marginal tax rate. 
D) is one of the main causes of social unrest. 
E) will make the distribution of wealth more closely match the distribution of human capital.

Question 16

A proportional income tax

Accepted Answer

A) taxes lower income people a larger percentage than higher income people. 
B) taxes lower income people a smaller percentage than higher income people. 
C) receives less tax from higher income people, but taxes them at the same rate as lower income people. 
D) taxes everyone at the same rate. 
E) taxes everyone the same amount. 
A) taxes lower income people a larger percentage than higher income people. 
B) taxes lower income people a smaller percentage than higher income people. 
C) receives less tax from higher income people, but taxes them at the same rate as lower income people. 
D) taxes everyone at the same rate. 
E) taxes everyone the same amount.

Question 17

The inequality in the distribution of wealth is

Accepted Answer

A) less than the inequality in the distribution of income. 
B) decreased by the existence of assortative mating. 
C) a better measure of the inequality in the distribution of economic resources than is the inequality in the distribution of income. 
D) shown by a Lorenz curve that is farther away from the line of equality than the Lorenz curve for income. 
E) the result of an increasing Gini coefficient. 
A) less than the inequality in the distribution of income. 
B) decreased by the existence of assortative mating. 
C) a better measure of the inequality in the distribution of economic resources than is the inequality in the distribution of income. 
D) shown by a Lorenz curve that is farther away from the line of equality than the Lorenz curve for income. 
E) the result of an increasing Gini coefficient.

Question 18

Which one of the following reduces the inequality of income or wealth relative to the market distribution?

Accepted Answer

A) government payments to the poor 
B) a regressive income tax 
C) large inheritances 
D) assortative mating 
E) large families 
A) government payments to the poor 
B) a regressive income tax 
C) large inheritances 
D) assortative mating 
E) large families

Question 19

Use the figure below to answer the following questions.
   
Figure 19.3.6
-Refer to Figure 19.3.6. This is the market for a group of workers. If point A represents the equilibrium for workers with higher human capital, which point represents the equilibrium for the workers with less human capital?

Accepted Answer

A) D 
B) B 
C) I 
D) C 
E) H 
A) D 
B) B 
C) I 
D) C 
E) H

Question 20

Use the figure below to answer the following questions.
   
Figure 19.3.2
-Refer to Figure 19.3.2. At a wage rate of $5, an employer would hire

Accepted Answer

A) the same amount of high-skilled workers and low-skilled workers. 
B) 20 hours of low-skilled labour and 40 hours of high-skilled labour. 
C) 60 hours of low-skilled labour and 20 hours of high-skilled labour. 
D) 20 hours of low-skilled labour and 60 hours of high-skilled labour. 
E) 40 hours of low-skilled labour and 60 hours of high-skilled labour. 
A) the same amount of high-skilled workers and low-skilled workers. 
B) 20 hours of low-skilled labour and 40 hours of high-skilled labour. 
C) 60 hours of low-skilled labour and 20 hours of high-skilled labour. 
D) 20 hours of low-skilled labour and 60 hours of high-skilled labour. 
E) 40 hours of low-skilled labour and 60 hours of high-skilled labour.

Exam 19: Economic Inequality

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3, the second richest 20 percent of all families receive what share of income?

The low-income cutoff level is

Which of the following statements is false? Human capital

The distribution of wealth

Measured wealth distributions that do not consider the distribution of human capital

A progressive income tax

In an economy in 2011, 3 million people had full-time managerial and professional jobs that paid an average of $800 a week. At the same time, 1 million people had full-time sales positions that paid an average of $530 a week. Managers and professionals are paid more than salespeople because

In Canada, the low-income cut-off level for a family is when ________ or more of income is spent on food, shelter, and clothing.

If the average tax rate increases as income increases, the income tax is

Among Canada, Finland, and South Africa, income is distributed most equally in ________ and least equally in ________.

Comparing the distribution of income after taxes and benefits to the distribution of market income, it is true that the distribution of income after taxes and benefits is ________ the distribution of market income.

Use the figure below to answer the following questions. Figure 19.1.1 -Refer to Figure 19.1.1. The richest 20 percent of households receive what share of total income?

Use the figure below to answer the following questions. Figure 19.1.3 -In Figure 19.1.3, the second poorest 20 percent of all families receive what share of income?

A welfare trap occurs when the marginal tax rate is

Complete the following sentence. Passing on wealth from one generation to another

A proportional income tax

The inequality in the distribution of wealth is

Which one of the following reduces the inequality of income or wealth relative to the market distribution?

Use the figure below to answer the following questions. Figure 19.3.6 -Refer to Figure 19.3.6. This is the market for a group of workers. If point A represents the equilibrium for workers with higher human capital, which point represents the equilibrium for the workers with less human capital?

Use the figure below to answer the following questions. Figure 19.3.2 -Refer to Figure 19.3.2. At a wage rate of $5, an employer would hire

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Among Canada, Finland, and South Africa, income is distributed most equally in and least equally in .