Exam 19: Economic Inequality

-The table shows the distribution of human and non-human capital for two people, Sam and Janet. a) Looking just at tangible assets (non-human capital), by how many times does Janet's wealth exceed Sam's? b) Assume that both human and non-human capital earn a 10 percent annual interest rate. Calculate Sam's and Janet's total income. c) By how many times does Janet's total income exceed Sam's? d) Which comparison results in a more equal distribution? e) Which comparison gives a better indication of each person's economic condition?

Median household income in the United States has increased from $38,771 in 1967 to $51,017 in 2012. Based only on this fact, we can conclude that

A progressive income tax is defined as a tax for which

When China embarked on market changes towards urbanization and manufacturing in 1978, urban disposable incomes were 2.6 times greater than rural net income. By 2008 they were 3.3 times bigger. These market changes have led to

-The above figure shows the Lorenz curves for four different countries. Which of the following statements CANNOT be made on the basis of the graph?

In the United States, the wealthiest 10 percent of households own about ________ of total wealth.

A proportional income tax is defined as a tax for which

Suppose that the income tax in the United States was such that all households had to pay 20 percent of their income to the government as taxes. This tax is an example of

Because of assortative mating, wealth becomes ________ and the distribution of wealth becomes more ________.

Netflix, an online DVD rental service, was established in 1997. In 2008, Netflix has more than 8.2 million subscribers. This technology has ________ in the labor market for video rental clerks.

If a tax was instituted such that every dollar collected in taxes from high income households resulted in a distribution of $.80 to low income households

-What type of income tax is reflected in the table above?

In the U.S. in 2012 the poverty level for a family of four was about

Alex, Bill, and Cid live in Souland. Their annual incomes and the amounts they pay in income tax are shown in the table below. The income tax in Souland is

Making the distribution of wealth ________ equal is ________.

-In the figure above, if income were distributed equally across all households, the poorest 10 percent of households would receive ________ of total income.

What factors make inheritances a source of increased economic inequality?

The actual income distribution might be more equal than current official figures suggest because current official figures ignore the return on human capital.

-On a Lorenz curve graph, the area between the line of equality and the Lorenz curve is 2,000, and the entire area beneath the line of equality is 5,000. What does the Gini ratio equal?

-The above figure shows the Lorenz curve for wealth for the nation of Rusha. If the government were to confiscate all of the wealth from the poorest twenty percent of the population and give it to the wealthiest twenty percent, the Lorenz curve would