Question 1

Social Security is a pure transfer program because

Accepted Answer

A)  it transfers funds from current workers to the poor. 
B)  the government transfers funds from middle-income workers to welfare recipients. 
C)  current payroll taxes are used to pay the eligible retirees. 
D)  the government subsidizes the medical bill of the poor. 
A)  it transfers funds from current workers to the poor. 
B)  the government transfers funds from middle-income workers to welfare recipients. 
C)  current payroll taxes are used to pay the eligible retirees. 
D)  the government subsidizes the medical bill of the poor.

Question 2

The age-earnings cycle is an earnings profile of an individual throughout the person's lifetime. The profile shows that

Accepted Answer

A)  earnings usually peak at age 25 and then decline. 
B)  earnings gradually rise until they peak around age 50. 
C)  earnings and age have no particular correlation. 
D)  younger workers have the most productivity. 
A)  earnings usually peak at age 25 and then decline. 
B)  earnings gradually rise until they peak around age 50. 
C)  earnings and age have no particular correlation. 
D)  younger workers have the most productivity.

Question 3

In the United States, the distribution of wealth

Accepted Answer

A)  is the same as the distribution of income. 
B)  is more unequal than the distribution of income. 
C)  is more equal than the distribution of income. 
D)  is equal for all families. 
A)  is the same as the distribution of income. 
B)  is more unequal than the distribution of income. 
C)  is more equal than the distribution of income. 
D)  is equal for all families.

Question 4

Which of the following is the best definition of what economists define as total income?

Accepted Answer

A)  Payment for labor services. 
B)  Payment for labor services and for ownership of other factors of production. 
C)  Payment for labor services, for use of other factors of production, and gifts and government transfers. 
D)  Inheritance. 
A)  Payment for labor services. 
B)  Payment for labor services and for ownership of other factors of production. 
C)  Payment for labor services, for use of other factors of production, and gifts and government transfers. 
D)  Inheritance.

Question 5

-Use the above figure. Refer to the above diagram where curves (a) through (d) are for four different countries. Income is third most unequally distributed in

Accepted Answer

A)  Country A. 
B)  Country B. 
C)  Country C. 
D)  Country D. 
A)  Country A. 
B)  Country B. 
C)  Country C. 
D)  Country D.

Question 6

Income is considered to be a

Accepted Answer

A)  nontaxable stream of funds. 
B)  flow. 
C)  stock. 
D)  resource. 
A)  nontaxable stream of funds. 
B)  flow. 
C)  stock. 
D)  resource.

Question 7

-Refer to the above figure. Which curve shows the second most unequal distribution of income?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 8

The age-earning cycle

Accepted Answer

A)  is an earnings profile of an individual throughout his or her lifetime. 
B)  shows the earnings differences by age and by gender. 
C)  depicts differences in the relationship between age and earnings across countries. 
D)  shows the average incomes of people broken down by age categories. 
A)  is an earnings profile of an individual throughout his or her lifetime. 
B)  shows the earnings differences by age and by gender. 
C)  depicts differences in the relationship between age and earnings across countries. 
D)  shows the average incomes of people broken down by age categories.

Question 9

-The country reflecting perfect income equality in the above figure is

Accepted Answer

A)  country 4. 
B)  country 1. 
C)  country 5. 
D)  country 3. 
A)  country 4. 
B)  country 1. 
C)  country 5. 
D)  country 3.

Question 10

In calculating income for the Lorenz curve, one factor that is omitted, is

Accepted Answer

A)  capital gains income. 
B)  dividend payments. 
C)  in-kind transfer payments from the government. 
D)  pure economic rent. 
A)  capital gains income. 
B)  dividend payments. 
C)  in-kind transfer payments from the government. 
D)  pure economic rent.

Question 11

Under the Social Security program currently in existence,

Accepted Answer

A)  benefits are based on need. 
B)  benefits are determined by whether or not one contributed to the system. 
C)  benefits are provided to everyone who contributed to the system EXCEPT those under private retirement programs that provide an annual income in excess of $13,500. 
D)  benefits are guaranteed to be no lower for future retirees than for current retirees. 
A)  benefits are based on need. 
B)  benefits are determined by whether or not one contributed to the system. 
C)  benefits are provided to everyone who contributed to the system EXCEPT those under private retirement programs that provide an annual income in excess of $13,500. 
D)  benefits are guaranteed to be no lower for future retirees than for current retirees.

Question 12

The Lorenz curve shows

Accepted Answer

A)  how poverty rates change over time. 
B)  the percentage of population below the poverty line. 
C)  the degree of inequality in the income distribution. 
D)  the ratio of cash income to payments-in-kind. 
A)  how poverty rates change over time. 
B)  the percentage of population below the poverty line. 
C)  the degree of inequality in the income distribution. 
D)  the ratio of cash income to payments-in-kind.

Question 13

The productivity standard says

Accepted Answer

A)  that everyone should have exactly the same income. 
B)  that the age-earnings cycle should determine income. 
C)  that people should be compensated on the basis of what they produce. 
D)  that people should be compensated on the basis of their need. 
A)  that everyone should have exactly the same income. 
B)  that the age-earnings cycle should determine income. 
C)  that people should be compensated on the basis of what they produce. 
D)  that people should be compensated on the basis of their need.

Question 14

The typical age-earnings cycle shows that

Accepted Answer

A)  there is a positive relationship between age and earnings that eventually turns into a negative relationship. 
B)  there is a constant positive relationship between age and earnings. 
C)  there is a constant negative relationship between age and earnings. 
D)  there is no relationship between age and earnings. 
A)  there is a positive relationship between age and earnings that eventually turns into a negative relationship. 
B)  there is a constant positive relationship between age and earnings. 
C)  there is a constant negative relationship between age and earnings. 
D)  there is no relationship between age and earnings.

Question 15

Typically, the major cost of a college education is

Accepted Answer

A)  tuition. 
B)  books. 
C)  foregone income. 
D)  housing. 
A)  tuition. 
B)  books. 
C)  foregone income. 
D)  housing.

Question 16

The idea that some people engage in risky behavior due to the fact that they have good health care is known as

Accepted Answer

A)  moral hazard. 
B)  risk aversion. 
C)  zero-sum game. 
D)  risk-taking behavior. 
A)  moral hazard. 
B)  risk aversion. 
C)  zero-sum game. 
D)  risk-taking behavior.

Question 17

A geometric representation of the distribution of income is referred to as

Accepted Answer

A)  the labor supply curve. 
B)  the Lorenz curve. 
C)  the Phillips curve. 
D)  the Keynesian cross. 
A)  the labor supply curve. 
B)  the Lorenz curve. 
C)  the Phillips curve. 
D)  the Keynesian cross.

Question 18

Which of the following is not a determinant of an individual's marginal product?

Accepted Answer

A)  talent 
B)  money income 
C)  experience 
D)  educational level 
A)  talent 
B)  money income 
C)  experience 
D)  educational level

Question 19

Regarding income distribution and the distribution of wealth,

Accepted Answer

A)  wealth is a stock concept and income a flow concept. 
B)  a stock is evaluated at a given moment in time; a flow is evaluated during a period of time. 
C)  income, a flow, can be viewed as a return on wealth. 
D)  All of the above are correct. 
A)  wealth is a stock concept and income a flow concept. 
B)  a stock is evaluated at a given moment in time; a flow is evaluated during a period of time. 
C)  income, a flow, can be viewed as a return on wealth. 
D)  All of the above are correct.

Question 20

The contributive standard of income distribution is met by

Accepted Answer

A)  setting wages according to marginal productivity. 
B)  having a highly progressive income tax. 
C)  having the government determine all wages. 
D)  using local committees to determine the needs of families in the area. 
A)  setting wages according to marginal productivity. 
B)  having a highly progressive income tax. 
C)  having the government determine all wages. 
D)  using local committees to determine the needs of families in the area.

Exam 30: Income, Poverty, and Health Care

Social Security is a pure transfer program because

The age-earnings cycle is an earnings profile of an individual throughout the person's lifetime. The profile shows that

In the United States, the distribution of wealth

Which of the following is the best definition of what economists define as total income?

-Use the above figure. Refer to the above diagram where curves (a) through (d) are for four different countries. Income is third most unequally distributed in

Income is considered to be a

-Refer to the above figure. Which curve shows the second most unequal distribution of income?

The age-earning cycle

-The country reflecting perfect income equality in the above figure is

In calculating income for the Lorenz curve, one factor that is omitted, is

Under the Social Security program currently in existence,

The Lorenz curve shows

The productivity standard says

The typical age-earnings cycle shows that

Typically, the major cost of a college education is

The idea that some people engage in risky behavior due to the fact that they have good health care is known as

A geometric representation of the distribution of income is referred to as

Which of the following is not a determinant of an individual's marginal product?

Regarding income distribution and the distribution of wealth,

The contributive standard of income distribution is met by

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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