Question 1

The area under a Lorenz curve is 0.30.What is its Gini coefficient?

Accepted Answer

A)  0.15 
B)  0.20 
C)  0.30 
D)  0.40 
A)  0.15 
B)  0.20 
C)  0.30 
D)  0.40 D

Question 2

Which of these wage trends has reduced the rate of increase in income inequality since 1980?

Accepted Answer

A)  the trend in the wages of men versus the wages of women 
B)  the trend in the wages of high-school-educated workers versus the wages of college-educated workers 
C)  the narrowing of earnings within narrowly defined human capital groups 
D)  high levels of immigration 
A)  the trend in the wages of men versus the wages of women 
B)  the trend in the wages of high-school-educated workers versus the wages of college-educated workers 
C)  the narrowing of earnings within narrowly defined human capital groups 
D)  high levels of immigration A

Question 3

In a competitive industry,output is produced with skilled and unskilled labor.Factor-biased technical change that increases the productivity of skilled labor,will,at a given ratio of skilled to unskilled labor,shift any given isoproduct curve ________ the origin and ________ the absolute slope of the isoproduct curve (when the number of skilled workers is measured along the horizontal axis).Pick the best pair of answers.

Accepted Answer

A)  towards; increase 
B)  towards; decrease 
C)  away from; increase 
D)  away from; decrease 
A)  towards; increase 
B)  towards; decrease 
C)  away from; increase 
D)  away from; decrease A

Question 4

In an economy,employers cover the cost of health insurance by the difference between what the worker produces and what the worker gets in wages.If the cost of health insurance goes up by $5000 for all workers,what will happen to earnings inequality (as measured by the 80:20 ratio)?

Accepted Answer

A)  Earnings inequality will go up. 
B)  Earnings inequality will go down. 
C)  Earnings inequality will remain unchanged. 
D)  Uncertain: it depends upon who gets sick more. 
A)  Earnings inequality will go up. 
B)  Earnings inequality will go down. 
C)  Earnings inequality will remain unchanged. 
D)  Uncertain: it depends upon who gets sick more.

Question 5

If the wages of less-educated workers were reduced by supply shifts,then we would expect to see

Accepted Answer

A)  an increase in the employment level of these workers. 
B)  a decrease in the employment level of these workers. 
C)  no change in the employment level of these workers. 
D)  either an increase or a decrease in the employment level of these workers. 
A)  an increase in the employment level of these workers. 
B)  a decrease in the employment level of these workers. 
C)  no change in the employment level of these workers. 
D)  either an increase or a decrease in the employment level of these workers.

Question 6

Identify the major changes in earnings inequality in the U.S.since 1980.

Accepted Answer

First,inequality increased significantly

Question 7

If all incomes were to fall by ten percent (due to deflation,for example)then the variance of income will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  either increase or decrease. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  either increase or decrease.

Question 8

The increase in wage inequality has been more rapid in the United States than in other industrialized countries for all the following reasons EXCEPT

Accepted Answer

A)  the supply of skilled workers has grown less quickly in the United States. 
B)  wage determination is more decentralized in the United States. 
C)  unskilled workers are retrained more quickly in the United States. 
D)  unemployment rates among unskilled workers have risen more rapidly in other countries. 
A)  the supply of skilled workers has grown less quickly in the United States. 
B)  wage determination is more decentralized in the United States. 
C)  unskilled workers are retrained more quickly in the United States. 
D)  unemployment rates among unskilled workers have risen more rapidly in other countries.

Question 9

Table 14.1 Incomes in Pololand
 $$\begin{array} { l l l l l } 
& \text { Period 1 } & \text { Period 2 } & \text { Period 3 } & \text { Period 4 } \
\hline \text { Thomas } & \$ 50,000 & \$ 40,000 & \$ 60,000 & \$ 100,000 \
\text { Nina } & \$ 40,000 & \$ 40,000 & \$ 40,000 & \$ 80,000 \
\text { Becky } & \$ 30,000 & \$ 30,000 & \$ 30,000 & \$ 60,000 \
\text { Rose } & \$ 20,000 & \$ 20,000 & \$ 20,000 & \$ 40,000 \
\text { Charlie } & \$ 10,000 & \$ 20,000 & \$ 0 & \$ 20,000 \
\hline
\end{array}$$
-A decrease in the price of capital will cause the demand for unskilled labor to shift to the left if capital and unskilled labor are

Accepted Answer

A)  gross complements. 
B)  gross substitutes. 
C)  gross complements or gross substitutes. 
D)  complements in production. 
A)  gross complements. 
B)  gross substitutes. 
C)  gross complements or gross substitutes. 
D)  complements in production.

Question 10

Suppose that earnings instability (such that income can go up or down)increases for the lower 20 percent of the workforce.The increase in inequality as measured by the 90:10 ratio will ________ the increase as measured by the 80:20 ratio.

Accepted Answer

A)  be smaller than 
B)  be about the same as 
C)  be greater than 
D)  None of the above: inequality will decrease. 
A)  be smaller than 
B)  be about the same as 
C)  be greater than 
D)  None of the above: inequality will decrease.

Question 11

How is it that technological change could have a polarizing effect on the labor market?

Accepted Answer

The argument here is that the technologi

Question 12

Table 14.1 Incomes in Pololand
 $$\begin{array} { l l l l l } 
& \text { Period 1 } & \text { Period 2 } & \text { Period 3 } & \text { Period 4 } \
\hline \text { Thomas } & \$ 50,000 & \$ 40,000 & \$ 60,000 & \$ 100,000 \
\text { Nina } & \$ 40,000 & \$ 40,000 & \$ 40,000 & \$ 80,000 \
\text { Becky } & \$ 30,000 & \$ 30,000 & \$ 30,000 & \$ 60,000 \
\text { Rose } & \$ 20,000 & \$ 20,000 & \$ 20,000 & \$ 40,000 \
\text { Charlie } & \$ 10,000 & \$ 20,000 & \$ 0 & \$ 20,000 \
\hline
\end{array}$$
-Changes in labor demand can result from changes in either product demand or the capital-labor mix.During the 1980s,

Accepted Answer

A)  changes in product demand were more influential due to changes in import-export ratios. 
B)  changes in product demand were more influential due to changes in income levels. 
C)  changes in capital-labor mixes were more important. 
D)  changes in both areas were of roughly equal importance. 
A)  changes in product demand were more influential due to changes in import-export ratios. 
B)  changes in product demand were more influential due to changes in income levels. 
C)  changes in capital-labor mixes were more important. 
D)  changes in both areas were of roughly equal importance.

Question 13

Among male college graduates,returns to experience have ________ since 1980,tending to ________.

Accepted Answer

A)  increased; equalize earnings 
B)  increased; increase earnings inequality 
C)  decreased; equalize earnings 
D)  decreased; increase earnings inequality 
A)  increased; equalize earnings 
B)  increased; increase earnings inequality 
C)  decreased; equalize earnings 
D)  decreased; increase earnings inequality

Question 14

Assume the demand for high tech goods is perfectly inelastic.If workers producing high tech goods become more productive,then these workers employment will ________ and their wages will ________.

Accepted Answer

A)  fall; rise 
B)  fall; fall 
C)  rise; rise 
D)  rise; fall 
A)  fall; rise 
B)  fall; fall 
C)  rise; rise 
D)  rise; fall

Question 15

If supply shifts were the primary cause behind the increasing wage gap between highly-educated and less-educated workers then

Accepted Answer

A)  both supply curves must shift in the same direction. 
B)  the employment of less-educated workers would increase relative to the employment of college-educated workers. 
C)  the employment of less-educated workers would decrease relative to the employment of college-educated workers. 
D)  the relative employment of the two groups would not change. 
A)  both supply curves must shift in the same direction. 
B)  the employment of less-educated workers would increase relative to the employment of college-educated workers. 
C)  the employment of less-educated workers would decrease relative to the employment of college-educated workers. 
D)  the relative employment of the two groups would not change.

Question 16

How can skill-biased technological change account for increased earnings inequality?

Accepted Answer

Skill-biased technological change is tec

Question 17

Table 14.1 Incomes in Pololand
 $$\begin{array} { l l l l l } 
& \text { Period 1 } & \text { Period 2 } & \text { Period 3 } & \text { Period 4 } \
\hline \text { Thomas } & \$ 50,000 & \$ 40,000 & \$ 60,000 & \$ 100,000 \
\text { Nina } & \$ 40,000 & \$ 40,000 & \$ 40,000 & \$ 80,000 \
\text { Becky } & \$ 30,000 & \$ 30,000 & \$ 30,000 & \$ 60,000 \
\text { Rose } & \$ 20,000 & \$ 20,000 & \$ 20,000 & \$ 40,000 \
\text { Charlie } & \$ 10,000 & \$ 20,000 & \$ 0 & \$ 20,000 \
\hline
\end{array}$$
-If technical change in the form of an increase in the use of capital increased the demand for skilled labor,then capital and skilled labor must be

Accepted Answer

A)  gross substitutes. 
B)  substitutes in production. 
C)  gross complements. 
D)  perfect complements. 
A)  gross substitutes. 
B)  substitutes in production. 
C)  gross complements. 
D)  perfect complements.

Question 18

Table 14.1 Incomes in Pololand
 $$\begin{array} { l l l l l } 
& \text { Period 1 } & \text { Period 2 } & \text { Period 3 } & \text { Period 4 } \
\hline \text { Thomas } & \$ 50,000 & \$ 40,000 & \$ 60,000 & \$ 100,000 \
\text { Nina } & \$ 40,000 & \$ 40,000 & \$ 40,000 & \$ 80,000 \
\text { Becky } & \$ 30,000 & \$ 30,000 & \$ 30,000 & \$ 60,000 \
\text { Rose } & \$ 20,000 & \$ 20,000 & \$ 20,000 & \$ 40,000 \
\text { Charlie } & \$ 10,000 & \$ 20,000 & \$ 0 & \$ 20,000 \
\hline
\end{array}$$
-According to the Gini coefficient,income EQUALITY in the United States during the 1980s

Accepted Answer

A)  increased. 
B)  remained unchanged. 
C)  decreased. 
D)  increased, because the Gini coefficient increased. 
A)  increased. 
B)  remained unchanged. 
C)  decreased. 
D)  increased, because the Gini coefficient increased.

Question 19

During the 1980s,inequality increased.While the wages of high school graduates remained unchanged,the wages of college graduates increased dramatically.Which of the following (if true)could explain why this occurred? (Note that the "quality" of education includes the value of what is being taught.)

Accepted Answer

A)  The quality of education at the high school level (and below) fell. 
B)  The quality of education at the college level (and above) rose. 
C)  The relative number of college graduates increased. 
D)  The quality of education at the high school level (and below) rose. 
A)  The quality of education at the high school level (and below) fell. 
B)  The quality of education at the college level (and above) rose. 
C)  The relative number of college graduates increased. 
D)  The quality of education at the high school level (and below) rose.

Question 20

Technological change

Accepted Answer

A)  is the equivalent of a decrease in the price of capital. 
B)  is the equivalent of an increase in international trade. 
C)  will always decrease the demand for less-educated workers. 
D)  will always decrease the demand for well-educated workers. 
A)  is the equivalent of a decrease in the price of capital. 
B)  is the equivalent of an increase in international trade. 
C)  will always decrease the demand for less-educated workers. 
D)  will always decrease the demand for well-educated workers.

The area under a Lorenz curve is 0.30.What is its Gini coefficient?

Which of these wage trends has reduced the rate of increase in income inequality since 1980?

In an economy,employers cover the cost of health insurance by the difference between what the worker produces and what the worker gets in wages.If the cost of health insurance goes up by $5000 for all workers,what will happen to earnings inequality (as measured by the 80:20 ratio)?

If the wages of less-educated workers were reduced by supply shifts,then we would expect to see

Identify the major changes in earnings inequality in the U.S.since 1980.

If all incomes were to fall by ten percent (due to deflation,for example)then the variance of income will

The increase in wage inequality has been more rapid in the United States than in other industrialized countries for all the following reasons EXCEPT

Suppose that earnings instability (such that income can go up or down)increases for the lower 20 percent of the workforce.The increase in inequality as measured by the 90:10 ratio will ________ the increase as measured by the 80:20 ratio.

How is it that technological change could have a polarizing effect on the labor market?

Among male college graduates,returns to experience have since 1980,tending to .

Assume the demand for high tech goods is perfectly inelastic.If workers producing high tech goods become more productive,then these workers employment will and their wages will .

If supply shifts were the primary cause behind the increasing wage gap between highly-educated and less-educated workers then

How can skill-biased technological change account for increased earnings inequality?

During the 1980s,inequality increased.While the wages of high school graduates remained unchanged,the wages of college graduates increased dramatically.Which of the following (if true)could explain why this occurred? (Note that the "quality" of education includes the value of what is being taught.)

Technological change

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: The Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination within the Firm

Gender,Race,and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

The Labor-Market Effects of International Trade and Production Sharing

Filters

Exam 15: Inequality in Earnings

The area under a Lorenz curve is 0.30.What is its Gini coefficient?

Which of these wage trends has reduced the rate of increase in income inequality since 1980?

In an economy,employers cover the cost of health insurance by the difference between what the worker produces and what the worker gets in wages.If the cost of health insurance goes up by $5000 for all workers,what will happen to earnings inequality (as measured by the 80:20 ratio)?

If the wages of less-educated workers were reduced by supply shifts,then we would expect to see

Identify the major changes in earnings inequality in the U.S.since 1980.

If all incomes were to fall by ten percent (due to deflation,for example)then the variance of income will

The increase in wage inequality has been more rapid in the United States than in other industrialized countries for all the following reasons EXCEPT

Suppose that earnings instability (such that income can go up or down)increases for the lower 20 percent of the workforce.The increase in inequality as measured by the 90:10 ratio will ________ the increase as measured by the 80:20 ratio.

How is it that technological change could have a polarizing effect on the labor market?

Among male college graduates,returns to experience have ________ since 1980,tending to ________.

Assume the demand for high tech goods is perfectly inelastic.If workers producing high tech goods become more productive,then these workers employment will ________ and their wages will ________.

If supply shifts were the primary cause behind the increasing wage gap between highly-educated and less-educated workers then

How can skill-biased technological change account for increased earnings inequality?

During the 1980s,inequality increased.While the wages of high school graduates remained unchanged,the wages of college graduates increased dramatically.Which of the following (if true)could explain why this occurred? (Note that the "quality" of education includes the value of what is being taught.)

Technological change

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: The Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination within the Firm

Gender,Race,and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

The Labor-Market Effects of International Trade and Production Sharing

Filters

Among male college graduates,returns to experience have since 1980,tending to .

Assume the demand for high tech goods is perfectly inelastic.If workers producing high tech goods become more productive,then these workers employment will and their wages will .