Question 1

The main reason that wealth inequality persists across generations is that

Accepted Answer

A) people tend to marry within their own socioeconomic class. 
B) intergenerational transfers can only increase wealth inequality. 
C) there are differences between households in their degree of specialization. 
D) rich families have equal wealth over the life cycle. 
E) taxes are too high for the lower quintiles. 
A) people tend to marry within their own socioeconomic class. 
B) intergenerational transfers can only increase wealth inequality. 
C) there are differences between households in their degree of specialization. 
D) rich families have equal wealth over the life cycle. 
E) taxes are too high for the lower quintiles. A

Question 2

Use the figure below to answer the following questions.   Figure 18.3.5
-Refer to Figure 18.3.5.This figure shows the labour supply curves and the value of marginal product curves for high-skilled and low-skilled workers.If the labour markets are competitive,then for a 40-hour work week,high-skilled workers must be paid

Accepted Answer

A) an extra $9 to compensate for the cost of acquiring their human capital and for their increased productivity. 
B) an extra $60 to compensate for the cost of acquiring their human capital and for their increased productivity. 
C) an extra $360 to compensate for the cost of acquiring their human capital and for their increased productivity. 
D) an extra $900 to compensate for the cost of acquiring their human capital and for their enhanced productivity. 
E) an extra $540 to compensate for the cost of acquiring their human capital and for their increased productivity. 
A) an extra $9 to compensate for the cost of acquiring their human capital and for their increased productivity. 
B) an extra $60 to compensate for the cost of acquiring their human capital and for their increased productivity. 
C) an extra $360 to compensate for the cost of acquiring their human capital and for their increased productivity. 
D) an extra $900 to compensate for the cost of acquiring their human capital and for their enhanced productivity. 
E) an extra $540 to compensate for the cost of acquiring their human capital and for their increased productivity. C

Question 3

Assortative mating

Accepted Answer

A) tends to break down barriers between the social classes. 
B) tends to increase the equality of the income distribution. 
C) tends to increase the equality of the distribution of wealth. 
D) tends to keep the income and wealth distributions from becoming more equal. 
E) occurs rarely these days due to changes in social values. 
A) tends to break down barriers between the social classes. 
B) tends to increase the equality of the income distribution. 
C) tends to increase the equality of the distribution of wealth. 
D) tends to keep the income and wealth distributions from becoming more equal. 
E) occurs rarely these days due to changes in social values. D

Question 4

Redistribution of income from the rich to the poor will lead to a reduction in total output.This is known as the

Accepted Answer

A) market distribution. 
B) Robin Hood principle. 
C) inheritance principle. 
D) big tradeoff. 
E) capitalist dilemma. 
A) market distribution. 
B) Robin Hood principle. 
C) inheritance principle. 
D) big tradeoff. 
E) capitalist dilemma.

Question 5

Last year you earned $45,000 and paid $9,000 in income taxes.This year you earned $60,000 and paid $15,000 in income taxes.What type of income tax do you face?

Accepted Answer

A) regressive 
B) proportional 
C) progressive 
D) flat 
E) Both B and D are correct. 
A) regressive 
B) proportional 
C) progressive 
D) flat 
E) Both B and D are correct.

Question 6

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 7

The closer the income Lorenz curve is to the line of equality,

Accepted Answer

A) the more equal is the income distribution. 
B) the less equal is the income distribution. 
C) the more unfair is the income distribution. 
D) the richer are the highest 5 percent of households. 
E) the poorer are the highest 5 percent of households. 
A) the more equal is the income distribution. 
B) the less equal is the income distribution. 
C) the more unfair is the income distribution. 
D) the richer are the highest 5 percent of households. 
E) the poorer are the highest 5 percent of households.

Question 8

The larger the gap between the income Lorenz curve and the line of equality,

Accepted Answer

A) the greater is the equality in the income distribution. 
B) the less is the inequality in the income distribution. 
C) the poorer are the top 50 percent of households. 
D) the richer are the lowest 50 percent of households. 
E) the greater is the inequality in the income distribution. 
A) the greater is the equality in the income distribution. 
B) the less is the inequality in the income distribution. 
C) the poorer are the top 50 percent of households. 
D) the richer are the lowest 50 percent of households. 
E) the greater is the inequality in the income distribution.

Question 9

Other things remaining the same,if education costs rise substantially,we would expect to see

Accepted Answer

A) a decrease in the value of marginal product of high-skilled workers. 
B) a decrease in the demand for high-skilled workers. 
C) an increase in the supply of high-skilled workers. 
D) an increase in the number of high-skilled workers employed. 
E) an increase in the wages received by high-skilled workers. 
A) a decrease in the value of marginal product of high-skilled workers. 
B) a decrease in the demand for high-skilled workers. 
C) an increase in the supply of high-skilled workers. 
D) an increase in the number of high-skilled workers employed. 
E) an increase in the wages received by high-skilled workers.

Question 10

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 11

The greater the value of marginal product of labour,the

Accepted Answer

A) greater is the supply of labour. 
B) greater is the demand for labour. 
C) greater is the marginal cost of production. 
D) greater is unemployment. 
E) lower is the wage rate. 
A) greater is the supply of labour. 
B) greater is the demand for labour. 
C) greater is the marginal cost of production. 
D) greater is unemployment. 
E) lower is the wage rate.

Question 12

Use the figure below to answer the following questions.   Figure 18.1.1
-In Figure 18.1.1,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 13

Assortative mating means that

Accepted Answer

A) poor men tend to marry rich women. 
B) people tend to marry within their own socioeconomic class. 
C) people tend to marry above their own socioeconomic class. 
D) same sex marriages occur because "like attracts like." 
E) people with different values will marry. 
A) poor men tend to marry rich women. 
B) people tend to marry within their own socioeconomic class. 
C) people tend to marry above their own socioeconomic class. 
D) same sex marriages occur because "like attracts like." 
E) people with different values will marry.

Question 14

Use the figure below to answer the following questions.   Figure 18.3.6
-Refer to Figure 18.3.6.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 15

The redistribution of income creates the big tradeoff between

Accepted Answer

A) receiving workers' compensation and not receiving workers' compensation. 
B) equity and efficiency. 
C) qualifying to receive employment insurance and not qualifying to receive employment insurance. 
D) earning an income and losing welfare benefits. 
E) being rich and being poor. 
A) receiving workers' compensation and not receiving workers' compensation. 
B) equity and efficiency. 
C) qualifying to receive employment insurance and not qualifying to receive employment insurance. 
D) earning an income and losing welfare benefits. 
E) being rich and being poor.

Question 16

Choose the correct sentence.

Accepted Answer

A) Inherited wealth does not change income inequality because debts can't be forced onto the next generation. 
B) Inherited wealth can increase income inequality because debts can't be forced onto the next generation,but it can also decrease income inequality. 
C) Inherited wealth decreases income inequality because debts are forced onto the next generation. 
D) Inherited wealth decreases income inequality because on average most people inherit the same amount of money. 
E) Inherited wealth always increases income inequality because of assortative mating. 
A) Inherited wealth does not change income inequality because debts can't be forced onto the next generation. 
B) Inherited wealth can increase income inequality because debts can't be forced onto the next generation,but it can also decrease income inequality. 
C) Inherited wealth decreases income inequality because debts are forced onto the next generation. 
D) Inherited wealth decreases income inequality because on average most people inherit the same amount of money. 
E) Inherited wealth always increases income inequality because of assortative mating.

Question 17

From an examination of data on income and wealth,it can be concluded that

Accepted Answer

A) wealth distribution is more equal than income distribution. 
B) income distribution is more equal than wealth distribution. 
C) wealth distribution is equal to income distribution. 
D) income and wealth are the same. 
E) income and wealth are unrelated. 
A) wealth distribution is more equal than income distribution. 
B) income distribution is more equal than wealth distribution. 
C) wealth distribution is equal to income distribution. 
D) income and wealth are the same. 
E) income and wealth are unrelated.

Question 18

Use the figure below to answer the following questions.   Figure 18.1.1
-Refer to Figure 18.1.1.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 19

An income Lorenz curve

Accepted Answer

A) graphs the cumulative percentage of income against the cumulative percentage of households. 
B) measures the income among households ranked from the poorest to the richest. 
C) measures the income among households ranked from the richest to the poorest. 
D) measures the factor prices earned by the rich compared with the poor. 
E) is a downward-sloping curve. 
A) graphs the cumulative percentage of income against the cumulative percentage of households. 
B) measures the income among households ranked from the poorest to the richest. 
C) measures the income among households ranked from the richest to the poorest. 
D) measures the factor prices earned by the rich compared with the poor. 
E) is a downward-sloping curve.

Question 20

Use the figure below to answer the following questions.   Figure 18.3.5
-Refer to Figure 18.3.5.This figure shows the labour supply curves and the value of marginal product curves for high-skilled and low-skilled workers.If there is an increase in the supply of high-skilled workers and the supply of high-skilled workers is now equal to the supply of low-skilled workers,then employment of high-skilled labour would

Accepted Answer

A) remain the same. 
B) decrease. 
C) increase to 40 hours per week. 
D) increase to 50 hours per week. 
E) increase to 60 hours per week. 
A) remain the same. 
B) decrease. 
C) increase to 40 hours per week. 
D) increase to 50 hours per week. 
E) increase to 60 hours per week.

The main reason that wealth inequality persists across generations is that

Assortative mating

Redistribution of income from the rich to the poor will lead to a reduction in total output.This is known as the

Last year you earned $45,000 and paid $9,000 in income taxes.This year you earned $60,000 and paid $15,000 in income taxes.What type of income tax do you face?

The distribution of wealth

The closer the income Lorenz curve is to the line of equality,

The larger the gap between the income Lorenz curve and the line of equality,

Other things remaining the same,if education costs rise substantially,we would expect to see

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

The greater the value of marginal product of labour,the

Use the figure below to answer the following questions. Figure 18.1.1 -In Figure 18.1.1,the second richest 20 percent of all families receive what share of income?

Assortative mating means that

Use the figure below to answer the following questions. Figure 18.3.6 -Refer to Figure 18.3.6.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?

The redistribution of income creates the big tradeoff between

Choose the correct sentence.

From an examination of data on income and wealth,it can be concluded that

Use the figure below to answer the following questions. Figure 18.1.1 -Refer to Figure 18.1.1.The richest 20 percent of households receive what share of total income?

An income Lorenz curve

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 18: Economic Inequality

The main reason that wealth inequality persists across generations is that

Assortative mating

Redistribution of income from the rich to the poor will lead to a reduction in total output.This is known as the

Last year you earned $45,000 and paid $9,000 in income taxes.This year you earned $60,000 and paid $15,000 in income taxes.What type of income tax do you face?

The distribution of wealth

The closer the income Lorenz curve is to the line of equality,

The larger the gap between the income Lorenz curve and the line of equality,

Other things remaining the same,if education costs rise substantially,we would expect to see

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

The greater the value of marginal product of labour,the

Use the figure below to answer the following questions. Figure 18.1.1 -In Figure 18.1.1,the second richest 20 percent of all families receive what share of income?

Assortative mating means that

Use the figure below to answer the following questions. Figure 18.3.6 -Refer to Figure 18.3.6.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?

The redistribution of income creates the big tradeoff between

Choose the correct sentence.

From an examination of data on income and wealth,it can be concluded that

Use the figure below to answer the following questions. Figure 18.1.1 -Refer to Figure 18.1.1.The richest 20 percent of households receive what share of total income?

An income Lorenz curve

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters