Question 1

Real income will fall whenever:

Accepted Answer

A)  prices and wages increase at the same rate. 
B)  wages increase faster than prices. 
C)  prices increase faster than wages. 
D)  wages increase and prices stay the same. 
A)  prices and wages increase at the same rate. 
B)  wages increase faster than prices. 
C)  prices increase faster than wages. 
D)  wages increase and prices stay the same.

Question 2

Which of the following statements contradicts the evidence shown in the graph shown?

Accepted Answer

A)  Income is more equally distributed in Sweden than it is in Brazil. 
B)  Income is more equally distributed in Taiwan than it is in the United States. 
C)  Income is more equally distributed in Sweden than it is in Taiwan. 
D)  Income is more equally distributed in the United States than it is in Brazil. 
A)  Income is more equally distributed in Sweden than it is in Brazil. 
B)  Income is more equally distributed in Taiwan than it is in the United States. 
C)  Income is more equally distributed in Sweden than it is in Taiwan. 
D)  Income is more equally distributed in the United States than it is in Brazil.

Question 3

In most developed countries, the class system:

Accepted Answer

A)  is the same as in underdeveloped countries. 
B)  has been completely eliminated. 
C)  is a pyramid with the largest group being the lower class. 
D)  is diamond-shaped with the largest group being the middle class. 
A)  is the same as in underdeveloped countries. 
B)  has been completely eliminated. 
C)  is a pyramid with the largest group being the lower class. 
D)  is diamond-shaped with the largest group being the middle class.

Question 4

Because the poor tend to use public transportation more than the rich do, a tax on the Washington, D.C., metro probably would be:

Accepted Answer

A)  progressive. 
B)  retroactive. 
C)  reactionary. 
D)  regressive. 
A)  progressive. 
B)  retroactive. 
C)  reactionary. 
D)  regressive.

Question 5

Positive economics is concerned with justifying a particular distribution of income.

Accepted Answer

A) True 
 B)False

Question 6

According to the text, the most important income distribution decisions that the government makes involve:

Accepted Answer

A)  establishing and protecting property rights. 
B)  maintaining a progressive income tax structure. 
C)  redistributing income through transfer payments to the poor. 
D)  encouraging innovation through direct subsidies. 
A)  establishing and protecting property rights. 
B)  maintaining a progressive income tax structure. 
C)  redistributing income through transfer payments to the poor. 
D)  encouraging innovation through direct subsidies.

Question 7

Attempts to reduce income inequality may lead to greater income inequality.

Accepted Answer

A) True 
 B)False

Question 8

In the United States, the class system is a:

Accepted Answer

A)  triangle, and in most developing countries the class system is a triangle. 
B)  pentagon, and in most developing countries the class system is a diamond. 
C)  pentagon, and in most developing countries the class system is a triangle. 
D)  triangle, and in most developing countries the class system is a diamond. 
A)  triangle, and in most developing countries the class system is a triangle. 
B)  pentagon, and in most developing countries the class system is a diamond. 
C)  pentagon, and in most developing countries the class system is a triangle. 
D)  triangle, and in most developing countries the class system is a diamond.

Question 9

Wealth is defined as the:

Accepted Answer

A)  total amount of income earned in a one-year period. 
B)  value of all assets minus the money that is owed. 
C)  value of assets that can be converted to cash on short notice. 
D)  value of monetary assets. 
A)  total amount of income earned in a one-year period. 
B)  value of all assets minus the money that is owed. 
C)  value of assets that can be converted to cash on short notice. 
D)  value of monetary assets.

Question 10

Which of the following statements is true?

Accepted Answer

A)  Income distribution became less equal from 1929 to 1970. 
B)  Income distribution became less equal from 1970 to today. 
C)  The income of the bottom fifth of families rose 10 percent from 1970 to today. 
D)  The income of the bottom fifth of families fell 10 percent from 1929 to today. 
A)  Income distribution became less equal from 1929 to 1970. 
B)  Income distribution became less equal from 1970 to today. 
C)  The income of the bottom fifth of families rose 10 percent from 1970 to today. 
D)  The income of the bottom fifth of families fell 10 percent from 1929 to today.

Question 11

Poverty is defined by the U.S. government as having an income equal to or less than three times an average family's minimum food expenditure as calculated by the U.S. Department of Agriculture.

Accepted Answer

A) True 
 B)False

Question 12

If redistribution is a public bad, rather than a public good, redistributing income to the poor makes others feel that society is:

Accepted Answer

A)  unjust and therefore decreases their utility. 
B)  unjust and therefore increases their utility. 
C)  more just and therefore decreases their utility. 
D)  more just and therefore increases their utility. 
A)  unjust and therefore decreases their utility. 
B)  unjust and therefore increases their utility. 
C)  more just and therefore decreases their utility. 
D)  more just and therefore increases their utility.

Question 13

To remedy unfairness in the distribution of income, many Americans look to all of the following except:

Accepted Answer

A)  affirmative action laws. 
B)  comparable worth laws. 
C)  social welfare programs. 
D)  regressive taxes. 
A)  affirmative action laws. 
B)  comparable worth laws. 
C)  social welfare programs. 
D)  regressive taxes.

Question 14

Refer to the graph shown.   The bottom 20 percent of the families earn:

Accepted Answer

A)  6.6 percent of the income. 
B)  17.3 percent of the income. 
C)  10.7 percent of the income. 
D)  20 percent of the income. 
A)  6.6 percent of the income. 
B)  17.3 percent of the income. 
C)  10.7 percent of the income. 
D)  20 percent of the income.

Question 15

The recession that began with a housing market crash in 2007 had the effect of reducing income inequality.

Accepted Answer

A) True 
 B)False

Question 16

Society as a whole likely benefits from a decrease in poverty because:

Accepted Answer

A)  social programs to help the poor are a small portion of the U.S. government budget. 
B)  increased assistance to those in poverty raises their incentives to work. 
C)  if there are fewer families in poverty, there will be less demand for childcare. 
D)  if there are fewer people in poverty, the incentive to commit crimes falls. 
A)  social programs to help the poor are a small portion of the U.S. government budget. 
B)  increased assistance to those in poverty raises their incentives to work. 
C)  if there are fewer families in poverty, there will be less demand for childcare. 
D)  if there are fewer people in poverty, the incentive to commit crimes falls.

Question 17

Income inequality increased in the United States from 1929 to 1970 and decreased thereafter.

Accepted Answer

A) True 
 B)False

Question 18

When a tax is proportional, the average tax rate:

Accepted Answer

A)  decreases with income. 
B)  is constant with income. 
C)  increases with income. 
D)  first increases with income, then decreases with income. 
A)  decreases with income. 
B)  is constant with income. 
C)  increases with income. 
D)  first increases with income, then decreases with income.

Question 19

Refer to the graph shown.   The 25 percent of the families with the highest income earn:

Accepted Answer

A)  6 percent of the income. 
B)  19 percent of the income. 
C)  36 percent of the income. 
D)  64 percent of the income. 
A)  6 percent of the income. 
B)  19 percent of the income. 
C)  36 percent of the income. 
D)  64 percent of the income.

Question 20

Share distribution of income is the relative division of total income among:

Accepted Answer

A)  capitalists, workers, and landowners. 
B)  income groupings. 
C)  socioeconomic groupings. 
D)  nationality groupings. 
A)  capitalists, workers, and landowners. 
B)  income groupings. 
C)  socioeconomic groupings. 
D)  nationality groupings.

Exam 18: Who Gets What the Distribution of Income

Real income will fall whenever:

Which of the following statements contradicts the evidence shown in the graph shown?

In most developed countries, the class system:

Because the poor tend to use public transportation more than the rich do, a tax on the Washington, D.C., metro probably would be:

Positive economics is concerned with justifying a particular distribution of income.

According to the text, the most important income distribution decisions that the government makes involve:

Attempts to reduce income inequality may lead to greater income inequality.

In the United States, the class system is a:

Wealth is defined as the:

Which of the following statements is true?

Poverty is defined by the U.S. government as having an income equal to or less than three times an average family's minimum food expenditure as calculated by the U.S. Department of Agriculture.

If redistribution is a public bad, rather than a public good, redistributing income to the poor makes others feel that society is:

To remedy unfairness in the distribution of income, many Americans look to all of the following except:

Refer to the graph shown. The bottom 20 percent of the families earn:

The recession that began with a housing market crash in 2007 had the effect of reducing income inequality.

Society as a whole likely benefits from a decrease in poverty because:

Income inequality increased in the United States from 1929 to 1970 and decreased thereafter.

When a tax is proportional, the average tax rate:

Refer to the graph shown. The 25 percent of the families with the highest income earn:

Share distribution of income is the relative division of total income among:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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