Question 1

Philosopher John Rawls generally argued for greater income equality.Under what conditions would he have argued against greater equality of income?

Accepted Answer

Rawls believes our goal should be the ma

Question 2

Because income differs so much by type of job, some economists argue that a new class distinction has emerged between:

Accepted Answer

A) union and nonunion workers. 
B) workers and capitalists. 
C) professionals and nonprofessionals. 
D) salaried workers and the self-employed. 
A) union and nonunion workers. 
B) workers and capitalists. 
C) professionals and nonprofessionals. 
D) salaried workers and the self-employed.

Question 3

One study of the distribution of wealth indicates that the bottom 40 percent of households hold 1 percent or less of total marketable wealth in the United States. Which of the following people is most likely to be in the bottom 40 percent?

Accepted Answer

A) Ann is 29 years old, earns $120,000 a year, has no financial assets, but still has student loans of $4,000. 
B) Betty is 29 years old, earns $40,000 a year, has $80,000 in a savings account, and has credit card debt of $4,000. 
C) Carol is 69 years old, is disabled, and is living on Social Security and dividends from her $500,000 of mutual funds. She has no debt. 
D) Debra is 45 years old, and the only money she gets is $40,000 of rental payments from an apartment building she owns that is worth $250,000. She owes the bank $50,000. 
A) Ann is 29 years old, earns $120,000 a year, has no financial assets, but still has student loans of $4,000. 
B) Betty is 29 years old, earns $40,000 a year, has $80,000 in a savings account, and has credit card debt of $4,000. 
C) Carol is 69 years old, is disabled, and is living on Social Security and dividends from her $500,000 of mutual funds. She has no debt. 
D) Debra is 45 years old, and the only money she gets is $40,000 of rental payments from an apartment building she owns that is worth $250,000. She owes the bank $50,000.

Question 4

Refer to the graph shown.   The middle quintile (the middle fifth)of families earn:

Accepted Answer

A) 10.7 percent of the income. 
B) 15.3 percent of the income. 
C) 22.1 percent of the income. 
D) 32.6 percent of the income. 
A) 10.7 percent of the income. 
B) 15.3 percent of the income. 
C) 22.1 percent of the income. 
D) 32.6 percent of the income.

Question 5

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 6

A curve that shows the wealth distribution for the United States would be:

Accepted Answer

A) equal to the Lorenz curve for income. 
B) below the Lorenz curve for income. 
C) above the Lorenz curve for income. 
D) above the diagonal line. 
A) equal to the Lorenz curve for income. 
B) below the Lorenz curve for income. 
C) above the Lorenz curve for income. 
D) above the diagonal line.

Question 7

When former president Obama promised to raise taxes only on those whose income exceeds $250,000, he was suggesting the federal tax system be:

Accepted Answer

A) more progressive. 
B) less progressive. 
C) proportional. 
D) regressive. 
A) more progressive. 
B) less progressive. 
C) proportional. 
D) regressive.

Question 8

The minimum food budget used to determine the poverty line was determined in the:

Accepted Answer

A) 1960s but has been recalculated every decade to account for rising standards of living. 
B) 1960s and is not recalculated to account for rising standards of living. 
C) 1930s but has been recalculated every decade to account for rising standards of living. 
D) 1930s and is not recalculated to account for rising standards of living. 
A) 1960s but has been recalculated every decade to account for rising standards of living. 
B) 1960s and is not recalculated to account for rising standards of living. 
C) 1930s but has been recalculated every decade to account for rising standards of living. 
D) 1930s and is not recalculated to account for rising standards of living.

Question 9

Social Security is:

Accepted Answer

A) a pension program that returns benefits to participants equal to the amount paid in. 
B) not purely a pension program, because some people receive more than they paid in. 
C) a means-tested public assistance program designed to reduce income inequality. 
D) a means-tested public assistance program designed to assist the poor. 
A) a pension program that returns benefits to participants equal to the amount paid in. 
B) not purely a pension program, because some people receive more than they paid in. 
C) a means-tested public assistance program designed to reduce income inequality. 
D) a means-tested public assistance program designed to assist the poor.

Question 10

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 11

Explain the difference between wealth and income.How does the distribution of income compare to the distribution of wealth in the U.S.and what does this imply about the respective Lorenz curves for wealth and income?

Accepted Answer

Wealth is a stock concept: it is the val

Question 12

The underclass in the United States has expanded over the last several decades as a fraction of the overall population partly because:

Accepted Answer

A) there are more people in the United States. 
B) there has been a substantial movement of Black people into the middle class. 
C) there has been a substantial amount of well-educated immigrants from Southeast Asia. 
D) there has been a substantial amount of illegal immigration. 
A) there are more people in the United States. 
B) there has been a substantial movement of Black people into the middle class. 
C) there has been a substantial amount of well-educated immigrants from Southeast Asia. 
D) there has been a substantial amount of illegal immigration.

Question 13

Most economists believe that it is impossible for government programs that benefit the rich to also benefit the poor.

Accepted Answer

A) True 
 B)False

Question 14

Is an equal distribution of income always the fairest distribution? What problems may arise when assessing the fairness of an equal distribution?

Accepted Answer

An equal distribution of income is not n

Question 15

Give three reasons why an equal distribution of income is not necessarily fair.Discuss each of them.

Accepted Answer

In trying to determine whether an equal

Question 16

What is a Lorenz curve? What does it mean if the gap between a Lorenz curve and the diagonal line gets smaller over time?

Accepted Answer

A Lorenz curve is a geometric representa

Question 17

Which of the following Lorenz curves is closest to the diagonal line?

Accepted Answer

A) The before-tax, before-transfer income distribution 
B) The after-tax income distribution 
C) The after-transfer income distribution 
D) The before-tax distribution of income 
A) The before-tax, before-transfer income distribution 
B) The after-tax income distribution 
C) The after-transfer income distribution 
D) The before-tax distribution of income

Question 18

For U.S. workers in tradable sectors such as manufacturing, the effect of globalization has been:

Accepted Answer

A) to push wages up relative to those in nontradable sectors such as government or service workers. 
B) to cause greater upward mobility for those workers while reducing downward mobility. 
C) to push wages down or leave them unemployed. 
D) to reduce unemployment in this group while leaving wage rates about the same. 
A) to push wages up relative to those in nontradable sectors such as government or service workers. 
B) to cause greater upward mobility for those workers while reducing downward mobility. 
C) to push wages down or leave them unemployed. 
D) to reduce unemployment in this group while leaving wage rates about the same.

Question 19

Over 17 million American households had a net worth over $1 million. This means:

Accepted Answer

A) their assets minus liabilities were greater than $1 million. 
B) their total income minus expenses was greater than $1 million. 
C) more than $1 million flowed through the accounts of over 17 million households. 
D) the Lorenz curve would show $1 million for over 17 million households. 
A) their assets minus liabilities were greater than $1 million. 
B) their total income minus expenses was greater than $1 million. 
C) more than $1 million flowed through the accounts of over 17 million households. 
D) the Lorenz curve would show $1 million for over 17 million households.

Question 20

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.

Exam 18: Who Gets What the Distribution of Income

Philosopher John Rawls generally argued for greater income equality.Under what conditions would he have argued against greater equality of income?

Because income differs so much by type of job, some economists argue that a new class distinction has emerged between:

One study of the distribution of wealth indicates that the bottom 40 percent of households hold 1 percent or less of total marketable wealth in the United States. Which of the following people is most likely to be in the bottom 40 percent?

Refer to the graph shown. The middle quintile (the middle fifth)of families earn:

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

A curve that shows the wealth distribution for the United States would be:

When former president Obama promised to raise taxes only on those whose income exceeds $250,000, he was suggesting the federal tax system be:

The minimum food budget used to determine the poverty line was determined in the:

Social Security is:

When a tax is proportional, the average tax rate:

Explain the difference between wealth and income.How does the distribution of income compare to the distribution of wealth in the U.S.and what does this imply about the respective Lorenz curves for wealth and income?

The underclass in the United States has expanded over the last several decades as a fraction of the overall population partly because:

Most economists believe that it is impossible for government programs that benefit the rich to also benefit the poor.

Is an equal distribution of income always the fairest distribution? What problems may arise when assessing the fairness of an equal distribution?

Give three reasons why an equal distribution of income is not necessarily fair.Discuss each of them.

What is a Lorenz curve? What does it mean if the gap between a Lorenz curve and the diagonal line gets smaller over time?

Which of the following Lorenz curves is closest to the diagonal line?

For U.S. workers in tradable sectors such as manufacturing, the effect of globalization has been:

Over 17 million American households had a net worth over $1 million. This means:

Wealth is defined as the:

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

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International Trade Policy

Production and Cost Analysis I

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Perfect Competition

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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

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Microeconomic Policy, Economic Reasoning, and Beyond

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Measuring and Describing the Aggregate Economy

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The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

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Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

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