Question 1

Which of the following is correct about the United States?

Accepted Answer

A)  Income is equally distributed. 
B)  Wealth is equally distributed. 
C)  Income is equally distributed but wealth is unequally distributed because of inheritances. 
D)  Both wealth and income are unequally distributed. 
E)  Both wealth and income are equally distributed. 
A)  Income is equally distributed. 
B)  Wealth is equally distributed. 
C)  Income is equally distributed but wealth is unequally distributed because of inheritances. 
D)  Both wealth and income are unequally distributed. 
E)  Both wealth and income are equally distributed. D

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Wealth inequality in the United States is greater than income inequality. 
B)  Income inequality in the United States is greater than wealth inequality. 
C)  Income includes all the things owned by a household at a certain point in time. 
D)  The top fifth of households have a greater share of the nation's income than the nation's wealth. 
E)  The fraction of wealth owned by the bottom 20 percent of households is larger than the fraction income earned by the bottom 20 percent of households. 
A)  Wealth inequality in the United States is greater than income inequality. 
B)  Income inequality in the United States is greater than wealth inequality. 
C)  Income includes all the things owned by a household at a certain point in time. 
D)  The top fifth of households have a greater share of the nation's income than the nation's wealth. 
E)  The fraction of wealth owned by the bottom 20 percent of households is larger than the fraction income earned by the bottom 20 percent of households. A

Question 3

The figure above shows Lorenz curves for a nation
-Based on the figure above,which of the following can cause a movement from point C to point D on the Lorenz curve for income?

Accepted Answer

A)  an increase in income for the bottom 60 percent of households 
B)  an increase in income for the bottom 80 percent of households 
C)  a decrease in income for the bottom 60 percent of households 
D)  a decrease in income for the bottom 80 percent of households 
E)  None of the above answers is correct. 
A)  an increase in income for the bottom 60 percent of households 
B)  an increase in income for the bottom 80 percent of households 
C)  a decrease in income for the bottom 60 percent of households 
D)  a decrease in income for the bottom 80 percent of households 
E)  None of the above answers is correct. E

Question 4

Looking at the results of government income redistribution programs,we find that the income received by the

Accepted Answer

A)  lowest 20 percent of households is almost unchanged because most don't work. 
B)  highest 20 percent is left unaffected because they are able to shelter income from taxes. 
C)  lowest 20 percent increases, and the income received by the highest 20 percent decreases. 
D)  lowest 20 percent increases somewhat, but the income received by the next 20 percent increases the most. 
E)  lowest 20 percent decreases because of government taxes, and the income received by the highest 20 percent increases because of government subsidies. 
A)  lowest 20 percent of households is almost unchanged because most don't work. 
B)  highest 20 percent is left unaffected because they are able to shelter income from taxes. 
C)  lowest 20 percent increases, and the income received by the highest 20 percent decreases. 
D)  lowest 20 percent increases somewhat, but the income received by the next 20 percent increases the most. 
E)  lowest 20 percent decreases because of government taxes, and the income received by the highest 20 percent increases because of government subsidies.

Question 5

-The figure above shows the market for high and low-skilled labor.Supply curve SB represents the supply of ________ labor because ________.

Accepted Answer

A)  high-skilled; these workers must receive higher pay in return for acquiring their skills 
B)  high-skilled; firms supply more jobs for high-skilled workers 
C)  low-skilled; low-skilled labor must work more hours to compensate for their lower wage 
D)  low-skilled; firms supply fewer jobs for low-skilled labor 
E)  low-skilled; low-skilled labor has a lower value of marginal product 
A)  high-skilled; these workers must receive higher pay in return for acquiring their skills 
B)  high-skilled; firms supply more jobs for high-skilled workers 
C)  low-skilled; low-skilled labor must work more hours to compensate for their lower wage 
D)  low-skilled; firms supply fewer jobs for low-skilled labor 
E)  low-skilled; low-skilled labor has a lower value of marginal product

Question 6

Suppose a government of LaLa Land imposes the following tax rates on its citizens.
$$\begin{array} { | c | c | } 
\hline \text { Income } & \text { Tax Rate } \
\hline \text { below } \$ 30,000 & 9 \% \
\hline \$ 30,001 - \$ 70,000 & 12 \% \
\hline \text { above } \$ 70,000 & 17 \% \
\hline
\end{array}$$
The government has imposed a ________ tax system because its citizens will pay a ________ portion of their income as taxes as incomes increase.

Accepted Answer

A)  progressive; larger 
B)  progressive; smaller 
C)  regressive; larger 
D)  regressive; smaller 
E)  proportional; larger 
A)  progressive; larger 
B)  progressive; smaller 
C)  regressive; larger 
D)  regressive; smaller 
E)  proportional; larger

Question 7

Which of the following is true? At a given quantity of employment,if the
i.value of marginal product of a high-skill worker is $35 and the value of marginal product of a low-skill worker is $10,the value of marginal product of the skill is $25.
ii.value of marginal product of a high-skill worker is $35 and the value of marginal product of a low-skill worker is $10,the cost of acquiring the skill is $25.
iii.value of marginal product of a skill is $25,then the wage rate must be $25.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  ii and iii

Question 8

In the United States in 2010,a family of four was considered to be living below the poverty line only if its household income was less than approximately

Accepted Answer

A)  $400 per year. 
B)  $4,000 per year. 
C)  $11,900 per year. 
D)  $22,800 per year. 
E)  $35,800 per year. 
A)  $400 per year. 
B)  $4,000 per year. 
C)  $11,900 per year. 
D)  $22,800 per year. 
E)  $35,800 per year.

Question 9

With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

Accepted Answer

A)  $16,000. 
B)  $22,000. 
C)  $26,000. 
D)  $24,000. 
E)  $10,000. 
A)  $16,000. 
B)  $22,000. 
C)  $26,000. 
D)  $24,000. 
E)  $10,000.

Question 10

The figure above shows Lorenz curves for a nation
-Based on the figure above,

Accepted Answer

A)  the average household's income exceeds its wealth. 
B)  the average household's wealth exceeds its income. 
C)  income is distributed more equally than wealth. 
D)  wealth is distributed more equally than income. 
E)  Both answers A and C are correct. 
A)  the average household's income exceeds its wealth. 
B)  the average household's wealth exceeds its income. 
C)  income is distributed more equally than wealth. 
D)  wealth is distributed more equally than income. 
E)  Both answers A and C are correct.

Question 11

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers.
-In the figure above,if the cost of acquiring the skill decreased,then the

Accepted Answer

A)  SL curve shifts leftward. 
B)  SH curve shifts leftward. 
C)  SH curve shifts rightward. 
D)  DH curve shifts leftward. 
E)  DL curve shifts leftward. 
A)  SL curve shifts leftward. 
B)  SH curve shifts leftward. 
C)  SH curve shifts rightward. 
D)  DH curve shifts leftward. 
E)  DL curve shifts leftward.

Question 12

$$\begin{array} { | c | c | } 
\hline \text { Group } & \begin{array} { c } 
\text { Percent of } \
\text { income }
\end{array} \
\hline \text { Poorest } 20 \% & 5 \
\hline \text { Second poorest } 20 \% & 10 \
\hline \text { Middle } 20 \% & 15 \
\hline \text { Second richest } 20 \% & 25 \
\hline \text { Richest } 20 \% & 45 \
\hline
\end{array}$$ 
The table gives the distribution of income in Mise
-What percent of income is earned by the richest 80 percent of the population?

Accepted Answer

A)  25 percent 
B)  95 percent 
C)  100 percent 
D)  5 percent 
E)  More information is needed to answer the question. 
A)  25 percent 
B)  95 percent 
C)  100 percent 
D)  5 percent 
E)  More information is needed to answer the question.

Question 13

In the United States,the poorest 20 percent of the household receive approximately ________ percent of total money income.

Accepted Answer

A)  3.3 
B)  9.5 
C)  11.8 
D)  17.6 
E)  20.0 
A)  3.3 
B)  9.5 
C)  11.8 
D)  17.6 
E)  20.0

Question 14

Pete just started a new job as an assembler and is earning a wage of $10 per hour.Sam,who is an experienced assembler assigned to train Pete,earns $15 per hour.The opportunity cost to Pete of acquiring this skill is

Accepted Answer

A)  $25 per hour. 
B)  $15 per hour. 
C)  $10 per hour. 
D)  $5 per hour. 
E)  $0 per hour because Pete is being paid a wage. 
A)  $25 per hour. 
B)  $15 per hour. 
C)  $10 per hour. 
D)  $5 per hour. 
E)  $0 per hour because Pete is being paid a wage.

Question 15

Compared to low-skilled workers,high-skilled workers have a ________ value of marginal product and ________ opportunity cost of obtaining their skills.

Accepted Answer

A)  higher; a higher 
B)  higher; a lower 
C)  lower; a higher 
D)  lower; a lower 
E)  higher; the same 
A)  higher; a higher 
B)  higher; a lower 
C)  lower; a higher 
D)  lower; a lower 
E)  higher; the same

Question 16

In the United States,the federal and state income tax system is

Accepted Answer

A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  a flat-rate tax. 
E)  None of the above answers is correct. 
A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  a flat-rate tax. 
E)  None of the above answers is correct.

Question 17

The figure above shows Lorenz curves for a nation
-Based on the figure above,if the poorest 20 percent group of households increased the share of the nation's income they receive,then

Accepted Answer

A)  there is a movement up along the Lorenz curve for income. 
B)  there is a movement down along the Lorenz curve for income. 
C)  the Lorenz curve for income shifts toward the line of equality. 
D)  the Lorenz curve for income shifts away from the line of equality. 
E)  Both answers A and C are correct. 
A)  there is a movement up along the Lorenz curve for income. 
B)  there is a movement down along the Lorenz curve for income. 
C)  the Lorenz curve for income shifts toward the line of equality. 
D)  the Lorenz curve for income shifts away from the line of equality. 
E)  Both answers A and C are correct.

Question 18

-In the figure above,the nation with the highest average income is nation

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  The average income is the same in all three nations because their Lorenz curves can be plotted on the same diagram. 
E)  It is impossible to determine with the information given. 
A)  A. 
B)  B. 
C)  C. 
D)  The average income is the same in all three nations because their Lorenz curves can be plotted on the same diagram. 
E)  It is impossible to determine with the information given.

Question 19

A tax is progressive if the average tax rate

Accepted Answer

A)  increases as income increases. 
B)  increases as income decreases. 
C)  is negative. 
D)  is positive. 
A)  increases as income increases. 
B)  increases as income decreases. 
C)  is negative. 
D)  is positive.

Question 20

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers.
-In the figure above,the compensation for the cost of acquiring the skill creates the difference between the ________ curves and ________.

Accepted Answer

A)  SL and SH; is equal to $10 per hour 
B)  SL and SH; is less than $10 per hour 
C)  DL and DH; is less than $10 per hour 
D)  DL and DH; is equal to $10 per hour 
E)  SL and SH; exceeds $10 per hour 
A)  SL and SH; is equal to $10 per hour 
B)  SL and SH; is less than $10 per hour 
C)  DL and DH; is less than $10 per hour 
D)  DL and DH; is equal to $10 per hour 
E)  SL and SH; exceeds $10 per hour

Which of the following is correct about the United States?

Which of the following statements is correct?

The figure above shows Lorenz curves for a nation -Based on the figure above,which of the following can cause a movement from point C to point D on the Lorenz curve for income?

Looking at the results of government income redistribution programs,we find that the income received by the

-The figure above shows the market for high and low-skilled labor.Supply curve SB represents the supply of labor because .

Suppose a government of LaLa Land imposes the following tax rates on its citizens. Income Tax Rate below \ 30,000 9\% \ 30,001-\ 70,000 12\% above \ 70,000 17\% The government has imposed a tax system because its citizens will pay a portion of their income as taxes as incomes increase.

In the United States in 2010,a family of four was considered to be living below the poverty line only if its household income was less than approximately

With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

The figure above shows Lorenz curves for a nation -Based on the figure above,

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,if the cost of acquiring the skill decreased,then the

Group Percent of income Poorest 20\% 5 Second poorest 20\% 10 Middle 20\% 15 Second richest 20\% 25 Richest 20\% 45 The table gives the distribution of income in Mise -What percent of income is earned by the richest 80 percent of the population?

In the United States,the poorest 20 percent of the household receive approximately ________ percent of total money income.

Pete just started a new job as an assembler and is earning a wage of $10 per hour.Sam,who is an experienced assembler assigned to train Pete,earns $15 per hour.The opportunity cost to Pete of acquiring this skill is

Compared to low-skilled workers,high-skilled workers have a value of marginal product and opportunity cost of obtaining their skills.

In the United States,the federal and state income tax system is

The figure above shows Lorenz curves for a nation -Based on the figure above,if the poorest 20 percent group of households increased the share of the nation's income they receive,then

-In the figure above,the nation with the highest average income is nation

A tax is progressive if the average tax rate

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,the compensation for the cost of acquiring the skill creates the difference between the curves and .

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Filters

Exam 20: Economic Inequality

Which of the following is correct about the United States?

Which of the following statements is correct?

The figure above shows Lorenz curves for a nation -Based on the figure above,which of the following can cause a movement from point C to point D on the Lorenz curve for income?

Looking at the results of government income redistribution programs,we find that the income received by the

-The figure above shows the market for high and low-skilled labor.Supply curve SB represents the supply of ________ labor because ________.

In the United States in 2010,a family of four was considered to be living below the poverty line only if its household income was less than approximately

With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

The figure above shows Lorenz curves for a nation -Based on the figure above,

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,if the cost of acquiring the skill decreased,then the

Group Percent of income Poorest 20\% 5 Second poorest 20\% 10 Middle 20\% 15 Second richest 20\% 25 Richest 20\% 45 The table gives the distribution of income in Mise -What percent of income is earned by the richest 80 percent of the population?

In the United States,the poorest 20 percent of the household receive approximately ________ percent of total money income.

Pete just started a new job as an assembler and is earning a wage of $10 per hour.Sam,who is an experienced assembler assigned to train Pete,earns $15 per hour.The opportunity cost to Pete of acquiring this skill is

Compared to low-skilled workers,high-skilled workers have a ________ value of marginal product and ________ opportunity cost of obtaining their skills.

In the United States,the federal and state income tax system is

The figure above shows Lorenz curves for a nation -Based on the figure above,if the poorest 20 percent group of households increased the share of the nation's income they receive,then

-In the figure above,the nation with the highest average income is nation

A tax is progressive if the average tax rate

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,the compensation for the cost of acquiring the skill creates the difference between the ________ curves and ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Filters

-The figure above shows the market for high and low-skilled labor.Supply curve SB represents the supply of labor because .

Compared to low-skilled workers,high-skilled workers have a value of marginal product and opportunity cost of obtaining their skills.

The figure above shows the demand and supply curves for high-skilled (indicated by an "H" subscript) and low-skilled (indicated by an "L" subscript) workers. -In the figure above,the compensation for the cost of acquiring the skill creates the difference between the curves and .