Question 1

What is the approximate Gini coefficient associated with the following income distribution?

Accepted Answer

A) 0.08 
B) 0.13 
C) 0.23 
D) 0.34 
E) 0.48 
A) 0.08 
B) 0.13 
C) 0.23 
D) 0.34 
E) 0.48 D

Question 2

Which of the following measures would best allow one to compare the relative wealth of poor households to the typical household in an economy?

Accepted Answer

A) The perfect-equality Lorenz curve. 
B) The Gini coefficient. 
C) The 90-10 wage gap. 
D) The 50-10 wage gap. 
E) The 90-50 wage gap. 
A) The perfect-equality Lorenz curve. 
B) The Gini coefficient. 
C) The 90-10 wage gap. 
D) The 50-10 wage gap. 
E) The 90-50 wage gap. D

Question 3

In the United States over the last 30 years, wage differentials have

Accepted Answer

A) narrowed for all groups of workers. 
B) increased for all groups of workers. 
C) increased for skilled workers but have narrowed for unskilled workers. 
D) decreased for skilled workers but have increased for unskilled workers. 
E) increased for women but have narrowed for men. 
A) narrowed for all groups of workers. 
B) increased for all groups of workers. 
C) increased for skilled workers but have narrowed for unskilled workers. 
D) decreased for skilled workers but have increased for unskilled workers. 
E) increased for women but have narrowed for men. B

Question 4

What is meant by the skill-bias technological explanation of increasing inequality?

Accepted Answer

A) There has been increasing inequality over the last 40 years because unskilled workers use no technology. 
B) There has been increasing inequality over the last 40 years among high-skilled workers. 
C) Inequality has increased because technological advances have not kept pace with the demand for education. 
D) Inequality has increased because technological advances over the last 40 years have complemented the productivity of skilled labor relative to unskilled labor. 
E) Inequality has increased because technological advances over the last 40 years have complemented the productivity of unskilled labor relative to foreign labor. 
A) There has been increasing inequality over the last 40 years because unskilled workers use no technology. 
B) There has been increasing inequality over the last 40 years among high-skilled workers. 
C) Inequality has increased because technological advances have not kept pace with the demand for education. 
D) Inequality has increased because technological advances over the last 40 years have complemented the productivity of skilled labor relative to unskilled labor. 
E) Inequality has increased because technological advances over the last 40 years have complemented the productivity of unskilled labor relative to foreign labor.

Question 5

How does the income distribution in the United States compare to other developed countries?

Accepted Answer

A) The income distribution is vastly more unequal in the United States compared to other developed countries. 
B) The income distribution is vastly more equal in the United States compared to other developed countries. 
C) The income distribution tends to be more unequal in the United States compared to other developed countries, but not by a huge amount. 
D) The income distribution tends to be more equal in the United States compared to other developed countries, but not by a huge amount. 
E) The income distribution must be the same in all developed countries, the United States included, because of increased globalization. 
A) The income distribution is vastly more unequal in the United States compared to other developed countries. 
B) The income distribution is vastly more equal in the United States compared to other developed countries. 
C) The income distribution tends to be more unequal in the United States compared to other developed countries, but not by a huge amount. 
D) The income distribution tends to be more equal in the United States compared to other developed countries, but not by a huge amount. 
E) The income distribution must be the same in all developed countries, the United States included, because of increased globalization.

Question 6

Which of the following does not measure inequality?

Accepted Answer

A) The 90-10 wage gap. 
B) The 50-10 wage gap. 
C) The Gini coefficient. 
D) The actual Lorenz curve. 
E) The perfect-equality Lorenz curve. 
A) The 90-10 wage gap. 
B) The 50-10 wage gap. 
C) The Gini coefficient. 
D) The actual Lorenz curve. 
E) The perfect-equality Lorenz curve.

Question 7

Wage differentials across individual workers are determined in part by:

Accepted Answer

A) Effort. 
B) Productivity. 
C) Social capital. 
D) Luck. 
E) All of the above. 
A) Effort. 
B) Productivity. 
C) Social capital. 
D) Luck. 
E) All of the above.

Question 8

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of _____ while a perfectly equal society will have a Gini coefficient equal to _____.

Accepted Answer

A) 0; 1 
B) 1; 0 
C) 0; infinity 
D) infinity; 0 
E) -1; 1 
A) 0; 1 
B) 1; 0 
C) 0; infinity 
D) infinity; 0 
E) -1; 1

Question 9

Extraordinary earnings of superstars require

Accepted Answer

A) a technology that allows the superstar's output to be mass distributed. 
B) there to be only one superstar. 
C) all customers to agree on which potential superstar is the best. 
D) the superstar's talents to be substantially better than anyone else's talents. 
E) unification of international markets for the superstar's services. 
A) a technology that allows the superstar's output to be mass distributed. 
B) there to be only one superstar. 
C) all customers to agree on which potential superstar is the best. 
D) the superstar's talents to be substantially better than anyone else's talents. 
E) unification of international markets for the superstar's services.

Question 10

Many studies measure inequality with the 90-10, 50-10, or 90-50 wage gaps rather than with the Gini coefficient. Why?

Accepted Answer

A) The Gini coefficient is poorly defined. 
B) The Gini coefficient is ambiguous in terms of where in the earnings distribution inequality exists. 
C) The Gini coefficient tends to jump around from one year to the next due to extreme outliers. 
D) The Gini coefficient is a poor measure of international comparisons of inequality. 
E) The Gini coefficient fails to take into account the entire wage distribution. 
A) The Gini coefficient is poorly defined. 
B) The Gini coefficient is ambiguous in terms of where in the earnings distribution inequality exists. 
C) The Gini coefficient tends to jump around from one year to the next due to extreme outliers. 
D) The Gini coefficient is a poor measure of international comparisons of inequality. 
E) The Gini coefficient fails to take into account the entire wage distribution.

Question 11

How have average wages of college graduates compared to average wages of high school graduates over the last 30 years?

Accepted Answer

A) Relative college wages have held steady over the last 30 years, with college graduates earning about 60 percent more than high school graduates during the entire period. 
B) Relative college wages have held steady over the last 30 years, with college graduates earning about 90 percent more than high school graduates during the entire period. 
C) Relative college wages have increased drastically over the last 30 years, from being 50 percent more than high school wages in 1980 to almost 100 percent more in 2010. 
D) Relative college wages have increased drastically over the last 30 years, from being 20 percent more than high school wages in 1980 to almost 60 percent more in 2010. 
E) Relative college wages have decreased slightly over the last 30 years, from being 40 percent more than high school wages in 1980 to just under 30 percent more in 2010. 
A) Relative college wages have held steady over the last 30 years, with college graduates earning about 60 percent more than high school graduates during the entire period. 
B) Relative college wages have held steady over the last 30 years, with college graduates earning about 90 percent more than high school graduates during the entire period. 
C) Relative college wages have increased drastically over the last 30 years, from being 50 percent more than high school wages in 1980 to almost 100 percent more in 2010. 
D) Relative college wages have increased drastically over the last 30 years, from being 20 percent more than high school wages in 1980 to almost 60 percent more in 2010. 
E) Relative college wages have decreased slightly over the last 30 years, from being 40 percent more than high school wages in 1980 to just under 30 percent more in 2010.

Question 12

The positive correlation between ability and human capital investments "stretches out" wages in the population, generating what?

Accepted Answer

A) A positively skewed wage distribution. 
B) A negatively skewed wage distribution. 
C) An inconsistent wage distribution. 
D) A uniform wage distribution. 
E) A symmetric wage distribution. 
A) A positively skewed wage distribution. 
B) A negatively skewed wage distribution. 
C) An inconsistent wage distribution. 
D) A uniform wage distribution. 
E) A symmetric wage distribution.

Question 13

The superstar phenomenon explains why

Accepted Answer

A) some people are paid extraordinary sums of money for talents that many people have. 
B) a few people are paid extraordinary sums of money for extreme talents that only a few people have. 
C) most people are paid relatively modest sums of money for talents that just a few people have. 
D) superstars have talents that far exceed even the next best person in the field. 
E) there are fewer superstars with the passing of time. 
A) some people are paid extraordinary sums of money for talents that many people have. 
B) a few people are paid extraordinary sums of money for extreme talents that only a few people have. 
C) most people are paid relatively modest sums of money for talents that just a few people have. 
D) superstars have talents that far exceed even the next best person in the field. 
E) there are fewer superstars with the passing of time.

Question 14

In the context of intergenerational inequality, regression toward the mean is captured by which of the following?

Accepted Answer

A) The tendency for inequality to be wider as a country experiences economic growth. 
B) The tendency for countries to diverge in their inequality. 
C) The tendency for income differences across families to get smaller over time as the various families move toward the mean income of the population. 
D) The tendency for the 90-50 wage gap to approach the 50-10 wage gap as a country experiences economic growth. 
E) The tendency for the tax code to erode inequality by targeting the mean tax rate to mean income. 
A) The tendency for inequality to be wider as a country experiences economic growth. 
B) The tendency for countries to diverge in their inequality. 
C) The tendency for income differences across families to get smaller over time as the various families move toward the mean income of the population. 
D) The tendency for the 90-50 wage gap to approach the 50-10 wage gap as a country experiences economic growth. 
E) The tendency for the tax code to erode inequality by targeting the mean tax rate to mean income.

Question 15

In the United States, the poorest 10 percent of households earn approximately what share of total income?

Accepted Answer

A) 2% 
B) 5% 
C) 10% 
D) 20% 
E) 50% 
A) 2% 
B) 5% 
C) 10% 
D) 20% 
E) 50%

Question 16

The earnings distribution refers to the distribution of

Accepted Answer

A) wages or earnings in an economy. 
B) earnings over an individual's life. 
C) wages between races. 
D) wages between genders. 
E) wage offers throughout an economy. 
A) wages or earnings in an economy. 
B) earnings over an individual's life. 
C) wages between races. 
D) wages between genders. 
E) wage offers throughout an economy.

Question 17

Higher values of the Gini coefficient are associated with

Accepted Answer

A) greater education inequality. 
B) greater income inequality. 
C) less income inequality. 
D) greater labor mobility. 
E) less labor mobility. 
A) greater education inequality. 
B) greater income inequality. 
C) less income inequality. 
D) greater labor mobility. 
E) less labor mobility.

Question 18

What does it mean for the U.S. economy to have a positively skewed wage distribution?

Accepted Answer

A) Most workers earn below the average wage. 
B) A large proportion of workers earn very high wages. 
C) The average wage equals the median wage. 
D) The distribution of wages is symmetric around the mean. 
E) The mean wage equals the median wage. 
A) Most workers earn below the average wage. 
B) A large proportion of workers earn very high wages. 
C) The average wage equals the median wage. 
D) The distribution of wages is symmetric around the mean. 
E) The mean wage equals the median wage.

Question 19

In the United States, the wealthiest 10 percent of households earn approximately what share of total income?

Accepted Answer

A) 5% 
B) 10% 
C) 30% 
D) 50% 
E) 80% 
A) 5% 
B) 10% 
C) 30% 
D) 50% 
E) 80%

Question 20

Consider an economy with a particular distribution of income. Over the next 10 years, the income of all households increases by $20,000. How will the Gini coefficient change over those 10 years?

Accepted Answer

A) The Gini coefficient will increase. 
B) The Gini coefficient will decrease. 
C) The Gini coefficient will stay the same as all households received the same increase in income. 
D) The Gini coefficient will become more negative. 
E) It is impossible to determine how the Gini coefficient will change as it will depend on the original income distribution. 
A) The Gini coefficient will increase. 
B) The Gini coefficient will decrease. 
C) The Gini coefficient will stay the same as all households received the same increase in income. 
D) The Gini coefficient will become more negative. 
E) It is impossible to determine how the Gini coefficient will change as it will depend on the original income distribution.

What is the approximate Gini coefficient associated with the following income distribution?

Which of the following measures would best allow one to compare the relative wealth of poor households to the typical household in an economy?

In the United States over the last 30 years, wage differentials have

What is meant by the skill-bias technological explanation of increasing inequality?

How does the income distribution in the United States compare to other developed countries?

Which of the following does not measure inequality?

Wage differentials across individual workers are determined in part by:

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of _ while a perfectly equal society will have a Gini coefficient equal to _.

Extraordinary earnings of superstars require

Many studies measure inequality with the 90-10, 50-10, or 90-50 wage gaps rather than with the Gini coefficient. Why?

How have average wages of college graduates compared to average wages of high school graduates over the last 30 years?

The positive correlation between ability and human capital investments "stretches out" wages in the population, generating what?

The superstar phenomenon explains why

In the context of intergenerational inequality, regression toward the mean is captured by which of the following?

In the United States, the poorest 10 percent of households earn approximately what share of total income?

The earnings distribution refers to the distribution of

Higher values of the Gini coefficient are associated with

What does it mean for the U.S. economy to have a positively skewed wage distribution?

In the United States, the wealthiest 10 percent of households earn approximately what share of total income?

Consider an economy with a particular distribution of income. Over the next 10 years, the income of all households increases by $20,000. How will the Gini coefficient change over those 10 years?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 7: The Wage Structure

What is the approximate Gini coefficient associated with the following income distribution?

Which of the following measures would best allow one to compare the relative wealth of poor households to the typical household in an economy?

In the United States over the last 30 years, wage differentials have

What is meant by the skill-bias technological explanation of increasing inequality?

How does the income distribution in the United States compare to other developed countries?

Which of the following does not measure inequality?

Wage differentials across individual workers are determined in part by:

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of _____ while a perfectly equal society will have a Gini coefficient equal to _____.

Extraordinary earnings of superstars require

Many studies measure inequality with the 90-10, 50-10, or 90-50 wage gaps rather than with the Gini coefficient. Why?

How have average wages of college graduates compared to average wages of high school graduates over the last 30 years?

The positive correlation between ability and human capital investments "stretches out" wages in the population, generating what?

The superstar phenomenon explains why

In the context of intergenerational inequality, regression toward the mean is captured by which of the following?

In the United States, the poorest 10 percent of households earn approximately what share of total income?

The earnings distribution refers to the distribution of

Higher values of the Gini coefficient are associated with

What does it mean for the U.S. economy to have a positively skewed wage distribution?

In the United States, the wealthiest 10 percent of households earn approximately what share of total income?

Consider an economy with a particular distribution of income. Over the next 10 years, the income of all households increases by $20,000. How will the Gini coefficient change over those 10 years?

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

The Gini coefficient in a perfectly unequal society will have a Gini coefficient of _ while a perfectly equal society will have a Gini coefficient equal to _.