Question 1

The effective tax rate is the

Accepted Answer

A)  share of income a household pays in taxes. 
B)  percentage of an additional dollar that a household would pay in taxes. 
C)  share of income a household pays in taxes, minus any welfare transfers to the household from the government. 
D)  highest income tax rate minus the lowest income tax rate. 
A)  share of income a household pays in taxes. 
B)  percentage of an additional dollar that a household would pay in taxes. 
C)  share of income a household pays in taxes, minus any welfare transfers to the household from the government. 
D)  highest income tax rate minus the lowest income tax rate.

Question 2

If white workers earn more than black or Hispanic workers primarily because of differences in education,then this means there is no discrimination against blacks or Hispanics.This statement is

Accepted Answer

A)  true, because black and Hispanic workers are paid less because they have less education, not because of discrimination. 
B)  true, because antidiscrimination laws went into effect a long time ago. 
C)  false, because it could be that black and Hispanic workers face discrimination or other obstacles to receiving a quality college education. 
D)  false, because employers are discriminating by choosing not to hire uneducated workers, regardless of their race. 
A)  true, because black and Hispanic workers are paid less because they have less education, not because of discrimination. 
B)  true, because antidiscrimination laws went into effect a long time ago. 
C)  false, because it could be that black and Hispanic workers face discrimination or other obstacles to receiving a quality college education. 
D)  false, because employers are discriminating by choosing not to hire uneducated workers, regardless of their race.

Question 3

People who oppose government intervention to reduce income inequality have sometimes argued that allowing large income gaps can be beneficial because

Accepted Answer

A)  people with large incomes will feel guiltier about their financial advantages and be motivated to give more to the poor. 
B)  large income gaps increase the incentive to support a market-based economy. 
C)  the poor will have a shorter life expectancy, leaving more wealth for the successful few. 
D)  it increases the incentive to work harder to be successful, thereby increasing economic growth. 
A)  people with large incomes will feel guiltier about their financial advantages and be motivated to give more to the poor. 
B)  large income gaps increase the incentive to support a market-based economy. 
C)  the poor will have a shorter life expectancy, leaving more wealth for the successful few. 
D)  it increases the incentive to work harder to be successful, thereby increasing economic growth.

Question 4

Among the reasons for high CEO pay are all of the following EXCEPT

Accepted Answer

A)  the people who are capable of doing the work required of a top corporate officer are relatively scarce. 
B)  paying CEOs with stock in the company will motivate the CEO to do what is in the best interests of the shareholders, and these stock packages might be very large to motivate more. 
C)  shareholders might benefit from the prestige of investing in a company with a CEO who enjoys a high standard of living. 
D)  a corporate board might make the CEO job higher-paying in order to entice lower-level corporate officers to put forth maximum effort as they try to achieve the top position. 
A)  the people who are capable of doing the work required of a top corporate officer are relatively scarce. 
B)  paying CEOs with stock in the company will motivate the CEO to do what is in the best interests of the shareholders, and these stock packages might be very large to motivate more. 
C)  shareholders might benefit from the prestige of investing in a company with a CEO who enjoys a high standard of living. 
D)  a corporate board might make the CEO job higher-paying in order to entice lower-level corporate officers to put forth maximum effort as they try to achieve the top position.

Question 5

If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $20,000 in taxes,then the tax system is

Accepted Answer

A)  regressive. 
B)  progressive. 
C)  neither regressive nor progressive. 
D)  redistributive. 
A)  regressive. 
B)  progressive. 
C)  neither regressive nor progressive. 
D)  redistributive.

Question 6

Compared to 1981,the year Ronald Reagan took office,the poor now pay a

Accepted Answer

A)  larger fraction of their income in taxes than the top 10 percent of income earners. 
B)  larger fraction of their income in taxes than the middle 50 percent of income earners. 
C)  smaller fraction of their income in federal taxes. 
D)  larger fraction of their income in federal taxes. 
A)  larger fraction of their income in taxes than the top 10 percent of income earners. 
B)  larger fraction of their income in taxes than the middle 50 percent of income earners. 
C)  smaller fraction of their income in federal taxes. 
D)  larger fraction of their income in federal taxes.

Question 7

A quintile,sometimes used to measure wealth inequality,represents one-fourth of households.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is among the arguments against using government intervention to reduce income inequality?

Accepted Answer

A)  Governments cannot have much of an impact on income inequality, so there is little use in making the attempt. 
B)  A wide gap between the rich and the poor tends to promote active participation in the democratic process. 
C)  Allowing big rewards to go to the most successful performers helps motivate creativity, innovation, and hard work. 
D)  Large income differences eventually lead to political strife and will undermine support for a market economy. 
A)  Governments cannot have much of an impact on income inequality, so there is little use in making the attempt. 
B)  A wide gap between the rich and the poor tends to promote active participation in the democratic process. 
C)  Allowing big rewards to go to the most successful performers helps motivate creativity, innovation, and hard work. 
D)  Large income differences eventually lead to political strife and will undermine support for a market economy.

Question 9

Which of the following is NOT a reason for increasing income inequality?

Accepted Answer

A)  A shift to "superstar" markets, in which firms with larger markets seek the very best talent to work for their companies. 
B)  Rapid technological improvements, which favor educated workers more than lower-skilled workers. 
C)  Growth of foreign trade, which helps higher-skilled workers whose talents are in higher demand worldwide. 
D)  A decline in the dollar value of the minimum wage over several decades. 
A)  A shift to "superstar" markets, in which firms with larger markets seek the very best talent to work for their companies. 
B)  Rapid technological improvements, which favor educated workers more than lower-skilled workers. 
C)  Growth of foreign trade, which helps higher-skilled workers whose talents are in higher demand worldwide. 
D)  A decline in the dollar value of the minimum wage over several decades.

Question 10

Which of the following numbers,if it were equal to the 80/20 ratio for a particular country,would indicate the most inequality?

Accepted Answer

A)  0. 
B)  0.5. 
C)  1. 
D) 2. 
A)  0. 
B)  0.5. 
C)  1. 
D) 2.

Question 11

An income tax is progressive if

Accepted Answer

A)  lower-income households pay a larger share of their income in taxes than higher-income households. 
B)  most of the tax revenue is used to benefit lower-income households. 
C)  higher-income households pay a larger share of their income in taxes than lower-income households. 
D)  most of the tax revenue is used to benefit higher-income households. 
A)  lower-income households pay a larger share of their income in taxes than higher-income households. 
B)  most of the tax revenue is used to benefit lower-income households. 
C)  higher-income households pay a larger share of their income in taxes than lower-income households. 
D)  most of the tax revenue is used to benefit higher-income households.

Question 12

The 80/20 ratio of income has been rising over the last three decades.

Accepted Answer

A) True 
 B)False

Question 13

Government intervention to reduce income inequality might reduce growth rates because of rent-seeking behavior.This means that

Accepted Answer

A)  landlords might raise rental rates on housing in order to pay the higher taxes that go with government wealth redistribution programs. 
B)  groups who are not among the neediest might put pressure on government officials to obtain transfers of wealth. 
C)  people who are not home owners, but reside in rental housing, may become unmotivated and work less, reducing payments to landlords and slowing real estate markets. 
D)  as a larger fraction of the population falls below the poverty line, or near it, they are pushed out of home ownership and into rental housing. This means they cannot build equity, slowing economic growth overall. 
A)  landlords might raise rental rates on housing in order to pay the higher taxes that go with government wealth redistribution programs. 
B)  groups who are not among the neediest might put pressure on government officials to obtain transfers of wealth. 
C)  people who are not home owners, but reside in rental housing, may become unmotivated and work less, reducing payments to landlords and slowing real estate markets. 
D)  as a larger fraction of the population falls below the poverty line, or near it, they are pushed out of home ownership and into rental housing. This means they cannot build equity, slowing economic growth overall.

Question 14

Which of the following statements is true?

Accepted Answer

A)  Income distributions have not changed much in the United States in the past 30 years. 
B)  Progressive income tax structures are one method of making incomes more equal. 
C)  The poverty line has not been adjusted at all in the past 30 years. 
D)  Worldwide, no countries are catching up to the United States with respect to GDP per capita. 
A)  Income distributions have not changed much in the United States in the past 30 years. 
B)  Progressive income tax structures are one method of making incomes more equal. 
C)  The poverty line has not been adjusted at all in the past 30 years. 
D)  Worldwide, no countries are catching up to the United States with respect to GDP per capita.

Question 15

Progressive income tax structures tend to make incomes less equal.

Accepted Answer

A) True 
 B)False

Question 16

An income tax is regressive if

Accepted Answer

A)  lower-income households pay a larger share of their income in taxes than higher-income households. 
B)  most of the tax revenue is used to benefit lower-income households. 
C)  higher-income households pay a larger share of their income in taxes than lower-income households. 
D)  most of the tax revenue is used to benefit higher-income households. 
A)  lower-income households pay a larger share of their income in taxes than higher-income households. 
B)  most of the tax revenue is used to benefit lower-income households. 
C)  higher-income households pay a larger share of their income in taxes than lower-income households. 
D)  most of the tax revenue is used to benefit higher-income households.

Question 17

In the United States,people who earn more than $250,000 a year represent 2 percent of all households and earn

Accepted Answer

A)  13 percent of total income. 
B)  2 percent of total income. 
C)  Less than 1 percent of total income. 
D)  83 percent of total income. 
A)  13 percent of total income. 
B)  2 percent of total income. 
C)  Less than 1 percent of total income. 
D)  83 percent of total income.

Question 18

If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $15,000 in taxes,then the tax system is

Accepted Answer

A)  regressive. 
B)  progressive. 
C)  reducing income inequality. 
D)  discriminatory. 
A)  regressive. 
B)  progressive. 
C)  reducing income inequality. 
D)  discriminatory.

Question 19

Supporters of supply-side economics would be most likely to argue __________ government intervention to reduce inequality by focusing on its effects on __________.

Accepted Answer

A)  against; economic growth 
B)  against; fairness 
C)  in favor of; politics 
D)  in favor of; economic growth 
A)  against; economic growth 
B)  against; fairness 
C)  in favor of; politics 
D)  in favor of; economic growth

Question 20

Increasing foreign trade has reduced income inequality because the market expansion effect increases the work opportunities and wages of low-skilled workers.

Accepted Answer

A) True 
 B)False

The effective tax rate is the

If white workers earn more than black or Hispanic workers primarily because of differences in education,then this means there is no discrimination against blacks or Hispanics.This statement is

People who oppose government intervention to reduce income inequality have sometimes argued that allowing large income gaps can be beneficial because

Among the reasons for high CEO pay are all of the following EXCEPT

If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $20,000 in taxes,then the tax system is

Compared to 1981,the year Ronald Reagan took office,the poor now pay a

A quintile,sometimes used to measure wealth inequality,represents one-fourth of households.

Which of the following is among the arguments against using government intervention to reduce income inequality?

Which of the following is NOT a reason for increasing income inequality?

Which of the following numbers,if it were equal to the 80/20 ratio for a particular country,would indicate the most inequality?

An income tax is progressive if

The 80/20 ratio of income has been rising over the last three decades.

Government intervention to reduce income inequality might reduce growth rates because of rent-seeking behavior.This means that

Which of the following statements is true?

Progressive income tax structures tend to make incomes less equal.

An income tax is regressive if

In the United States,people who earn more than $250,000 a year represent 2 percent of all households and earn

If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $15,000 in taxes,then the tax system is

Supporters of supply-side economics would be most likely to argue government intervention to reduce inequality by focusing on its effects on .

Increasing foreign trade has reduced income inequality because the market expansion effect increases the work opportunities and wages of low-skilled workers.

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Fiscal Policy

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Exam 17: The Distribution of Income

The effective tax rate is the

If white workers earn more than black or Hispanic workers primarily because of differences in education,then this means there is no discrimination against blacks or Hispanics.This statement is

People who oppose government intervention to reduce income inequality have sometimes argued that allowing large income gaps can be beneficial because

Among the reasons for high CEO pay are all of the following EXCEPT

If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $20,000 in taxes,then the tax system is

Compared to 1981,the year Ronald Reagan took office,the poor now pay a

A quintile,sometimes used to measure wealth inequality,represents one-fourth of households.

Which of the following is among the arguments against using government intervention to reduce income inequality?

Which of the following is NOT a reason for increasing income inequality?

Which of the following numbers,if it were equal to the 80/20 ratio for a particular country,would indicate the most inequality?

An income tax is progressive if

The 80/20 ratio of income has been rising over the last three decades.

Government intervention to reduce income inequality might reduce growth rates because of rent-seeking behavior.This means that

Which of the following statements is true?

Progressive income tax structures tend to make incomes less equal.

An income tax is regressive if

In the United States,people who earn more than $250,000 a year represent 2 percent of all households and earn

If a household earning $50,000 annually pays $10,000 in taxes while a household earning $100,000 annually pays $15,000 in taxes,then the tax system is

Supporters of supply-side economics would be most likely to argue __________ government intervention to reduce inequality by focusing on its effects on __________.

Increasing foreign trade has reduced income inequality because the market expansion effect increases the work opportunities and wages of low-skilled workers.

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Competition and Market Power

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Fiscal Policy

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Supporters of supply-side economics would be most likely to argue government intervention to reduce inequality by focusing on its effects on .