Question 1

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. A

Question 2

The table below shows the distribution of market income in an economy.The government redistributes income by collecting income taxes and paying benefits shown in the table.
a.Calculate the income shares of each 20 percent of households after tax and redistribution.
   
b.In the figure below,draw the Lorenz curves for this economy,both before and after taxes and benefits.

Accepted Answer

a.The completed table is above.
   b.The completed figure is above.

Question 3

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. C

Question 4

Describe the characteristics of the typical lowest income household in the United States and the characteristics of the typical richest household in the United States.

Accepted Answer

The typical lowest income household has

Question 5

The vertical distance between the supply curves for neurosurgeons and the supply curve for fast-food servers

Accepted Answer

A)  represents the difference in the demand for these two occupations. 
B)  is the compensation that neurosurgeons require for the cost of acquiring this skill. 
C)  is the difference in the value of marginal product of the two professions. 
D)  is the difference in on-the-job training. 
E)  equals the difference in the equilibrium wages paid these two professions. 
A)  represents the difference in the demand for these two occupations. 
B)  is the compensation that neurosurgeons require for the cost of acquiring this skill. 
C)  is the difference in the value of marginal product of the two professions. 
D)  is the difference in on-the-job training. 
E)  equals the difference in the equilibrium wages paid these two professions.

Question 6

A ________ tax is one that taxes income at an average rate that decreases with the level of income.

Accepted Answer

A)  regressive 
B)  progressive 
C)  flat 
D)  Social Security 
E)  proportional 
A)  regressive 
B)  progressive 
C)  flat 
D)  Social Security 
E)  proportional

Question 7

Suppose a government of LaLa Land imposes the following tax rates on its citizens.
 
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 8

What is the difference between wealth and income?

Accepted Answer

Wealth is a stock of assets,that is,weal

Question 9

Suppose a state charges an in-state student $2000 in tuition for a college education and charges an out-of -state student $10,000 in tuition.This differential
A) is a result of the state subsidizing education for its residents.
B) explains the difference between the demand curve for high-skilled and low-skilled labor.
C) explains the difference between the supply curve for high-skilled and low-skilled labor.
D) can be corrected via a negative income tax.
E) is an example of the positive theories of income redistribution.

Accepted Answer

The answer of Suppose a state charges an in-state student...

Question 10

The larger the value of marginal product of a skill,the

Accepted Answer

A)  larger the vertical difference between the demand curves for high- and low-skilled labor. 
B)  smaller the vertical difference between the demand curves for high- and low-skilled labor. 
C)  larger the vertical distance between the supply curves for high- and low-skilled labor. 
D)  smaller the vertical distance between the supply curves for high- and low-skilled labor. 
E)  higher is the wage rate at which the demand curve for high-skilled workers crosses the demand curve for low-skilled workers. 
A)  larger the vertical difference between the demand curves for high- and low-skilled labor. 
B)  smaller the vertical difference between the demand curves for high- and low-skilled labor. 
C)  larger the vertical distance between the supply curves for high- and low-skilled labor. 
D)  smaller the vertical distance between the supply curves for high- and low-skilled labor. 
E)  higher is the wage rate at which the demand curve for high-skilled workers crosses the demand curve for low-skilled workers.

Question 11

The median voter theory predicts income redistribution ________ occur because the median voter ________.

Accepted Answer

A)  will; wants to be made as well off as possible 
B)  will; will only vote for the political party that supports a utilitarian proposal 
C)  will not; has his/her disposable income reduced to inefficient levels 
D)  will not; faces the big tradeoff 
E)  will not; usually favors a negative income tax 
A)  will; wants to be made as well off as possible 
B)  will; will only vote for the political party that supports a utilitarian proposal 
C)  will not; has his/her disposable income reduced to inefficient levels 
D)  will not; faces the big tradeoff 
E)  will not; usually favors a negative income tax

Question 12

Poverty for a household is defined as the state of

Accepted Answer

A)  having a total income that is below the median total income. 
B)  having an income that can be spent on food, shelter, and clothing that is below the median for food, shelter, and clothing. 
C)  income below what is thought fair. 
D)  income below what is thought necessary for food, shelter, and clothing. 
E)  having an income that is below average. 
A)  having a total income that is below the median total income. 
B)  having an income that can be spent on food, shelter, and clothing that is below the median for food, shelter, and clothing. 
C)  income below what is thought fair. 
D)  income below what is thought necessary for food, shelter, and clothing. 
E)  having an income that is below average.

Question 13

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

Accepted Answer

A)  wealth is distributed more equally than income. 
B)  the Lorenz curve for wealth shows that the poorest 40 percent of households receive about 40 percent of the nation's wealth. 
C)  average income exceeds average wealth. 
D)  average wealth exceeds average income. 
E)  the Lorenz curve for income shows that the richest 20 percent of households receive about 50 percent of the nation's income. 
A)  wealth is distributed more equally than income. 
B)  the Lorenz curve for wealth shows that the poorest 40 percent of households receive about 40 percent of the nation's wealth. 
C)  average income exceeds average wealth. 
D)  average wealth exceeds average income. 
E)  the Lorenz curve for income shows that the richest 20 percent of households receive about 50 percent of the nation's income.

Question 14

A ________ has a constant tax rate regardless of the level of income.

Accepted Answer

A)  regressive tax 
B)  progressive tax 
C)  state tax 
D)  proportional tax 
E)  subsidy tax 
A)  regressive tax 
B)  progressive tax 
C)  state tax 
D)  proportional tax 
E)  subsidy tax

Question 15

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 16

Which of the following is a way income is redistributed in the United States?
i.subsidizing services
ii.income taxes
iii.income maintenance programs

Accepted Answer

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

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

Fully explain why it is a good idea for young people who are considering dropping out of high school to stay in school if the U.S.government pursues more liberal immigration policies over the next 20 years.

Accepted Answer

Over the past several years,the number o

Question 19

The inequality of annual income

Accepted Answer

A)  overstates the amount of lifetime inequality. 
B)  understates the amount of lifetime inequality. 
C)  cannot change from one year to the next. 
D)  is about the same as the amount of lifetime inequality. 
E)  cannot be compared to the amount of lifetime inequality. 
A)  overstates the amount of lifetime inequality. 
B)  understates the amount of lifetime inequality. 
C)  cannot change from one year to the next. 
D)  is about the same as the amount of lifetime inequality. 
E)  cannot be compared to the amount of lifetime inequality.

Question 20

Of the following types of income tax systems,the one that provides the greatest amount of redistribution from the rich to the poor is a

Accepted Answer

A)  progressive income tax. 
B)  proportional income tax. 
C)  regressive income tax. 
D)  flat-rate income tax. 
E)  money-income tax. 
A)  progressive income tax. 
B)  proportional income tax. 
C)  regressive income tax. 
D)  flat-rate income tax. 
E)  money-income tax.

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

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

Describe the characteristics of the typical lowest income household in the United States and the characteristics of the typical richest household in the United States.

The vertical distance between the supply curves for neurosurgeons and the supply curve for fast-food servers

A ________ tax is one that taxes income at an average rate that decreases with the level of income.

Suppose a government of LaLa Land imposes the following tax rates on its citizens. The government has imposed a tax system because its citizens will pay a portion of their income as taxes as incomes increase.

What is the difference between wealth and income?

The larger the value of marginal product of a skill,the

The median voter theory predicts income redistribution occur because the median voter .

Poverty for a household is defined as the state of

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

A ________ has a constant tax rate regardless of the level of income.

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

Which of the following is a way income is redistributed in the United States? i.subsidizing services ii.income taxes iii.income maintenance programs

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

Fully explain why it is a good idea for young people who are considering dropping out of high school to stay in school if the U.S.government pursues more liberal immigration policies over the next 20 years.

The inequality of annual income

Of the following types of income tax systems,the one that provides the greatest amount of redistribution from the rich to the poor is a

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

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

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

Describe the characteristics of the typical lowest income household in the United States and the characteristics of the typical richest household in the United States.

The vertical distance between the supply curves for neurosurgeons and the supply curve for fast-food servers

A ________ tax is one that taxes income at an average rate that decreases with the level of income.

Suppose a government of LaLa Land imposes the following tax rates on its citizens. The government has imposed a ________ tax system because its citizens will pay a ________ portion of their income as taxes as incomes increase.

What is the difference between wealth and income?

The larger the value of marginal product of a skill,the

The median voter theory predicts income redistribution ________ occur because the median voter ________.

Poverty for a household is defined as the state of

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

A ________ has a constant tax rate regardless of the level of income.

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

Which of the following is a way income is redistributed in the United States? i.subsidizing services ii.income taxes iii.income maintenance programs

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

Fully explain why it is a good idea for young people who are considering dropping out of high school to stay in school if the U.S.government pursues more liberal immigration policies over the next 20 years.

The inequality of annual income

Of the following types of income tax systems,the one that provides the greatest amount of redistribution from the rich to the poor is a

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

Suppose a government of LaLa Land imposes the following tax rates on its citizens. The government has imposed a tax system because its citizens will pay a portion of their income as taxes as incomes increase.

The median voter theory predicts income redistribution occur because the median voter .