Deck 18: The Two Americas Inequality, Class, and Conflict

Question 1

Whats defention of terms:
-class

Answer 1

a group of people who obtain their income in a way that distinguishes them from other groups and shows their relationship to other groups in the economic process

Question 2

Whats defention of terms:
-Gini coefficient

Answer 2

a calculation of income inequality that falls between zero and one

Question 3

Whats defention of terms:
-income

Answer 3

the stream of receipts from work or property generated by an individual or household over a specific time period

Question 4

Whats defention of terms:
-wealth

Question 5

Describe the sources of income and purchasing power for households.
-What is the difference between income and wealth?

Question 6

Describe the sources of income and purchasing power for households.
-Personal income can be broken down into five sources or categories. What are these categories and what percentage of personal income comes from each of these sources?

Question 7

Describe the sources of income and purchasing power for households.
-Which sources of income are generated from work and which from the ownership of assets?

Question 8

Compare and contrast relevant statistics on income and wealth for the United States.
-Use Table 18.2 in the text to describe how the distribution of income has changed in the United States over the last three decades. Has inequality increased or decreased? How do you know?

Question 9

Compare and contrast relevant statistics on income and wealth for the United States.
-What is a Gini coefficient? What would it mean if the Gini coefficient were equal to zero? What if it were equal to one?

Question 10

Compare and contrast relevant statistics on income and wealth for the United States.
-Which countries in the world have a more equal distribution of income than the United States? Which countries have a more unequal distribution of income?

Question 11

Compare and contrast relevant statistics on income and wealth for the United States.
-What is the poverty threshold for a family of three in the United States in 2005? What percentage of the population has income below this level?

Question 12

Compare and contrast relevant statistics on income and wealth for the United States.
-One percent of households own what share of total stock market value?

Question 13

Compare and contrast relevant statistics on income and wealth for the United States.
-Use Table 18.5 in the text to compute the ratio of net worth for the highest income quintile with that of the lowest income quintile. Given the other evidence in this chapter, do you suspect that this ratio has increased or decreased over the last 30 years?

Question 14

Compare and contrast relevant statistics on income and wealth for the United States.
-What has caused the increases in income and wealth inequality over the last three decades?

Question 15

Define class and explain how the definition ties into the sources of income to households.
-What do the authors mean by class? What is the largest class?

Question 16

Define class and explain how the definition ties into the sources of income to households.
-Which is more important in determining class: the level of income a person earns, or their relationship to the ownership of capital?

Question 17

What are sources of income for individuals in the U.S.?

A) employee compensation, profits, interest, and rent
B) employee compensation, profits, government transfers, and credit card debt
C) employee compensation, interest, government transfers, and credit card debt.
D) employee compensation, interest, rent and outstanding student loans.

Question 18

What is the difference between income and wealth?

A) Income is the value of accumulated assets minus liabilities held by an individual.
B) Income is the total value of accumulated assets held by an individual.
C) Income is the stream of receipts from work or property generated by an individual over a particular time period.
D) Income is the total amount of money owed in debts by an individual.

Question 19

What is the difference between income and wealth?

A) Wealth is the value of accumulated assets minus liabilities held by an individual.
B) Wealth is the total value of accumulated assets held by an individual.
C) Wealth is the stream of receipts from work or property generated by an individual over a particular time period.
D) Wealth is the total amount of money owed in debts by an individual.

Question 20

Income inequality can be measured by the distribution of income. A common method of measuring the distribution of income is to use quintiles. What does this mean?

A) each quintile represents the number of people earning the same level of income.
B) each quintile represents one fifth of the total population and the percent of total income received by that fifth.
C) each quintile represents one fifth of the total income or GDP and the percent of the population earning that fifth.
D) each quintile represents 5 percent of the population.

Question 21

What was the approximate average (median) net worth for the wealthiest 20% of U.S. households in 2000?

A) $185,000
B) $1,850,000
C) $18,500
D) $18,500,000

Question 22

What is the definition of "class" used in the text?

A) a group of people who obtain their income in a way that distinguishes them from other groups.
B) a group of people who know how to behave in most social situations.
C) a group of people who graduate from high school in the same year.
D) a group of people defined by how much income they receive.

Question 23

What does the phrase, "the two Americas," refer to?

A) North and South America.
B) Red states and blue states.
C) urban and rural America.
D) the rich and the poor.

Question 24

Total personal income to US households was $10,891 billion in 2006. Approximately what percent of this income came from employee compensation?

A) 68.7%
B) 31.3%
C) 94%
D) 14%

Question 25

According to the World Bank, the Gini coefficient for India was 0.368 in 2004-05 and 0.513 for Argentina in 2004. Based on this data,

A) India has a more equal distribution of income than Argentina.
B) Argentina has a more equal distribution of income than India.
C) The top 20% of the population has 36.8% of the income in India and 51.3% in Argentina.
D) The bottom 20% of the population has 36.8% of the income in India and 51.3% in Argentina.

Question 26

An often cited statistic is the ratio between CEO salaries and those of average worker. In 1960, the average CEO earned 41 times as much as the average worker. In 1997 the ratio had increased to approximately

A) 82
B) 123
C) 224
D) 326