Deck 19: Economic Inequality

Question 1

The distribution of income in the United States is characterized by the following relationship between the mean, median, and mode incomes

A) mean income < median income < mode income.
B) mode income < median income < mean income.
C) median income < mean income < mode income.
D) mode income < mean income < median income.

Answer 1

mode income < median income < mean income.

Question 2

Market income is

A) profit earned in factor markets.
B) interest earned in factor markets.
C) wages, interest, rent, and profit earned in factor markets.
D) wages, interest, rent, and profit earned in factor markets plus cash payments made to households by government.

Answer 2

wages, interest, rent, and profit earned in factor markets.

Question 3

In the United States the richest 20 percent of households receive about ________ of total income.

A) 10 percent
B) 20 percent
C) 50 percent
D) 80 percent

Answer 3

50 percent

Question 4

Money income is

A) market income plus cash payments from government.
B) equal to market income.
C) market income plus cash payments from government minus taxes.
D) market income minus taxes.

Question 5

The Lorenz curve graphs the

A) cumulative percentage of spending against the cumulative percentage of households.
B) marginal percentage of income against the marginal percentage of households.
C) cumulative percentage of income against the cumulative percentage of households.
D) cumulative percentage of spending against the marginal percentage of households.

Question 6

Mode income is

A) the most common income.
B) the average income.
C) the middle income level.
D) the same as money income.

Question 7

In the United States

A) there are more households with incomes below the mean income than above the mean income.
B) there are more households with incomes above the mean income than below the mean income.
C) the mode income equals the mean income.
D) the income distribution is bell shaped.

Question 8

In the United States the poorest 20 percent of households receive about ________ of total income.

A) 1 percent
B) 4 percent
C) 10 percent
D) 15 percent

Question 9

The income distribution in the United States is

A) positively skewed.
B) negatively skewed.
C) bell-shaped
D) uniform.

Question 10

The mean household income is

A) the income that separates households into two equal groups.
B) the most common household income.
C) the percentage of total income received by the richest 20 percent of households.
D) the average household income.

Question 11

The distribution of income in the United States is skewed so that the mode level of household income is ________ the median household income and the median household income is ________ than the mean household income.

A) less than; less than
B) less than; greater than
C) greater than; greater than
D) greater than; less than

Question 12

In the United States, the percentage of households that have incomes below the mean income is

A) 50 percent.
B) less than 50 percent.
C) more than 50 percent.
D) 0 percent.

Question 13

Market income is

A) wage, interest, rent, and profit earned in factor markets.
B) wage income.
C) wage and salary income.
D) money income.

Question 14

The median household income is

A) the income that separates households into two equal groups.
B) the most common household income.
C) the mean household income.
D) the average household income.

Question 15

In the United States, the median household income is ________ than the mean income, which means there are ________ households with low incomes than with high incomes.

A) less; more
B) greater; more
C) greater; fewer
D) less; fewer

Question 16

An economy has the income shares information in the table above. Which of the following is TRUE?

A) The information in the table represents the income distribution in the United States.
B) Income in the U.S. economy is more equally distributed than that represented in the table.
C) Income in the U.S. economy is less equally distributed than that represented in the table.
D) The information in the table represents the wealth distribution in the United States.

Question 17

A Lorenz curve graphs the

A) percentage of income or wealth against the percentage of households.
B) cumulative percentage of income or wealth against the cumulative percentage of households.
C) cumulative value of income against the cumulative percentage of households.
D) percentage of wealth against the percentage of income.

Question 18

As a tool that is used to measure inequality in the distribution of income, the Lorenz curve graphs

A) the cumulative percentage of income against the cumulative percentage of households.
B) the percentage of total income received by each given percentage of households.
C) the mean income, median income, and mode income against the percentage of households.
D) the mean income received by households over time.

Question 19

The distribution of U.S. income is not bell-shaped because

A) there are more households with incomes below the mean income than above the mean income.
B) there are more households with incomes above the mean income than below the mean income.
C) the mode income equals the mean income.
D) the income distribution is bell shaped.

Question 20

The "mode" household income is

A) the income that separates households into two equal groups.
B) the most common level of household income.
C) the mean household income.
D) the average household income.

Question 21

The above table shows the distribution of wealth and income in Miseria. The Lorenz curve for wealth would

A) intersect the horizontal axis at 100 percent.
B) bow outward more to the right than does the Lorenz curve for income.
C) lie parallel to the line of equality.
D) become flatter as one moves from left to right.

Question 22

The above table shows the distribution of wealth and income for Miseria. What percent of wealth is owned by the poorest forty percent of the population?

A) 0 percent
B) 2 percent
C) 5 percent
D) 10 percent

Question 23

A Lorenz curve measures

A) the benefits received through welfare programs.
B) the actual income distribution and compares it to an equal income distribution.
C) the degree to which income taxes are regressive.
D) the effect of flat taxes on income distribution.

Question 24

From left to right, the horizontal axis of the Lorenz curve ranks households from

A) smallest to largest.
B) largest to smallest.
C) poorest to richest.
D) richest to poorest.

Question 25

A Lorenz curve can be used to illustrate

A) the supply of labor.
B) the substitution effect.
C) the income effect.
D) the distribution of income.

Question 26

The above table shows the distribution of wealth and income in Miseria. What percent of wealth is owned by the poorest twenty percent?

A) 0 percent
B) 2 percent
C) 3 percent
D) 5 percent

Question 27

The farther the Lorenz curve for income is from the line of equality, the more ________ is distributed.

A) equally wealth
B) unequally income
C) unequally wealth
D) equally income

Question 28

If a Lorenz curve for a country's income bows more rightward over time, then the country's

A) income is increasing.
B) income is decreasing.
C) income is becoming more unequally distributed.
D) income is becoming more equally distributed.

Question 29

Country A has a more equal distribution of income than country B if

A) country A's Lorenz curve is closer to the line of equality than is country B's Lorenz curve.
B) country B's Lorenz curve is closer to the line of equality than is country A's Lorenz curve.
C) country A's Lorenz curve is just as close to the line of equality as is country B's Lorenz curve.
D) None of the above because it is impossible to compare income inequalities across countries.

Question 30

The above table shows the distribution of income and wealth in Miseria. What percent of income is earned by the richest 40 percent of the population?

A) 20 percent
B) 30 percent
C) 55 percent
D) 70 percent

Question 31

In the above figure, the straight line between the lower left corner and the upper right corner shows

A) perfect equality in income distribution.
B) perfect inequality in income distribution.
C) that wealth rises as income rises.
D) that household size rises as income rises.

Question 32

If a Lorenz curve for income moves rightward and becomes more bowed out over time, then

A) the population is growing.
B) income is growing.
C) income is being more equally distributed.
D) income is being more unequally distributed.

Question 33

The Lorenz curve

A) explains why some households have different incomes.
B) explains why income is equally distributed.
C) graphically shows the degree of income inequality.
D) graphically shows the amount of wealth in a country.

Question 34

The above table shows the distribution of wealth and income in Miseria. Ninety-five percent of the wealth is owned by what percent of the population?

A) 20 percent
B) 40 percent
C) 60 percent
D) 95 percent

Question 35

In the figure above, income is most unequally distributed

A) in Country A.
B) in Country B.
C) in Country C.
D) in one of the nations, but without more information, it is not possible to determine in which country income is distributed most unequally.

Question 36

The above table shows the distribution of wealth and income in Miseria. With respect to income, the richest twenty percent of the population earn

A) 90 percent of the income.
B) 11 times as much as the poorest twenty percent.
C) 9 times as much as the poorest twenty percent.
D) just as much as the second richest twenty percent.

Question 37

The above table shows the distribution of income and wealth in Miseria. What percent of income is earned by the richest twenty percent?

A) 5 percent
B) 20 percent
C) 45 percent
D) 55 percent

Question 38

The above table shows the distribution of wealth and income in Miseria. The Lorenz curve for wealth would

A) be parallel to the line of equality.
B) lie to the left of the Lorenz curve for income.
C) become flatter when moving from left to right.
D) intersect the horizontal axis at twenty percent.

Question 39

The above table shows the distribution of wealth and income for Miseria. What percent of the wealth is owned by the wealthiest twenty percent of the population?

A) 0 percent
B) 2 percent
C) 5 percent
D) 83 percent

Question 40

If a Lorenz curve moves leftward and becomes closer to the line of equality over time, then

A) the population is growing.
B) income is growing.
C) income is being more equally distributed.
D) income is being more unequally distributed.

Question 41

In the figure above, line A represents the

A) the line of market income distribution.
B) line of equality.
C) line of equal number of people in each household.
D) line of equal consumption in each household.

Question 42

In the figure above, the Lorenz curve that shows the richest 20 percent of households receiving 80 percent of all income is

A) curve A.
B) curve B.
C) curve C.
D) curve D.

Question 43

The above figure shows the Lorenz curves for four different countries. If country C implemented a policy of redistribution from rich to poor, its Lorenz curve would

A) move toward country B's.
B) move toward country D's.
C) become positively sloped.
D) move above the line of equality.

Question 44

In the figure above, 10 percent of income in country A is distributed to the

A) richest 10 percent of the households.
B) poorest 10 percent of the households.
C) richest 30 percent of the households.
D) poorest 30 percent of the households.

Question 45

In the figure above, the lowest 20 percent of all households receive ________ percent of all income, the next lowest 20 percent receive ________ percent of all income and the richest 20 percent receive ________ percent of all income.

A) 20; 20; 20
B) 20; 40; 100
C) 10; 20; 40
D) 10; 10; 40

Question 46

In the figure above, the middle fifth of all households receive what share of income?

A) 10 percent
B) 30 percent
C) 20 percent
D) 5 percent

Question 47

In the figure above, in which country do the highest-income 30 percent of households have the highest fraction of the nation's income?

A) Country A
B) Country B
C) Country C
D) It is impossible to answer the question without more information.

Question 48

In the figure above, income

A) is most equally distributed in country A.
B) is most equally distributed in country B.
C) is most equally distributed in country C.
D) is equally distributed in all three countries.

Question 49

The above figure shows the Lorenz curves for four different countries. Which of the following statements CANNOT be made on the basis of the graph?

A) Incomes are distributed unequally in all four countries.
B) Income distribution in country D is the most unequal among the four countries.
C) Incomes are higher in country A than in country B.
D) Income distribution is more equal in country B than in country D.

Question 50

The above figure shows the Lorenz curves for four different countries. Which country has the most unequal distribution of income?

A) country A
B) country B
C) country C
D) country D

Question 51

In the figure above, the Lorenz curve that shows the least inequality, but NOT perfect equality, is

A) curve A.
B) curve B.
C) curve C.
D) curve D.

Question 52

In the figure above, the line of equality is

A) curve A.
B) curve B.
C) curve C.
D) curve D.

Question 53

The above figure shows the Lorenz curves for four different countries. In which country is income most equally distributed?

A) country A
B) country B
C) country C
D) country D

Question 54

In the figure above, in which country do the lowest-income 30 percent of households have the highest fraction of the nation's income?

A) Country A
B) Country B
C) Country C
D) It is impossible to answer the question without more information.

Question 55

In the figure above, the poorest 40 percent of all households receive what share of income?

A) 10 percent
B) 20 percent
C) 40 percent
D) 60 percent

Question 56

The above figure shows the Lorenz curves for four different countries. Which of the following statements CAN be made on the basis of the graph?

A) Country C has the best balance between equity and efficiency.
B) Country A is a socialist country.
C) The income distribution is more equal in country B than in country D.
D) all of the above

Question 57

In the figure above, the Lorenz curve that shows the richest 20 percent of households receiving 40 percent of all income is

A) curve A.
B) curve B.
C) curve C.
D) curve D.

Question 58

In the figure above, 10 percent of income in country C is distributed to the

A) richest 10 percent of the households.
B) poorest 10 percent of the households.
C) poorest 30 percent of the households.
D) poorest 70 percent of the households.

Question 59

In the figure above, the Lorenz curve that shows the richest 20 of households percent receiving 60 percent of all income is

A) curve A.
B) curve B.
C) curve C.
D) curve D.

Question 60

The above figure shows the Lorenz curves for four different countries. Which of the following statements is FALSE?

A) Country A has an income distribution that is not perfectly equal.
B) Country D's income distribution is the most unequal of the four countries.
C) The distribution of income is more unequal in country A than in country B.
D) The distribution of income is more unequal in country D than in country C.

Question 61

The above figure shows the Lorenz curve for wealth for the nation of Rusha. If the government were to confiscate half of the wealth from the wealthiest twenty percent of the population and give it to the poorest twenty percent, then

A) wealth distribution would be more equal.
B) wealth distribution would be unchanged.
C) wealth distribution would be more unequal.
D) the Lorenz curve would shift rightward.

Question 62

In the above figure, point ________ shows an equal distribution of income, while point ________ shows an unequal distribution of income.

A) a, b
B) b, c
C) b, a
D) a, d

Question 63

In the above figure, the Lorenz curve for income is shown. If the data used are from the United States, and the U.S. Lorenz curve for wealth was added to the diagram, it would be

A) further from the line of equality than the Lorenz curve for income.
B) closer to the line of equality than the Lorenz curve for income.
C) above the line of equality.
D) the same as the Lorenz curve for income.

Question 64

The Lorenz curve in the above figure implies that

A) income is equally distributed.
B) the lowest fifth of households account for less than 20 percent of income.
C) the highest fifth of households account for less than 20 percent of income.
D) the lowest fifth of households account for more than 20 percent of income.

Question 65

In the figure above, the richest 20 percent of all households receive what share of all income?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent

Question 66

The above figure shows the Lorenz curve for wealth for the nation of Rusha. The wealthiest forty percent of the population own what percent of wealth?

A) 40 percent
B) 50 percent
C) 60 percent
D) 100 percent

Question 67

The above figure shows the Lorenz curve for wealth for the nation of Rusha. If the government were to confiscate all of the wealth from the poorest twenty percent of the population and give it to the wealthiest twenty percent, the Lorenz curve would

A) not change.
B) shift farther away from the line of equality.
C) shift closer to the line of equality.
D) flip above the line of equality.

Question 68

The above figure shows the Lorenz curve for wealth for the nation of Rusha. What percent of wealth is owned by the wealthiest quintile?

A) 0 percent
B) 5 percent
C) 40 percent
D) 60 percent

Question 69

In the figure above, the poorest 20 percent of all households receive what share of all income?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent

Question 70

In the figure above, the richest 20 percent of households receive ________ of total income.

A) 55 percent
B) 45 percent
C) 80 percent
D) 60 percent

Question 71

In the figure above, the poorest 20 percent of households receive ________ of total income.

A) 20 percent
B) 10 percent
C) 5 percent
D) 15 percent

Question 72

In the above figure, if the Lorenz curve were to move closer to the diagonal line containing points b and c, the income distribution would be

A) more unequal.
B) more equal.
C) unchanged.
D) More information is needed to determine how this change would affect the income distribution.

Question 73

The above figure shows the Lorenz curve for wealth for the nation of Rusha. The poorest forty percent of the population own what percent of wealth?

A) 0 percent
B) 10 percent
C) 20 percent
D) 40 percent

Question 74

In the figure above, the lowest 20 percent of all households own ________ percent of all wealth, the next lowest 20 percent own ________ percent of all wealth and the richest 20 percent own ________ percent of all wealth.

A) 20; 20; 20
B) 20; 40; 100
C) 5; 15; 40
D) 5; 20; 60

Question 75

The above figure shows the Lorenz curve for wealth for the nation of Rusha. What percent of wealth is owned by the poorest quintile?

A) 0 percent
B) 5 percent
C) 20 percent
D) 35 percent

Question 76

In the figure above, the poorest 40 percent of households receive ________ of total income.

A) 20 percent
B) 10 percent
C) 30 percent
D) 15 percent

Question 77

In the figure above, the richest 40 percent of households receive ________ of total income.

A) 70 percent
B) 30 percent
C) 60 percent
D) 80 percent

Question 78

In the figure above, the second poorest fifth of all households receive what share of all income?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent

Question 79

In the figure above, the middle fifth of all households receive what share of all income?

A) 10 percent
B) 20 percent
C) 30 percent
D) 40 percent

Question 80

In the figure above, the curve going through point A represents

A) an upward-sloping demand curve.
B) the line of equality.
C) the wage curve.
D) the Lorenz curve.