Question 1

The recession that began with a housing market crash in 2007 had the effect of reducing income inequality.

Accepted Answer

A) True 
 B)False

Question 2

What is the distributive effect of the Social Security tax? Explain.

Accepted Answer

The answer of What is the distributive effect of the...

Question 3

Real income will fall whenever:

Accepted Answer

A) prices and wages increase at the same rate. 
B) wages increase faster than prices. 
C) prices increase faster than wages. 
D) wages increase and prices stay the same.

Question 4

Refer to the graph shown.  The poorest 25 percent of the families earn:

Accepted Answer

A) 6 percent of the income. 
B) 19 percent of the income. 
C) 36 percent of the income. 
D) 64 percent of the income.

Question 5

Refer to the graph shown.  The fourth quintile (a quintile is a fifth)of the families earn:

Accepted Answer

A) 52 percent of the income. 
B) 28 percent of the income. 
C) 24 percent of the income. 
D) 20 percent of the income.

Question 6

All of the following are examples of socioeconomic distribution of income except how much:

Accepted Answer

A) the top 10 percent of a population gets. 
B) Black people get relative to white people. 
C) two-parent households get relative to single-parent households. 
D) the young get relative to the old.

Question 7

Economic theory tells us that inequality in income is unfair if differences in opportunity leads to inequality of income.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the graph shown.  The country with the most unequal distribution of income is:

Accepted Answer

A) Sweden. 
B) Taiwan. 
C) the United States. 
D) Brazil.

Question 9

Which of the three types of tax systems (progressive,proportional,regressive)redistributes income? Explain.

Accepted Answer

The answer of Which of the three types of tax...

Question 10

In the United States, the income distribution is shaped like a:

Accepted Answer

A) pyramid. 
B) diamond. 
C) square. 
D) pentagon.

Question 11

Share distribution of income is the relative division of total income among:

Accepted Answer

A) capitalists, workers, and landowners. 
B) income groupings. 
C) socioeconomic groupings. 
D) nationality groupings.

Question 12

In the United States:

Accepted Answer

A) the upper class has become the largest class. 
B) the lower class has become the largest class. 
C) the middle class has become the largest class. 
D) all three classes are the same size.

Question 13

What is the official definition of poverty in the U.S.?

Accepted Answer

The answer of What is the official definition of poverty...

Question 14

"To eliminate poverty,all we need to do is tax the millionaires and billionaires sufficiently,and spread the money around among the poor based on who needs it the most." Do you agree or disagree with this statement? Why?

Accepted Answer

The answer of "To eliminate poverty,all we need to do...

Question 15

The democratic system of one person/one vote:

Accepted Answer

A) necessarily leads to a political system that favors the poor because there are more poor voters than there are rich voters. 
B) necessarily leads to a political system that favors the poor because the poor organize themselves into groups that can deliver votes to politicians. 
C) does not necessarily lead to a political system that favors the poor, because many of the poor do not vote, believing that their individual votes cannot make a difference. 
D) does not necessarily lead to a political system that favors the poor because many of the poor are illiterate and unable to vote.

Question 16

The official poverty income threshold in the United States is:

Accepted Answer

A) adjusted for changes in the basket of food purchased by the average family. 
B) not adjusted for the effects of inflation. 
C) adjusted for inflation. 
D) adjusted for increases in standard of living.

Question 17

One of the major complaints about state lotteries is that they are played primarily by the poor. Hence, because lotteries do not pay out in prizes as much as they take in as revenue, this way of raising state revenue is:

Accepted Answer

A) progressive. 
B) retroactive. 
C) reactionary. 
D) regressive.

Question 18

Which of the following is not one of the side effects economists have found in programs to redistribute income?

Accepted Answer

A) The incentive effects of a tax may result in a switch from labor to leisure. 
B) The effects of taxes may include attempts to avoid or evade taxes, leading to a decrease in measured income. 
C) The incentive effects of distributing money may cause people to make themselves look needier than they really are. 
D) The incentive effects of distributing money may cause people to avoid government assistance programs.

Question 19

Today, the Gini coefficient of income inequality for the United States is about .5. In 1975, it had been about .4. What do these numbers tell us?

Accepted Answer

A) Wealth is distributed less equally than income. 
B) The number of rich people has fallen. 
C) Income has become more unequally distributed. 
D) The official definition of poverty has changed.

Question 20

According to the text, the most important income distribution decisions that the government makes involve:

Accepted Answer

A) establishing and protecting property rights. 
B) maintaining a progressive income tax structure. 
C) redistributing income through transfer payments to the poor. 
D) encouraging innovation through direct subsidies.

Exam 18: Who Gets What the Distribution of Income