Deck 7: The Rich

Question 1

Wealth is more equally distributed than income.

Answer 1

False

Question 2

Wealth refers to the flow of dollars received during a period, usually a year.

Answer 2

False

Question 3

The dividing line between the middle class and rich is very precise; those with wealth above $1 million are automatically rich.

Answer 3

False

Question 4

The higher the income, then the greater the reliance on capital as the source of income.

Question 5

The top 1% of the population is worth more than the bottom 90%

Question 6

Family members combine their assets via trusts and holding companies so as to control many large corporations.

Question 7

The rich have a significant quality that distinguish them from other classes:

A) they are in league with extraterrestrial forces.
B) they do not work.
C) they tend to vote for democrats.
D) they tend to divorce more frequently.
E) they own capital.

Question 8

A family's _______ comprises everything it owns minus its debts.

A) income
B) wealth
C) assets and property
D) socio-economic status
E) "stash"

Question 9

The basis for great wealth is:

A) higher intelligence.
B) better, that is, more moral, lifestyles.
C) hard work and philanthropy, or the giving of money to charity.
D) ownership of income producing assets, especially corporate stocks and bonds.
E) outstanding athletic ability, like Michael Jordan.

Question 10

The higher the income,

A) the greater the reliance on one's job as the main source of income.
B) the greater the reliance on capital as the main source of income.
C) the greater the reliance on anomie as the main source of income.
D) the lower the level of political participation.
E) the lower the proportion of income paid in federal taxes.

Question 11

The richest 1% of the population owns most of the capital that:

A) have endured all economic fluctuations.
B) control domestic and foreign production.
C) people really like, and want for themselves.
D) does87n't appear on financial report and are therefore known as "shadow" assets.
E) provides significant income.

Question 12

The richest 1% of the population:

A) owns almost all the stocks and bonds that are privately held
B) has a much greater rate of drug addiction than other classes
C) is wealthier than the bottom 90% of the population
D) is not as wealthy as it used to be
E) comprises a smaller number of people than in the past

Question 13

Economic development can occur without large-scale capital formation.

Question 14

Not only did great wealth inequality exist in the United States during the first half of the nineteenth century, but most wealth was acquired by inheritance and was very stable over time.

Question 15

Data since 1980 show that, contrary to the predictions made by Kuznets, wealth inequality in the U.S. has increased.

Question 16

Other Western nations display far more wealth inequality than does the United States.

Question 17

Kuznets hypothesized that inequality of wealth and income increases during the early phases of economic development, stabilizes for awhile, then

A) decreases in the later phases of economic development.
B) begins increasing again.
C) becomes erratic and unpredictable.
D) disappears completely.
E) retroactively affects the wealthy.

Question 18

Historically, the extent of an individual's _________ was the major factor determining whether he would be rich later.

A) work ethic
B) social connections
C) early wealth
D) indentured servitude
E) education

Question 19

During the second half of the nineteenth century, the economy continued its transformation and the distribution of wealth stabilized at

A) very high levels of inequality.
B) lower levels of inequality.
C) moderate levels of inequality.
D) the low-point level specified by Kuznets.
E) levels that could only be supported by slavery.

Question 20

Data for the 1980s through 2001 reveal:

A) that Kuznets was correct.
B) that there are fewer wealthy people today than in the past.
C) sharply increasing wealth inequality.
D) that the distribution of wealth in the U.S. has shifted back to northern states.
E) that wealthy are moving to rural areas to better shelter their wealth.

Question 21

Recent data suggests that the Kuznets hypothesis must be modified in the following way: Inequality of wealth and income increases during the early phases of economic growth when the transition from pre-industrial to industrial society is most rapid, stabilizes for awhile,

A) decreases in the later phases of industrialization.
B) and then becomes subject to political negotiation.
C) becomes erratic, responding to rapid shifts in the economy.
D) increases in the later phases of industrialization.
E) retroactively affects the wealthy.

Question 22

Compared to the United States, other Western nations:

A) display much more wealth inequality.
B) display much more income inequality.
C) display less inherited wealth.
D) display less inherited income inequality.
E) display less wealth inequality.

Question 23

Nearly all the great fortunes result from windfall profit.

Question 24

Wealth creation and expansion can occur as inventors of new products established their own companies, which then grow in value over time.

Question 25

Family fortunes stagnate after the founding entrepreneurs leave the scene or die.

Question 26

One way great wealth is created occurs when assets generate a sudden, extraordinary return on an investment, which is called:

A) rapid return profit
B) windfall profit
C) junk bond profit
D) relative profit
E) symbolic profit

Question 27

All of the following are strategies for the creation of great wealth except:

A) owing a small company in a new field that becomes a growth industry
B) inventors of new products establish their own company, which grows in value over time
C) windfall profit
D) own a corporation that radically increases its share of the market for a product
E) conspicuous consumption, such as the purchase of luxury goods that go up in value.

Question 28

The greater the wealth, the more likely is a person to have:

A) worked hard to earn it.
B) worked wisely to earn it.
C) altered a product to make it less useful, requiring more purchases.
D) abandoned the American Dream
E) inherited rather than created it.

Question 29

The purpose of taxes is to finance government and to redistribute income.

Question 30

The rich tend to believe that taxes are too high no matter at what level they are set.

Question 31

The value dilemma over taxation is the common good; that is, does the government have the right to take money from people who inherited it fairly.

Question 32

The reduction of the federal income tax has had a "spill-over" effect reducing other taxes: namely social security taxes and the entire array of state and local taxes.

Question 33

One of the main indicators of the ability of the rich to protect their interests, even over the opposition of others, is _______________.

A) the use of walled estates
B) tax law
C) criminal law
D) the national guard
E) hit-men and other hired "enforcers"

Question 34

Although politicians often use the phrase "tax reform" when describing changes in tax law, this is really a euphemism for:

A) radical social change.
B) a shift of the tax burden to middle and working class people.
C) an attempt to limit public assistance
D) a means of confusing to public, so as to better hide abuses of tax revenue.
E) making someone else pay.

Question 35

Over the past 30 years or so, tax-related dilemmas have been resolved to ___________, as tax rates declined and inequality increased.

A) the advantage of the rich
B) the advantage of the middle class
C) offset economic hardships in the middle class
D) compensate for the loss of market share in the global market
E) make liberal politicians appear more "moderate"

Question 36

The impact of using a limited number of ____________ is that people with different economic problems are treated as if they are the same

A) sources of public revenue
B) economic plans
C) political ideologies
D) income tax brackets
E) corporate-welfare programs

Question 37

Tax brackets are symbolic because most people benefit from _______________ that reduce their tax obligations.

A) political manipulation
B) deductions and exclusions
C) public ignorance
D) resentment toward the working class and poor
E) smaller families

Question 38

As federal taxes have been reduced over the years, other taxes (sales, excise, and property) taxes:

A) have also been reduced, lowering everyone's tax burden
B) have basically remained unchanged
C) have increased significantly, especially for those who are not rich
D) have become irrelevant to understanding inequality
E) vary so much that it is hard to tell what is going on with them

Question 39

Which of the following statements is true?

A) Higher taxes are associated with greater economic prosperity.
B) Higher taxes are associated with lower economic prosperity
C) Lower taxes nearly always lead to greater economic prosperity.
D) There seems to be little relationship between taxes and economic prosperity.
E) The overall tax structure leans more heavily on the rich today than it did in the past.

Question 40

Privacy combined with wealth brings much more personal autonomy than the rest of the population has.

Question 41

For the wealthy, the ideal expenditure is both status enhancing and a sound financial investment.

Question 42

Most prep schools are unknown to middle-class people, which constitutes another example of the ability of the rich to keep their lifestyles relatively private.

Question 43

Those attending prep schools don't really get an advantage over public school applicants in gaining admission to Ivy League Universities.

Question 44

Conspicuous purchases by rich people are often designed to . . .

A) ensure their status within the upper class.
B) demonstrate their wealth to ordinary (non-rich) people.
C) bolster the local economy.
D) hide wealth in non-tangible sources.
E) act as diplomatic gestures between a wealthy owner and buyer.

Question 45

For the wealthy, ____________ is designed to facilitate their children's entrance into the exclusive social circles of the upper class

A) cash assets
B) family background or "breeding"
C) bribes and other exchanges such as fraternity dues
D) occupational status
E) education

Question 46

The __________ has always served as means for inculcating upper class values, preparing students for socially desirable universities.

A) expense account
B) trust fund
C) prep school
D) private tutor
E) fraternity or sorority