Reference no: EM13230691

____ 1. According to the statistics, the distribution of money income:
a. fluctuated widely since 1947.
b. changed significantly in favor of the bottom 5 percent.
c. has not changed greatly since 1947.
d. has not changed greatly since 1929.
____ 2. "Dividing the economic pie more equally may reduce the size of the economic pie." This argument is
characterized as:
a. untrue.
b. a form of discrimination.
c. a conflict between equity and efficiency.
d. a conflict between full employment and economic growth.
e. b and c.
____ 3. In the United States, approximately what percentage of the total income is earned by the highest 5 percent of
the families?
a. 10 percent.
b. 21 percent.
c. 30 percent.
d. 40 percent.
____ 4. Which of the following countries has the most unequal distribution of income?
a. The United States.
b. Czech Republic.
c. Brazil.
d. cannot be determined.
____ 5. Since 1929, the distribution of income in the United States has become:
a. substantially more equal.
b. slightly more equal.
c. slightly more unequal.
d. substantially more unequal.
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Exhibit 12-1 Income distribution for three countries
Quintile Country I
(%)
Country II
(%)
Country III
(%)
Poorest 6 8 4
Second 12 12 8
Third 15 15 10
Fourth 27 30 30
Richest 40 35 48
____ 6. Exhibit 12-1 shows the percentage of income received by each population quintile. From this chart we can
conclude:
a. Country I has the most unequal income distribution.
b. Country III has the most equal income distribution.
c. Country II has the most unequal income distribution.
d. Country II has the most equal income distribution.
e. Country III has a more equal income distribution than Country II.
____ 7. Exhibit 12-1 shows the percentage of income received by each population quintile. In Country II we can
conclude that the:
a. least-wealthy 20 percent of the population received 75 percent of the economy's income.
b. least-wealthy 20 percent of the population received 25 percent of the economy's income.
c. richest 20 percent of the population received 25 percent of the economy's income.
d. richest 40 percent of the population received 25 percent of the economy's income.
e. least-wealthy 40 percent of the population received 20 percent of the economy's income.
____ 8. Exhibit 12-1 shows the percentage of income received by each population quintile. In Country III, we can
conclude that the:
a. majority of the people receive the majority of the income.
b. richest 20 percent of the population received 75 percent of the economy's income.
c. richest 20 percent of the population received 78 percent of the economy's income.
d. richest 40 percent of the population received 78 percent of the economy's income.
e. least-wealthy 40 percent of the population received 78 percent of the economy's income.
____ 9. The Lorenz curve measures the:
a. distribution of income.
b. effectiveness of government transfer payments.
c. extent to which family incomes are affected by welfare.
d. all of the above.
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____ 10. Between 1929 and 2008 in the United States, the Lorenz curve became:
a. less bowed outward.
b. more bowed outward.
c. a straight line.
d. a downward-sloping curve.
Exhibit 12-2 Lorenz curve
____ 11. As shown in Exhibit 12-2, the perfect equality line is drawn between points:
a. A and B.
b. B and D.
c. A and C along the straight line.
d. A and C along the curve.
____ 12. As shown in Exhibit 12-2, 60 percent of families earned a cumulative share of about ____ of income.
a. 5 percent
b. 15 percent
c. 30 percent
d. 50 percent
____ 13. As shown in Exhibit 12-2, 80 percent of families earned a cumulative share of about ____ of income.
a. 5 percent
b. 15 percent
c. 30 percent
d. 50 percent
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____ 14. As shown in Exhibit 12-2, the distance between points B and D means that 60 percent of families earn ____
less of total income than required for perfect equality.
a. 30 percent
b. 60 percent
c. 90 percent
d. insufficient information to answer question.
____ 15. As shown in Exhibit 12-2, the degree of unequal income distribution is measured by the area between the:
a. Lorenz curve and the horizontal axis.
b. Lorenz curve and the vertical axis.
c. Perfect equality line and the origin.
d. Perfect equality line and the Lorenz curve.
____ 16. In a Lorenz curve diagram, the 45° line represents:
a. perfect income equality.
b. zero inflation.
c. a negative income tax.
d. an extremely unequal distribution of income.
Exhibit 12-3 Lorenz curve for an economy
____ 17. According to the Lorenz curve shown in Exhibit 12-3, what percentage of total income is earned by the
richest 20 percent of families?
a. 20 percent.
b. 40 percent.
c. 60 percent.
d. 80 percent.
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____ 18. If this economy's distribution of income becomes more equal, then the Lorenz curve shown in Exhibit 12-3
will:
a. move closer to the 45° line.
b. become more bowed outward.
c. lie above the 45° line.
d. shift down and to the right.
____ 19. A Lorenz curve shows the:
a. number of people in an economy living below the poverty line.
b. percentage of children in an economy who are not receiving adequate nutrition.
c. percentage of the economy's population benefiting from government spending programs.
d. percentage of an economy's total income each part of the population receives.
e. percentage of the population whose income is dependent on sales to foreign countries.
Exhibit 12-6 Lorenz curves
____ 20. Exhibit 12-6 shows the Lorenz Curve for three countries, I, II, and III. Of the three countries shown,
a. country III has the most unequal income distribution.
b. country II has the most unequal income distribution.
c. country I has the most unequal income distribution.
d. country III has the most equal income distribution.
e. country II has a more equal income distribution than Country I.
____ 21. Exhibit 12-6 shows the Lorenz Curve for three countries, I, II, and III. Which of the following statements is
true?
a. Country I has the most unequal income distribution.
b. Country II has the most unequal income distribution.
c. Country I has the most equal income distribution.
d. Country III has the most equal income distribution.
e. Country II has a more equal income distribution than Country I.
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____ 22. Typically, a country's population is divided into how many income groups to find a Lorenz Curve?
a. 1 or 2.
b. 5.
c. 10 or 20.
d. 25 or 50.
e. 100.
____ 23. For the calculation of a Lorenz curve using quintiles, the:
a. first quintile contains the richest 50 percent of population.
b. first quintile contains the richest 20 percent of population.
c. first quintile contains the poorest 50 percent of population.
d. first quintile contains the poorest 20 percent of population.
e. last quintile contains the poorest 10 percent of population.
____ 24. If 80 percent of the population receives 75 percent of the income,
a. the richest quintile receives 20 percent of the income.
b. the Lorenz curve is the diagonal.
c. income is not perfectly evenly distributed.
d. the poorest quintile receives more than 20 percent of income.
e. people in the middle quintile have the highest incomes.
____ 25. When the Lorenz curve lies above the diagonal,
a. the poorest 20 percent of the population receive more than 20 percent of income.
b. the richest 20 percent of the population receive more than 20 percent of income.
c. everyone receives the same income.
d. the country's income has been rising over time.
e. it is wrong since it is impossible for the graph to look like this.
____ 26. The official poverty line is defined as:
a. one-half the average family income.
b. one-third the average family income.
c. three times the cost of a minimal food requirement.
d. two times the cost of a minimal food requirement.
____ 27. The official poverty rate for all persons declined sharply between 1959 and:
a. 2000.
b. 1970.
c. 1980.
d. 1990.
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____ 28. Which of the following is not included in census income?
a. wages and salaries.
b. property income.
c. cash welfare benefits.
d. in-kind transfers.
____ 29. Which of the following is not an in-kind subsidy?
a. Food stamps.
b. Low-cost rental housing.
c. Medicare.
d. Medicaid.
e. Unemployment compensation.
____ 30. The Social Security Act was passed:
a. in 1955.
b. just after World War II.
c. in 1935.
d. in 1964.
____ 31. Which of the following government programs provides recipients with in-kind benefits?
a. Temporary Assistance to Needy Families (TANF).
b. Social Security.
c. The food stamp program.
d. Unemployment compensation.
____ 32. In the United States since 1970, the poverty rate for blacks has been about:
a. 1-2 percentage point higher than the poverty rate for whites.
b. twice the poverty rate for whites.
c. three times the poverty rate for whites.
d. five times the poverty rate for whites.
____ 33. Which one of the following examples is a cash assistance program used to fight poverty in the United States?
a. Medicaid.
b. Food stamps.
c. Home energy assistance.
d. Head Start.
e. Temporary Assistance to Needy Families (TANF).
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____ 34. The largest in-kind transfer program is:
a. Transitory Assistance to Needy Families.
b. Medicaid.
c. Social Security.
d. Food stamps.
____ 35. If official U.S. poverty statistics included in-kind transfer payments the:
a. poverty rate would be close to zero.
b. poverty rate would be lower.
c. government deficit would be lower.
d. top 10 percent of those in the income distribution would be wealthier.
____ 36. Under a negative income tax program,
a. the government guarantees a minimum level of family income.
b. a family must pay income taxes on its welfare check.
c. a family receives a stated amount of money from the government plus its members can
keep all income earned through work.
d. the government reduces the welfare payment by any income earned through work.
e. a family's income is lower if its members work.
Exhibit 12-7 Negative income tax
____ 37. Under the negative income tax scheme in Exhibit 12-7, families earning between $10,000 and $40,000
would:
a. receive the maximum negative income tax payment of $20,000.
b. receive payments under the negative income tax.
c. pay no income taxes, but receive no payments.
d. none of the above is true.
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____ 38. As shown in Exhibit 12-7, a family of four pays income taxes at:
a. an income of $5,000.
b. any income between zero and $40,000.
c. all levels of income.
d. any income above $40,000.
____ 39. As shown in Exhibit 12-7, a family of four with no earned income receives ____ from the government.
a. zero payment.
b. the break-even income of $40,000.
c. a $20,000 payment.
d. a $20,000 tax deferment.
____ 40. The incentive to work is an ingredient of the negative income tax because:
a. if families do work, they will be eliminated from the program.
b. if families don't work, they will be eliminated from the program.
c. the more income earned in the workplace, the higher the family's after-tax income.
d. the more income earned in the workplace, the higher the payment from the government.
e. the amount earned in the workplace is not subject to income taxes.
____ 41. The main attractive feature(s) of a negative income tax program is (are):
a. c and d.
b. c, d, and e.
c. it is simple.
d. it avoids the stigma of hand-outs.
e. it only subsidizes the unemployed.
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Exhibit 12-8 Negative income tax for a family
____ 42. In Exhibit 12-8, consider a family that earns less than the break-even income level. For each $1 of earned
income, this family's government payment will be reduced by:
a. $0.10.
b. $0.25.
c. $0.33.
d. $0.50.
____ 43. Under the negative income tax shown in Exhibit 12-8, what cash payment would a family with no earned
income receive from the government?
a. $0.
b. $10,000.
c. $15,000.
d. $30,000.
____ 44. Consider a law that limits women's access to certain "dangerous" occupations like coal mining and military
combat service. Such a law would likely reduce women's wages because:
a. women would be overqualified for "non-dangerous" jobs.
b. labor supply in female-intensive occupations would increase.
c. women would be less likely to obtain college degrees.
d. comparable worth would no longer exist between men's and women's occupations.
____ 45. Statistics on families below the poverty line may be overstated because:
a. the poor are primarily children who soon will move out of poverty.
b. poverty in the United States is rich compared to poverty in other nations.
c. the income levels used to measure poverty do not include in-kind transfers.
d. unemployment compensation is a program closed to the poor.
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____ 46. Which of the following government programs provides recipients with unrestricted cash payments?
a. Temporary Assistance to Needy Families (TANF).
b. Medicaid.
c. The food stamp program.
d. Housing assistance programs.
____ 47. Which of the following program(s) is (are) in-kind assistance to fight poverty in the United States?
a. b and e.
b. Medicaid.
c. Unemployment benefits.
d. Temporary Assistance to Needy Families (TANF).
e. Food stamps.
____ 48. Medicaid and food stamps are:
a. available only to families.
b. counterproductive.
c. forms of in-kind assistance.
d. forms of cash assistance.
e. both c and d.
____ 49. Which of the following might increase the supply curve of labor?
a. Elimination of discrimination against blacks.
b. Elimination of discrimination against females.
c. Easing licensing requirements.
d. All of these.
____ 50. Some people believe that employees should be paid the same wages when their jobs, although different,
require similar levels of education, training, experience, and responsibility. This principle is known as:
a. the equal-pay-for-equal work doctrine.
b. Lorenz equivalence.
c. marginal productivity theory.
d. comparable worth.