Question_Doc13_15Dec

1)The Lorenz curve shows A) the demand for jobs. B) the supply of jobs.

C) the elasticity of jobs.

D) the distribution of income.

2)The graph which represents the distribution of income in an economy is called the A) Laffer curve.

B) Lorenz curve.

C) distribution curve.

D) aggregate demand curve.

3)According to the text, today's Lorenz curve is

A)a straight line.

B)a vertical line.

C)more bowed than in 1929.

D)less bowed than in 1929.

4) According to the text, the lower half of U.S. households earn about what percentage of total income?

A)4 percent

B)9 percent

C)15 percent

D)28 percent

5)The Lorenz curve shows what portion of total money income is accounted for by A) different proportions of a country's households.

B) only the wealthiest citizens. C) only poor people.

D) taxpaying citizens only.

6)In a Lorenz curve, perfect income equality is represented by

A)a vertical line.

B)a horizontal line.

C)a rectangular hyperbola.

D)a 45-degree line originating from the origin.

7)The more bowed out the Lorenz curve, the A) less equal the income distribution.

B) more equal the income distribution.

C) greater the overall wealth in the economy. D) less the overall wealth in the economy.

8)The less bowed the Lorenz Curve, the

A)more equal the income distribution.

B)less equal the income distribution.

C)greater the number of low-income people.

D)greater the number of high-income people.

9) A straight-line Lorenz curve shows

A)an equal distribution of money income.

B)a greater than proportionate share of income going to middle-income households.

C)a high incidence of absolute poverty.

D)a highly unequal distribution of income.

10)The more bowed (skewed) the Lorenz curve, A) the more equal the distribution of income.

B) the greater the number of households in the society. C) the more unequal the distribution of money income. D) the greater the total income of the society.

11)The Lorenz curve is a geometric representation of

A)the profile of earnings for a "typical" family over time.

B)the standard of living experienced by the poor in a country.

C)the difference between pre-tax and post-tax income.

D)the distribution of income.

12) The more bowed the Lorenz curve, the

A)richer the society.

B)more unequal the distribution of money income.

C)poorer the society.

D)more equal the distribution of income.

13) Suppose 10 percent of the families receive 10 percent of the income, 20 percent of the families receive 20 percent of the income, and so forth. The Lorenz curve would be

A)a straight line at a 45-degree angle from the origin.

B)a straight line at a 30-degree angle from the origin.

C)the most bowed curve possible.

D)the horizontal axis.

14) The most unequal distribution of income in the above figure exists in

A)country 4.

B)country 1.

C)country 5.

D)country 3.

15)The country reflecting perfect income equality in the above figure is A) country 4.

B) country 1. C) country 5. D) country 3. Answer: C Diff: 1

Topic: 30.1 Income AACSB: Analytic skills

Question Status: Previous Edition

16)Which of the following would be considered income in kind?

A)tax refunds

B)food stamps

C)yard sales

D)reduction in the tax rates

17)One reason some economists are critical of the Lorenz curve is because A) it reflects income before taxes.

B) it reflects income after taxes.

C) it reflects only the top bracket of taxpayers. D) it reflects only the poor in the country. Answer: A

18)Which of the following is NOT a correct criticism of the Lorenz curve? A) It does not include payments in kind.

B) It does not deal with differences in family size.

C) It ignores the impact of age distribution on income distribution. D) It refers to money income after taxes.

19)In calculating income for the Lorenz curve, one factor that is omitted, is A) capital gains income.

B) dividend payments.

C) in-kind transfer payments from the government. D) pure economic rent.

20)Some economists criticize the Lorenz curve because it

A)includes too many things in measuring income, such as food stamps, housing aid, and other government programs.

B)does not account for the effect of age on a family's income.

C)measures unreported income earned in the underground economy.

D)uses after-tax income when pre-tax income is more appropriate.

21) Some economists criticize the Lorenz curve because it

A)accounts for differences in the size of households when it should not.

B)does not include the cumulative percentage of households.

C)does not include unreported income earned in the underground economy.

D)represents the inequality of lifetime income when it should just look at a specific time period.

22) Since World War II, the share of total income going to the bottom 20 percent of U.S. households has

A)fallen by 20 percent.

B)increased by 10 percent.

C)remained constant.

D)more than doubled.

23)Compared to a sampling of other developed nations, the U.S. income distribution is more unequal than many others. What accounts for this?

A) The lowest-income families in the United States earn much less than the lowest-incomehouseholds in other nations.

B) Marginal income tax rates are much higher in the United States than in any other nation. C) Thehighest-income families in the United States earn much more than the highest-income households in other nations.

D) Other nations manipulate their data to look better.

24)When examining the financial status of households, wealth is

A)synonymous with income.

B)a flow variable whereas income is a stock variable.

C)a stock variable and includes both tangible assets and human capital.

D)not as important as income because wealth does not change over time.

25)The way income is allocated among the population is called the A) income curve.

B) income spread.

C) distribution of income. D) Gini allocation.

26)Which of the following is the best definition of what economists define as total income? A) Payment for labor services.

B) Payment for labor services and for ownership of other factors of production.

C) Payment for labor services, for use of other factors of production, and gifts and government transfers.

D) Inheritance.

27) The Lorenz curve

A)shows what portion of the population are living in poverty and what portion are living in wealth.

B)shows what portion of total money income is accounted for by different proportions of the nation's households.

C)shows what portion of the population is working as professionals, white- and blue-collar,workers and workers at menial tasks.

D)breaks down the income levels of each group in the economy.

28)The more bowed out the Lorenz curve is, the A) more equal the distribution of income.

B) less equal the distribution of income. C) richer the society.

D) poorer the society.

29)A Lorenz curve that represents an unequal income distribution is A) a straight line starting at the origin.

B) a straight line starting at 100% C) a bowed curved.

D) a line that has a kink in the middle of it.

30)A Lorenz curve that is perfectly straight indicates

A)that society is very rich.

B)that a small portion of the population accounts for most of the income.

C)that a large portion of the population accounts for most of the income.

D)complete income equality.

31) If everyone earned the same income, the Lorenz curve would be

A)a rectangular hyperbola.

B)a straight line from the origin at a 45-degree angle.

C)the horizontal axis.

D)very bowed from the diagonal.

32) The above figure displays

A)income-inequality curves.

B)Gini Coefficients.

C)Lorenz curves.

D)Laffer curves.

33)Refer to the above figure. Which curve shows the most unequal distribution of income? A) A

B) B C) C D) D

Answer: D Diff: 2

Topic: 30.1 Income AACSB: Analytic skills

Question Status: Previous Edition

34)Refer to the above figure. Which curve shows the second most unequal distribution of income?

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

35)Refer to the above figure. For which Lorenz curve does the richest 25 percent make 50 percent of the nation's money income?

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

36)Refer to the above figure. For which Lorenz curve does the richest 40 percent make 50 percent of the nation's money income?

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

37)Refer to the above figure. Perfect income equality is shown by A) the horizontal axis.

B) the vertical axis. C) curve A.

D) curve D.

38)Refer to the above figure. Where are the poorest households represented on the graph? A) The poorest households are to the left along the horizontal axis.

B) The poorest households are to the right along the horizontal axis. C) The poorest households are all along the horizontal axis.

D) The poorest households are concentrated in the middle. Answer: A

39)Refer to the above figure. Which of the above panels represents complete income equality? A) Panel A

B) Panel B C) Panel C D) Panel D

40)Refer to the above figure. Which of the above graphs represents an unequal income distribution?

A) Panel A B) Panel B C) Panel C D) Panel D