Chapter 26 Econ Final bank

In 2005, the Gini coefficient was higher in _________________ than in _____________________ which indicates that there is more income inequality in

Mexico; the United States; Mexico than in the United States.

If the Gini coefficient is equal to 2, we can conclude that

None of the above, because the Gini coefficient cannot exceed 1.

Smith and Jones work at very similar jobs, but Smith earns almost 30 percent more a day than Jones. This is a case of __________ discrimination.

There is not enough information to answer the question

Economists often assert that a person who receives an in-kind transfer payment (from government) has a higher income as a result. But an in-kind transfer is not money income, so what are economists thinking?

They are thinking that an additional in-kind benefit, like more money income, makes a person better off and thus they are equating being better off (in the sense of having more goods and services) with a higher income.

In 2005, the Gini coefficient was higher in _________________ than in _____________________ which indicates that there is more income inequality in the

United States; Sweden; the United States than in Sweden.

According to the Rawlsian normative standard of income distribution, people will argue for

a different income distribution if they know what their position is in the current income distribution than if they do not.

Proponents of the absolute income equality normative standard base their argument on the premise that

a poor person receives more satisfaction from an additional dollar than does a rich person. redistributing income away from the rich to the poor will increase the total amount of satisfaction received by society. an equal distribution of income will lead to the maximization of societal satisfaction. all of the above

Which of the following statements is true?

a. Some people earn higher incomes than other people because of luck. b. Some people earn higher incomes than other people because they work harder and longer. c. Some people earn higher incomes than other people because they have more marketable innate abilities and attributes. e. a, b, and c

Proponents of the absolute income equality standard argue that individuals are __________ in the satisfaction an extra dollar of income brings and that the law of diminishing marginal utility __________.

alike; holds

The absolute income equality normative standard of income distribution holds that individuals should receive

an equal percentage of total income.

The Gini coefficient is computed by dividing the

area between the line of perfect income equality and the actual Lorenz curve by the total triangular area below the line of perfect income equality.

Schooling is referred to

as human capital.

In-kind transfer payments are transfer payments that are paid in

b. a specific good or service.

The Gini coefficient is a number between

0 and 1

The Gini coefficient is a number between 0 and 100.

0 and 100. False.

A person who believes that equally poor people are not always poor for the same reasons would probably want to treat equally poor people equally. The Gini coefficient falls between 0 and 10.

A person who believes that equally poor people are not always poor for the same reasons would probably want to treat equally poor people equally.False The Gini coefficient falls between 0 and 10. False e.a and b

Which of the following is not an example of in-kind transfer payments?

Aid to Families with Dependent Children (AFDC)

If the Gini coefficient is zero, there is

complete income equality

If the Gini coefficient is 1, there is

complete income inequality.

-Some degree of income inequality is due to the fact that individuals are innately different and make different choices. -People who agree on the factors that cause income inequality may not agree on the importance of the different factors.

d. a and c TRUE

The larger the Gini coefficient, the

greater the degree of income inequality.

In-kind" transfer payments are made

in the form of goods and services

The Gini coefficient measures the degree of

income inequality.

A way the federal government could make the income distribution more equal is to

increase taxes on the rich and increase transfer payments to the poor. increase taxes on the rich and increase transfer payments to the middle class. a and d

According to the absolute income equality normative standard, a redistribution of income from the rich to the poor will

increase total utility.

One way to reduce the degree of income inequality is to

increase transfer payments going to people with low labor and asset incomes and increase taxes on people with high labor and asset incomes.

To an economist, wage discrimination exists when

individuals of equal marginal revenue products are paid different wage rates.

John Rawls argued that

individuals will argue for a different income distribution if they know what their position is in the current income distribution than if they don't know their position in the current income distribution

Rawls argues that a person who is behind the veil of ignorance

is more likely to want a more equal distribution of income than if he or she were not behind the veil.

An individual's income equals

labor income + asset income + transfer payments - taxes.

Evidence seems to indicate that the distribution of income prior to adjusting for taxes and in-kind transfer payments is

less equal than after adjusting for taxes and in-kind transfer payments.

Based on the income data presented for the United States (in your text), it follows that the Gini coefficient for the United States is

less than 1 and greater than 0.

The closer the Gini coefficient is to zero, the

less the degree of income inequality.

Which of the following was not given as a reason for income differences in the text?

low minimum wage

When income distribution data for the United States is adjusted for taxes and in-kind transfer payments the distribution is

more equal than before such an adjustment is made.

If a person's asset income rises and his or her transfer payments (received) decline, it follows that that person's

none of the above

The Gini coefficients for countries A and B are 0.25 and 0.30, respectively. We can definitely conclude that

none of the above

The absolute income equality normative standard states that it is just, or fair, for individuals to receive

none of the above

A factor that does not contribute to income inequality includes

none of the above; that is, all factors contribute to income inequality.

Transfer payments are payments that are

not made in return for goods and services currently supplied.

Education differences are generally

not reflected in income differences. False

A Gini coefficient of zero means there is

perfect income equality.

A Gini coefficient of 1 means there is

perfect income inequality

As a determinant of a person's income, luck is more important in the __________ run, as continuous reoccurrences of one kind of luck are __________.

short; unlikely

Critics of the Rawlsian normative standard would likely argue that as one tries to reduce income inequality that is based on individuals' unequal productivity, the income pie is likely to

shrink.

Some economists contend that in-kind transfers should be included in the calculation of an individual's income because

simple money income is not a complete measure of one's command over goods and services. in-kind items make a person "better off" than the person's actual money income would lead us to believe. b and c

The veil of ignorance is

the veil behind which a person does not know whether he or she will be rich or poor once the veil is removed.

If the government succeeds in decreasing income inequality

then the Gini coefficient will decrease. TRUE

If the government succeeds in decreasing income inequality, then the Gini coefficient will decrease.

then the Gini coefficient will decrease. True

Country A has a Gini coefficient of 0.5 and country B has a Gini coefficient of 0.7. It follows that

there is greater income inequality in country B than A.

According to John Rawls, an average person who is behind the "veil of ignorance"

would be more likely to "vote" for a more equal distribution of income than he or she would be if the veil were not there.

You are asked to determine which distribution of income A, B, or C is the fairest. If you want to make your judgment as you would if you were behind the "veil of ignorance," you must try to "forget" all knowledge of

your own position in the present income distribution.

The Gini coefficient would be

zero if there were perfect income equality.

One measure of the severity of poverty is the ratio of income to poverty which is calculated by

dividing a family's income by the family's poverty income threshold

a. Some people earn higher incomes than other people because of luck. b. Some people earn higher incomes than other people because they work harder and longer. c. Some people earn higher incomes than other people because they have more marketable innate abilities and attributes.

e.a, b, and c TRUE

Which of the following is an example of human capital?

education

Wage discrimination exists when individuals of __________ are paid different wage rates

equal ability and productivity