ECO 165- SmartBook Chapter 18

In today's world, the analysis of income distribution usually includes reference to which of the following?

Ethnic background Geographic regions Share distribution Race

True or false: Because it is difficult to measure socioeconomic dimensions of income distribution, economists focus largely on share distribution of income when analyzing the distribution of income.

False

True or false: Determining a position on income distribution is unnecessary for a policy economist since it involves normative judgments.

False

True or false: If lifetime incomes within a country are equally distributed, the Lorenz curve for any particular year must coincide with the line of absolute equality.

False

True or false: Rawls argues that policy should be focused on supporting its supermen, because they will best advance society.

False

True or false: Since the rich have much more control over politics and advertising, our society generally redistributes less income than is appropriate.

False

True or false: Since there are more poor than rich, our one-person one-vote democratic political system generally redistributes more income than is appropriate.

False

True or false: The U.S. uses a pure absolute definition of poverty.

False

A geometric representation of the share distribution of income among families in a given country at a given time called the _____.

Lorenz curve

Which of the following is least likely to play a role in whether an equal income distribution is fair?

People's efforts differ

Which of the following are problems in determining whether an equal income distribution is fair?

People's efforts differ. People's needs differ. People don't start from equivalent positions.

According to the Lorenz curve shown, the country with the most equal distribution of income is _____.

Sweden

True or false: John Rawls believes that policy should be directed at making the least well-off people as well off as possible.

True

True or false: People's sense of fairness is based on more than the share distribution of income.

True

When a tax is progressive, an increase in income is associated with

an increase in the average tax rate.

If income were equally distributed within age brackets, then the Lorenz curve

could be straight or bowed outward to the right

Among countries of the world, the United States has

neither the most equal nor the most unequal distribution of income.

Judgments about the fairness of income distribution are _____.

normative statements

A tax in which the average rate increases with income, is called a _____.

progressive tax

Someone who doesn't support income redistribution programs would point to the possibility that they

reduce the incentive to work

Share distribution of income is the

relative division of total income among income groups

The Lorenz curve is a geometric representation of the

share distribution of income among families in a given country at a given time.

Some side-effects of programs to redistribute income are:

the incentive effect to look needier than you are. the avoidance and evasion incentive effect. the labor/leisure incentive effect.

Wealth is

the value of the assets individuals own less the value of what they owe.

The difference between wealth and income is that

wealth is a stock concept, while income is a flow concept.

Which of the following can be determined by looking at a Lorenz curve?

The relative division of total income among income groups

The U.S. uses a definition of poverty that is

both relative and absolute