Ch. 15 CC Quiz

Suppose that the average income of the average person in the richest 20% of citizens of Japan is $130,000. What is the average income of a person who is among the poorest 20% of citizens in Japan?

$24,074

Suppose that the income of the average person in the poorest 20% of citizens in Namibia is $2,000. What is the average income of a person who is among the richest 20% of citizens?

$39,200

Which of the following statements is true?

A high income inequality ratio can occur if the income of high-income earners is much greater than the income of others.

Which country has greater inequality, Brazil, Namibia, or Japan?

Namibia

Efficiency wages are set

above the equilibrium wage and create a surplus of labor.

The income inequality ratio can be used to determine how much more income the top 20% of households has compared to

any quintile of households.

One condition of wage equality is that

each worker must have the same skills, ability, and productivity.

Which of the following is a nonmonetary determinant of wages?

efficiency wages

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

equal ability and productivity

Assume that the government imposes a 30% tax on your income and deducts $8,000 from those taxes. Under a negative income tax scheme, if you earn $30,000 a year, you will

have a tax liability of $1,000.

Students who choose to attend graduate or medical school are often rewarded with higher wages because they have acquired more

human capital.

Which of the following causes difficulty when measuring income inequality?

in-kind transfers

The Lorenz curve is a graph of the __________ of the population.

income distribution

Someone in the bottom 20% of income-earners who has a greater chance of income mobility than the other poor must be

marginal poor.

Wage discrimination and the earnings gap are often misinterpreted because

of human capital differences between new entrants and mid-career workers.

Baseball player Alex Rodriguez made $27.5 million during 2007. This large disparity in salary compared to the average baseball player in the major league is because

of marginal differences in talent.

The poverty _______________is defined as the percentage of the population whose income is below the poverty threshold.

rate

Welfare is a _________ that helps the poor by supplementing their income with ________.

series of initiatives; subsidies, vouchers, and health services

Which country has a lower poverty rate, the United States or Japan?

the United States

When comparing the income inequality ratio (top 20%/bottom 20%) across nations, we can say that the United States has a lower ratio compared to Namibia because

there are more low-income earners in the Namibia.