MicroEcon Ch 15 Quiz

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

none of the above

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

If the Gini coefficient is zero (0), this means that

there is perfect income equality.

In 2007, the top 20 percent of households in the United States earned collectively approximately what percent of the total income of all households?

50 percent

In 2007, the lowest 20 percent of households in the United States earned approximately what percent of the total income of all households?

3%

Lorenz curve of perfect income equality is a

45-degree line.

Which of the following statements is false?

ANSWER: none of the above A) There are more poor white persons than there are poor African-American persons. B) People are more likely to be poor when they are young than at any other time. C) Families headed by females are more likely to be poor than families headed by males. D) The uneducated and poorly educated are more likely to be poor than the educated. E) none of the above

person is more likely to be poor if he or she is

African-American or Hispanic rather than white.

Which of the following statements is false?

Education differences are generally not reflected in income differences.

Which of the following statements is true?

In 2007, the lowest 20 percent of all income earners earned less than 5 percent of the total money income.

During the last year that Michael Jordan played basketball with the Chicago Bulls he earned ___________________ times the salary of the lowest paid player on the team.

NOT: 12

Refer to Exhibit 29-2. This graph depicts the Lorenz curve for two countries, country 1 (Lorenz curve 1) and country 2 (Lorenz curve 2). The Gini coefficient associated with Lorenz curve 1 appears to be ____________ than the Gini coefficient associated with Lorenz curve 2. This information indicates that the income distribution is ______________ equal in country 2 than in country 1.

NOT: lower; less NOT: HIGHER; LESS

In the United States, there are _______________ people in the average household in the top quintile (of total money income) than in the bottom quintile. This situation tends to skew the Census's measure of the income distribution so that the income distribution appears to be __________________ than it would be if a correction were made so that each quintile actually contained 20% of the population.

NOT: more; more equal

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

NOT: subsidized public education TRY: AID TO DEPENDENDT....

If we define poverty using absolute terms, it follows that

a and b

public good is

a good that if consumed by one person can be consumed by other persons to the same degree and the consumption of which cannot be denied to anyone.

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.

In relative terms, poverty will always exist

b and c

Suppose the data show that each year between 1965 and 2008, 10 percent of all income earners (in the United States) earned little enough to be considered poor. It follows that

b and d

If the Gini coefficient is 1, there is

complete income inequality.

If the Gini coefficient is one (1), this means that there is

complete income inequality.

Which of the following is an example of human capital?

education

larger the Gini coefficient, the

greater the degree of income inequality.

In-kind" transfer payments are made

in the form of goods and services.

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.

social insurance justification for government welfare assistance holds that

individuals currently not receiving welfare think they might one day need welfare assistance and thus they support welfare programs today.

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.

closer the Gini coefficient is to zero, the

less the degree of income inequality.

Gini coefficient of zero means there is

perfect income equality.

When the actual Lorenz curve is a 45-degree line, there is

perfect income equality.

When the actual Lorenz curve is as far away from the 45-degree line as possible, there is

perfect income inequality.

Lorenz curve is a graphical representation of

the distribution of income.

If the population is divided into five family income groups, many interpret

the top fifth as rich, the middle three-fifths as middle income and the lowest fifth as poor.