Question 1

Two factors that have contributed to an increase in income inequality are

Accepted Answer

Technological change and globalization have significantly contributed to an increase in income inequality. Technological advancements have led to job automation, reducing the demand for low-skilled workers and increasing the demand for high-skilled workers, thus widening the income gap. Globalization has allowed companies to outsource jobs to countries with lower labor costs, which can depress wages domestically and contribute to income inequality.

Question 2

Income inequality in the United States has increased in part due to technological change. How does technological change contribute to income inequality?

Accepted Answer

Technological change often creates high-paying jobs for skilled workers, increasing income for those with the necessary skills while leaving less-skilled workers behind, thus widening income inequality.

Question 3

Technology has played a key role in changing the structure of the economy, which has increased the rewards for additional education and training. Greater access to education and training programs for all workers should therefore

Accepted Answer

Greater access to education and training programs can help workers acquire the skills needed for higher-paying jobs, which can reduce income disparities by enabling more people to move up the income ladder.

Question 4

Income inequality in the United States has increased in part due to globalization. How does globalization contribute to income inequality?

Accepted Answer

Globalization allows firms to hire low-skilled workers globally, increasing competition for U.S. workers and leading to lower wages for low-skilled workers compared to others.

Question 5

Globalization and growing technology have produced

Accepted Answer

Globalization and growing technology have led to a phenomenon where top performers in various fields can leverage their skills on a global scale, often resulting in significant, outsized rewards. This is sometimes referred to as the "superstar effect," where the best performers in any domain (e.g., entertainment, sports, business) can achieve exponential rewards compared to others.

Question 6

Rachel, a large pineapple producer in Hawaii, lobbies Congress to limit imports of pineapples in order to be able to sell her pineapples at a higher price and greatly increase her income. This possible source of income inequality is due to

Accepted Answer

Rachel's actions are an example of rent seeking, which involves seeking to increase one's share of existing wealth without creating new wealth. In this case, Rachel is attempting to influence government policy to limit competition and increase her profits, rather than by increasing productivity or creating better products.

Question 7

If growing income inequality results from changes in technology that, as a whole, make society better off, this will

Accepted Answer

Technological advancements generally increase productivity and efficiency, leading to overall economic growth. This growth can result in a larger "economic pie," meaning the total wealth or economic output of a society increases, even if the distribution of that wealth becomes more unequal.

Question 8

If growing income inequality results from or encourages more rent seeking that, as a whole, make society worse off, this will

Accepted Answer

Rent seeking typically involves extracting value without contributing to productivity, leading to a decrease in the overall economic pie as resources are diverted from productive uses to rent-seeking activities. This can exacerbate income inequality and reduce overall economic efficiency and growth.

Question 9

Using a Website created by the Sacramento Bee in 2008 that published the salaries of all California state employees, economists conducted research and found that

Accepted Answer

Knowing co-workers' salaries can significantly impact employees' perceptions of their own pay and overall job satisfaction, leading to feelings of inequity or dissatisfaction if disparities are discovered.

Question 10

Growing technology has provided increased opportunities for higher-skilled workers.

Accepted Answer

Advancements in technology have created more complex and specialized jobs, requiring higher levels of skill and education, thus providing increased opportunities for higher-skilled workers.

Question 11

Differences in productivity can actually benefit society even when this results in increases in income inequality.

Accepted Answer

Differences in productivity can lead to innovation and economic growth, which can benefit society as a whole by increasing the overall wealth and improving living standards, even if it also leads to increases in income inequality.

Question 12

List five major sources of income inequality.

Accepted Answer

The answer of List five major sources of income inequality....

Question 13

Explain how globalization has benefitted consumers but has also widened the gap between rich and poor in the United States.

Accepted Answer

The answer of Explain how globalization has benefitted consumers but...

Question 14

Philosophical arguments in favor of income redistribution programs include

Accepted Answer

All of the choices listed are philosophical arguments that can be used to support income redistribution programs. Utilitarianism argues for maximizing overall happiness, which can justify redistributing wealth to reduce poverty and increase societal welfare. The Rawlsian social contract theory, particularly the difference principle, suggests structuring society in a way that benefits the least advantaged, which can include income redistribution. The benefits-received principle isn't directly a philosophical argument for income redistribution but is often used in discussions about tax fairness and public goods provision, which can relate to redistributive policies.

Question 15

The belief that having more of something makes you happier but in successively smaller increments is called

Accepted Answer

Diminishing marginal utility is the economic principle that as a person increases consumption of a product, there is a decline in the marginal utility (satisfaction or benefit) that person derives from consuming each additional unit of that product.

Question 16

The first Taco Bell 7-layer burrito you ate was extraordinary. The second one was good. The third one was pretty good. The fourth one was just kind of okay. This illustrates

Accepted Answer

The concept of diminishing marginal utility explains how the satisfaction or utility derived from consuming additional units of a good or service decreases after a certain point, as illustrated by the progressively less enjoyable experiences of eating additional Taco Bell 7-layer burritos.

Question 17

The utilitarianism, Rawlsian, and benefits-received arguments all favor a ________ tax system.

Accepted Answer

The utilitarianism, Rawlsian, and benefits-received arguments all support a progressive tax system because they emphasize fairness, the ability to pay, and the idea that those who benefit more from public services should contribute more.

Question 18

The results of a survey conducted by Dan Ariely and Michael Norton found that Americans

Accepted Answer

The survey conducted by Dan Ariely and Michael Norton revealed that Americans generally prefer a much more equal distribution of wealth than the current state. This indicates a significant disparity between the ideal and the actual distribution of wealth as perceived by the general public.

Question 19

In the United States, the highest quintile of income earners face an average federal tax rate of ________, and the lowest quintile of income earners face an average federal tax rate of ________.

Accepted Answer

The highest quintile of income earners in the United States faces an average federal tax rate of approximately 24%, while the lowest quintile faces a much lower average federal tax rate, around 1.5%. This reflects the progressive nature of the U.S. tax system, where higher income earners pay a higher percentage of their income in taxes compared to lower income earners.

Question 20

In the United States, the highest quintile of income earners contribute ________ of all federal tax dollars received, and the lowest quintile of income earners contribute ________ of all federal tax dollars received

Accepted Answer

The highest quintile of income earners in the United States contribute a significant portion of all federal tax dollars received, at 68.8%, while the lowest quintile contributes a very small fraction, at 0.4%. This reflects the progressive nature of the U.S. tax system, where those with higher incomes pay a larger share of taxes.

Quiz 21: Income Inequality and the Redistribution of Income