Question 1

The households in the top tenth of income distribution earn ten percent of total income.

Accepted Answer

The households in the top tenth of income distribution typically earn more than ten percent of total income, as income distribution is often skewed, with higher earners capturing a larger share of total income.

Question 2

The most recent data indicates households in the top fifth of the income distribution earn nearly ten times as much income as those in the bottom fifth.

Accepted Answer

False

Question 3

In less developed economies,the distribution of income is

Accepted Answer

In less developed economies, the distribution of income is more concentrated, meaning wealth is distributed less evenly. This is due to a variety of factors such as lack of access to education, limited job opportunities, and corrupt governments. As a result, a small percentage of the population holds the majority of the wealth. This leads to a high level of income inequality between the rich and poor in these economies.

Question 4

Income distribution according to productivity is efficient because people with no resources could starve.

Accepted Answer

Income distribution according to productivity is not necessarily efficient because it is possible for some individuals to have high productivity but low income due to factors such as discrimination or lack of access to resources. Additionally, it is also possible for individuals with no resources to receive assistance such as food programs or social safety nets, so it is not necessary for them to starve.

Question 5

In the United States,the dramatic increase in government social spending since the mid-1960s has

Accepted Answer

The answer of In the United States,the dramatic increase in...

Question 6

Since 1970,the households in U.S.experienced an increased inequality of income distribution.

Accepted Answer

According to various studies and reports, income inequality in the U.S. has been increasing since 1970. The top earners have seen significant growth in their incomes, while the middle and lower-class households have seen little to no increase in their earnings. This inequality is an ongoing issue that has been debated and discussed among policymakers and economists.

Question 7

In a market economy,income depends mostly on

Accepted Answer

In a market economy, income depends mostly on productivity. This means that individuals who are more productive and contribute more to the economy through their work and skills are generally compensated with higher incomes. Luck, age, sex, and discrimination may all have some impact on an individual's income, but productivity is the primary determinant.

Question 8

One of the main tools used by economists to measure the actual distribution of income is

Accepted Answer

The Lorenz curve is a graphical representation of the distribution of income in a society, which is used to measure income inequality. It plots the cumulative percentage of income received against the cumulative percentage of the population, and the closer the curve is to the diagonal line, the more equal the distribution of income is.

Question 9

Census data on the income distribution among families in the United States in recent years show

Accepted Answer

Census data shows that in recent years, there has been a rising share of income earned by the top fifth of families in the United States and a declining share earned by the bottom fifth. This trend points to an increasing income inequality in the country.

Question 10

Taxes and in-kind transfers make the distribution of income more unequal.

Accepted Answer

The answer of Taxes and in-kind transfers make the distribution...

Question 11

On average,college graduates earn significantly more income than those with less education and the disparity tends to widen into middle age.

Accepted Answer

This statement is true based on numerous studies and statistics, which show that higher education generally leads to higher earnings over the course of one's career.

Question 12

Differences in earnings based on age and education reflect a normal life cycle pattern of income.

Accepted Answer

It is commonly understood that individuals tend to earn lower incomes when they are younger and have less education, but as they grow older and acquire more skills and experience, their earnings tend to increase. This is known as the normal life cycle pattern of income. Therefore, the statement is true.

Question 13

In a market economy,household income is determined primarily by

Accepted Answer

In a market economy, household income is primarily determined by the productivity of labor resources, which means how much output can be produced per unit of input (such as labor). The more productive a household's labor resources are, the more income they are likely to earn through wages, profits, or other sources of income. Factors that can improve productivity include education, training, skills, technology, and capital investments. Other factors such as age, gender, and luck may have some influence on income, but they are generally considered secondary to productivity in a market economy. Government transfer payments, while they can provide some income support for households, are not considered the primary source of income in a market economy.

Question 14

Using the Lorenz curve,the degree of income inequality is measured by

Accepted Answer

The degree of income inequality is measured by the distance of the Lorenz curve from the line of perfect equality. The farther the curve is from the line of perfect equality, the greater the degree of inequality. Choice A describes the Lorenz curve itself, not the degree of inequality. Choice C refers to a different concept entirely (perfectly elastic demand) and choice D is incorrect as the number of times the Lorenz curve crosses the line of perfect equality is not relevant to measuring the degree of income inequality. Choice E refers to the poverty rate and is not a measurement of income inequality.

Question 15

The Lorenz curve shows the

Accepted Answer

The Lorenz curve depicts the cumulative percentage of income received by cumulative percentages of households in a given population. This provides a visual representation of income inequality, showing how much of the total income is concentrated in the hands of a small percentage of the population. Therefore, the correct answer is E.

Question 16

The distribution of income in the United States is

Accepted Answer

The answer of The distribution of income in the United...

Question 17

In a market economy,income is primarily determined by

Accepted Answer

In a market economy, income is primarily determined by the productivity of household resources, such as education, skills, and labor. Individuals who possess valuable skills or education can command higher salaries in the market, while those without these resources may earn lower wages. This reflects the basic principle of supply and demand in the market economy, where individuals with scarce resources are able to command higher prices for their services, while those with abundant resources are not as valued.

Question 18

If income were distributed solely according to marginal productivity,

Accepted Answer

The answer of If income were distributed solely according to...

Question 19

In the United States,most income comes from

Accepted Answer

The majority of income in the United States comes from providing labor resources, such as wages and salaries earned through employment. Capital gains and stocks/bonds can also contribute to income, but these sources are generally not as widespread. Illegal transactions would not be considered a legitimate source of income, and government transfer payments (such as welfare or Social Security) make up a smaller portion of overall income.

Question 20

If the marginal productivity of labor was the sole determinant of household income in the U.S. ,then

Accepted Answer

Even if marginal productivity of labor were the sole determinant of household income, there would still be significant inequality in the distribution of income due to factors such as differences in education, experience, and skills. Therefore, the distribution of income would not be equal. Choices A, B, D, and E are incorrect because the marginal productivity of labor alone cannot guarantee that all households have sufficient income to meet their needs or eliminate poverty and inequality, and government programs may still be needed to address these issues.

Quiz 18: Income Distribution and Poverty