Question 1

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. The difference between the two curves equals

Accepted Answer

The answer of 
-The figure above shows two Lorenz curves,...

Question 2

One way the United States has tried to encourage welfare recipients to acquire human capital is by

Accepted Answer

Requiring an adult member of the household to either work or perform community service is known as workfare, and it encourages welfare recipients to acquire human capital by gaining job skills and work experience. This policy aims to reduce dependence on welfare and increase self-sufficiency by helping individuals obtain employment and achieve financial stability. Additionally, workfare is often paired with education and training programs to further support the acquisition of human capital.

Question 3

-The "big tradeoff" refers to the tradeoff between

Accepted Answer

The answer of 
-The "big tradeoff" refers to the tradeoff...

Question 4

The decrease in the incentive to work created by welfare payments programs

Accepted Answer

The decrease in the incentive to work created by welfare payments programs affects both taxpayers and welfare recipients. Taxpayers may be disincentivized to work because they are paying for the welfare programs, while welfare recipients may be disincentivized to work because they are receiving benefits without having to work.

Question 5

The redistribution of income creates the big tradeoff, which is a tradeoff between ________.

Accepted Answer

The redistribution of income involves taking from those with higher incomes and giving to those with lower incomes, in order to achieve a more equal distribution of wealth in society. However, this creates a tradeoff between equity (or fairness) and efficiency. In other words, policies that aim to redistribute income may lead to a more equal distribution of wealth, but they can also create disincentives for people to work hard and generate wealth, which can hurt overall economic growth and productivity. Therefore, it is important to find a balance between equity and efficiency when designing income redistribution programs. Options A, C, and D are not accurate descriptions of this tradeoff.

Question 6

According to an Asian Development Bank report in 2007, China's Gini coefficient, a statistical measure of wealth distribution in society, soared to 47.3 in 2004 from 40.7 in 1993, putting the country at a level more typical of Latin America. China experienced ________.

Accepted Answer

The Gini coefficient is a measure of income inequality, and a higher score indicates greater income inequality. Therefore, the increase in China's Gini coefficient from 1993 to 2004 suggests that income inequality in China increased during that time period.

Question 7

Which of the following REDUCES equality of income or wealth relative to the market distribution?

Accepted Answer

The answer of Which of the following REDUCES equality of...

Question 8

The "big tradeoff" refers to the point that governmental redistribution of income causes

Accepted Answer

The "big tradeoff" refers to the fact that governmental redistribution of income can lead to less efficiency because it weakens incentives to work. This is because if people are able to receive income without having to work as hard, they may be less motivated to work hard and be productive. This decreased productivity can lead to a less efficient economy overall.

Question 9

With respect to redistribution, one reason "The Big Tradeoff" exists is because

Accepted Answer

The answer of With respect to redistribution, one reason "The...

Question 10

The inefficiency created by income taxation occurs due to

Accepted Answer

The inefficiency created by income taxation occurs due to all of the above reasons - the cost of collecting taxes and making welfare payments, motivating welfare recipients to work less, and motivating income earners to work less.

Question 11

Redistribution programs create a disincentive to work among

Accepted Answer

Redistributive programs, such as welfare or food stamps, provide assistance to those who are not earning enough income to meet basic needs. This assistance can create a disincentive to work for both taxpayers (who may feel that their taxes are supporting others who are not working) and benefit recipients (who may feel that they can rely on government assistance instead of finding a job). Therefore, both groups can be affected by the disincentive to work created by redistribution programs.

Question 12

With respect to redistribution, one reason "The Big Tradeoff" exists is because

Accepted Answer

The answer of With respect to redistribution, one reason "The...

Question 13

If a tax was instituted such that every dollar collected in taxes from high income households resulted in a distribution of $.80 to low income households,

Accepted Answer

This tax policy would lead to an increase in equality of incomes as low income households receive a greater portion of the tax revenue. However, it would likely decrease efficiency as high income households may reduce their work effort or investments due to the higher tax burden, leading to a reduction in output and economic growth.

Question 14

When China embarked on market changes towards urbanization and manufacturing in 1978, urban disposable incomes were 2.6 times greater than rural net income. By 2008 they were 3.3 times bigger. These market changes have led to

Accepted Answer

The increasing difference between urban disposable incomes and rural net income indicates that market changes have led to increased income inequality between rural and urban populations.

Question 15

Using the government as a means of redistribution generates equity at the cost of efficiency, in part because

Accepted Answer

Using the government as a means of redistribution requires resources to be used for the process itself, such as administrative costs and taxes. These resources could have otherwise been used for private investment or consumption, reducing overall efficiency.

Question 16

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

Accepted Answer

The answer of 
-The figure above shows two Lorenz curves,...

Question 17

Suppose that the income tax in the United States was such that all households had to pay 20 percent of their income to the government as taxes. This tax is an example of

Accepted Answer

A 20 percent tax on all households' income would be a proportional tax because the same percentage is taken from all households, regardless of income level. A regressive tax would take a larger percentage from lower income households, while a progressive tax would take a larger percentage from higher income households. An efficient tax refers to a tax system that is easy to administer and collect, which cannot be determined from the information given.

Question 18

The big tradeoff between equality and efficiency exists because

Accepted Answer

Redistribution necessarily involves using resources to transfer wealth from the rich to the poor, which can weaken incentives to work and invest, ultimately reducing overall economic efficiency. This means that at some level, increasing equality comes at the cost of reducing efficiency.

Question 19

-The "big tradeoff" refers to the tradeoff between

Accepted Answer

The answer of 
-The "big tradeoff" refers to the tradeoff...

Question 20

Income redistribution ________.

Accepted Answer

Income redistribution creates a deadweight loss because it involves the government taking money from some individuals and giving it to others, which can result in reduced incentives to work and produce. It may also create administrative costs for the government. Therefore, while income redistribution can make the distribution of income more equal, it comes at a cost. Option A is incorrect because income redistribution aims to make the distribution of income more equal, not less equal. Option B is partially correct in that income redistribution can make the distribution of income more equal, but it is not necessarily efficient as it can create deadweight losses. Option C is incorrect because income redistribution does not eliminate the tradeoff between rich and poor, but rather seeks to mitigate the negative effects of income inequality on those who are less well off.

Quiz 19: Economic Inequality

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. The difference between the two curves equals

One way the United States has tried to encourage welfare recipients to acquire human capital is by

-The "big tradeoff" refers to the tradeoff between

The decrease in the incentive to work created by welfare payments programs

The redistribution of income creates the big tradeoff, which is a tradeoff between ________.

According to an Asian Development Bank report in 2007, China's Gini coefficient, a statistical measure of wealth distribution in society, soared to 47.3 in 2004 from 40.7 in 1993, putting the country at a level more typical of Latin America. China experienced ________.

Which of the following REDUCES equality of income or wealth relative to the market distribution?

The "big tradeoff" refers to the point that governmental redistribution of income causes

With respect to redistribution, one reason "The Big Tradeoff" exists is because

The inefficiency created by income taxation occurs due to

Redistribution programs create a disincentive to work among

With respect to redistribution, one reason "The Big Tradeoff" exists is because

If a tax was instituted such that every dollar collected in taxes from high income households resulted in a distribution of $.80 to low income households,

When China embarked on market changes towards urbanization and manufacturing in 1978, urban disposable incomes were 2.6 times greater than rural net income. By 2008 they were 3.3 times bigger. These market changes have led to

Using the government as a means of redistribution generates equity at the cost of efficiency, in part because

-The figure above shows two Lorenz curves, one before income redistribution and one after income redistribution. Lorenz curve B represents

Suppose that the income tax in the United States was such that all households had to pay 20 percent of their income to the government as taxes. This tax is an example of

The big tradeoff between equality and efficiency exists because

-The "big tradeoff" refers to the tradeoff between

Income redistribution ________.