Question

Question 1

Which of the following is not one of the ways we measure income inequality?

A. Income shares of the households with the most income. (wrong)

B. The Gini Coefficient.

C. Income shares of the households with the most income relative to the income shares of the poorest households.

D. The minimum wage.

Question 2

Which of the following is not true about the Gini Coefficient?

A. A value of 1 means perfect income inequality and a value of 0 means perfect income equality.

B. It takes into account the entirety of the income/wealth distribution, not just the top and/or bottom. (wrong)

C. A value of 1 means perfect income equality and a value of 0 means perfect income inequality.

D. Any point on the Lorenz curve tells us the % of total income earned by the bottom % of the income distribution.

Question 3

Which of the following is true about inequality in the United States over the last century?

A. The bottom 40% of the wealth distribution owns just 0.3% of the nation’s wealth whereas the top 20% owns 84% of the nation’s wealth. (wrong)

B. Inequality has been approximately U-shaped, reducing throughout the first three quarters of the 20th century but the growing since 1977 to where we are now back to early 20th century levels of income and wealth inequality.

C. Unfortunately, all of these are true.

D. The top 0.1% of the wealth distribution owns just as much wealth as the bottom 90% of the wealth distribution.

Question 4

Which is the most problematic of the causes of economic inequality?

A. Inequality in ability and education. (wrong)

B. Inequality in economic opportunities.

C. The decline in unionism.

D. Differences in preferences.

Question 5

Which of the following is not a productivity based explanation for wage differentials?

A. Differences in discrimination practices. B. Differences in experience lead to differences in wages.

C. Differences in formal education leads to differences in wages.

D. Differences in natural ability. (wrong)

Question 9

Which of the following is not an explanation for unemployment and wage differentials that is based upon failures in the labor market?

A. A Minimum Wage (wrong)

B. Statistical Discrimination

C. Labor Immobility

D. Differences in Education

Which of the following is an example of moral hazard in the labor market?

A. Once workers are hired, it is difficult for managers to get them to work hard.

B. Some work gets paid a premium in the labor market because it is undesirable work.

C. It is difficult for employers to tell if job applicants have high ability and motivation or low ability and motivation.

Answer 1

1. Option D

Explanation: The minimum wage does not help in measuring income inequality.

2. Option C. A value of 1 means perfect income equality and a value of 0 means perfect income inequality.

Explanation: The value of 1 means perfect income inequality and the value of 0 means perfect income equality.