Question 1

Over the period from 1971 to 2012, the U.S. Gini ratio for household income ________, which means income inequality in the United States ________.

Accepted Answer

The Gini ratio measures income inequality on a scale from 0 to 1, with 0 representing perfect equality and 1 representing perfect inequality. The U.S. Gini ratio has increased over the period from 1971 to 2012, indicating that income inequality in the United States has also increased.

Question 2

By human capital, economists mean

Accepted Answer

Human capital is the accumulated knowledge, skills, and abilities of individuals that are developed through education, training, and experience. It is an intangible asset that contributes to the productivity and economic success of individuals, organizations, and nations. It is distinct from physical capital or machines, which replace human labor. Therefore, the best choice is C, the accumulated skill and knowledge of humans.

Question 3

The world distribution of income has become more equal since 1970 because

Accepted Answer

The answer is C because the World Bank has reported that the world distribution of income has become more equal since 1970 due to the fast rise of average incomes in poor nations, such as China, compared to average incomes in rich nations, such as the United States. The distribution of income within most countries has also become more equal, but foreign aid programs from rich nations have not played a significant role in reducing global income inequality.

Question 4

In a Lorenz diagram for income, the line of equality shows

Accepted Answer

The line of equality in a Lorenz diagram for income shows the income distribution if everyone received the same income. This means that the Lorenz curve will lie on top of the line of equality if there is perfect income equality in the population. If the Lorenz curve lies far below the line of equality, it indicates a high degree of income inequality. Therefore, the best choice in this case is D, because the line of equality shows the income distribution if everyone received the same income.

Question 5

In the U.S. in 2012 the percentage of the Americans living below the poverty line was about

Accepted Answer

According to the U.S. Census Bureau, in 2012, the poverty rate was 15 percent. This means that 46.5 million people were living below the poverty line at that time.

Question 6

The closer an income Lorenz curve is to the line of equality, the

Accepted Answer

The Lorenz curve shows the distribution of income in a society. The closer the curve is to the line of equality, the more equally distributed the income is. Therefore, option B is the correct answer.

Question 7

The U.S. Gini ratio for income has ________ within recent decades, which means economic inequality has ________.

Accepted Answer

The answer of The U.S. Gini ratio for income has...

Question 8

If the area between the line of equality and the Lorenz curve is 1,000, the Gini ratio is

Accepted Answer

The area between the line of equality and the Lorenz curve represents the degree of income inequality in a society. If this area is equal to 1,000, then the whole area under the line of equality is 2,000 (since the line of equality represents perfect income equality, the area under it is a square with sides of length 1).

The Gini ratio is calculated as the ratio of the area between the line of equality and the Lorenz curve to the whole area under the line of equality.

Gini Ratio = Area between Lorenz curve and line of equality / Whole area under line of equality

Gini Ratio = 1,000 / 2,000 = 0.5

Therefore, the correct answer is B) 0.2.

Question 9

The mean (average) U.S. family income in 2012 was approximately

Accepted Answer

The mean (average) U.S. family income in 2012 was approximately $71,000.

Question 10

Over the past decade, the incomes of the top 1 percent have increased while the incomes of the middle class declined. These changes mean that the Lorenz curve moved ________ the 45 degree line and the Gini ratio has ________.

Accepted Answer

The answer of Over the past decade, the incomes of...

Question 11

Which of the following would show the LEAST amount of inequality?

Accepted Answer

Lifetime income takes into account a person's entire earnings over their lifetime, which provides a more accurate representation of their economic status than just measuring their annual income or wealth at a single point in time. It can also help to reduce the impact of temporary fluctuations in income or wealth. Therefore, overall, measuring lifetime income would show the least amount of inequality.

Question 12

In the U.S. in 2012 the poverty level for a family of four was about

Accepted Answer

According to the U.S. Department of Health and Human Services, the poverty guideline for a family of four in 2012 was $23,050.

Question 13

Which of the following is NOT an example of the opportunity cost of investing in human capital?

Accepted Answer

Apartment rent is not directly related to investing in human capital. The other options involve sacrificing something (wages or money) in order to improve one's skills and knowledge, which is the opportunity cost of investing in human capital.

Question 14

The distribution of world income is ________ the distribution of U.S. income.

Accepted Answer

The distribution of world income is less equal than the distribution of U.S. income. This is because the top 1% of individuals in the world own more than the bottom 50% combined, whereas in the United States the top 1% owns only about 15% of the wealth.

Question 15

Over the past decade, the incomes of the top 1 percent have increased disproportionately higher than that of the middle class. These changes mean that the Lorenz curve moved ________ the 45 degree line and the Gini ratio has ________.

Accepted Answer

The Lorenz curve moving further away from the 45-degree line indicates increased income inequality, which results in a higher Gini ratio.

Question 16

Among the United States, Finland, and South Africa, income is distributed most equally in ________ and least equally in ________.

Accepted Answer

According to the Gini coefficient, which measures income inequality on a scale from 0 to 1 (with 0 being perfect equality and 1 being perfect inequality), Finland has the lowest score at 0.26, indicating a relatively equal distribution of income, while South Africa has the highest score at 0.63, indicating a highly unequal distribution of income. The United States falls in between with a Gini coefficient of 0.39.

Question 17

Income is distributed very unequally in ________ and very equally in ________.

Accepted Answer

The answer of Income is distributed very unequally in ________...

Question 18

Of the approximate total population of 300 million people in America, about how many have incomes below the official poverty level?

Accepted Answer

According to data from the U.S. Census Bureau, about 15% of Americans live below the poverty line. With a population of about 300 million, that would mean approximately 46 million people have incomes below the official poverty level.

Question 19

Since 1970, the world Gini ratio has ________ indicating that the world distribution of income has ________.

Accepted Answer

The answer of Since 1970, the world Gini ratio has...

Question 20

The Gini ratio in Brazil was over 0.6 in 1990 and fell to 0.5 in 2010. This change means that over this time inequality ________ and the Lorenz curve moved ________ the 45 degree line.

Accepted Answer

A lower Gini ratio indicates a decrease in income inequality, so inequality decreased from 1990 to 2010. Moving closer to the 45 degree line on the Lorenz curve indicates a decrease in income inequality, so the Lorenz curve moved closer to the 45 degree line. Therefore, the correct answer is C - decreased; closer to.

Quiz 19: Economic Inequality

Over the period from 1971 to 2012, the U.S. Gini ratio for household income , which means income inequality in the United States .

By human capital, economists mean

The world distribution of income has become more equal since 1970 because

In a Lorenz diagram for income, the line of equality shows

In the U.S. in 2012 the percentage of the Americans living below the poverty line was about

The closer an income Lorenz curve is to the line of equality, the

The U.S. Gini ratio for income has within recent decades, which means economic inequality has .

If the area between the line of equality and the Lorenz curve is 1,000, the Gini ratio is

The mean (average) U.S. family income in 2012 was approximately

Over the past decade, the incomes of the top 1 percent have increased while the incomes of the middle class declined. These changes mean that the Lorenz curve moved the 45 degree line and the Gini ratio has .

Which of the following would show the LEAST amount of inequality?

In the U.S. in 2012 the poverty level for a family of four was about

Which of the following is NOT an example of the opportunity cost of investing in human capital?

The distribution of world income is ________ the distribution of U.S. income.

Over the past decade, the incomes of the top 1 percent have increased disproportionately higher than that of the middle class. These changes mean that the Lorenz curve moved the 45 degree line and the Gini ratio has .

Among the United States, Finland, and South Africa, income is distributed most equally in and least equally in .

Income is distributed very unequally in and very equally in .

Of the approximate total population of 300 million people in America, about how many have incomes below the official poverty level?

Since 1970, the world Gini ratio has indicating that the world distribution of income has .

The Gini ratio in Brazil was over 0.6 in 1990 and fell to 0.5 in 2010. This change means that over this time inequality and the Lorenz curve moved the 45 degree line.