Chapter 13 — Quiz

Multiple choice

Q1. The Lorenz curve plots: a) GDP over time b) Cumulative income share against cumulative population share, ranked poorest to richest c) The inflation rate d) Supply and demand

Q2. A Gini coefficient of 0 means: a) Perfect inequality b) Perfect equality c) No data available d) Average inequality

Q3. The U.S. income Gini coefficient is approximately: a) 0.15 b) 0.27 c) 0.39 d) 0.65

Q4. Wealth inequality is much larger than income inequality because: a) Wealth data is unreliable b) Wealth accumulates over lifetimes and across generations, earns compounding returns, and passes through inheritance c) Income is more important than wealth d) The government taxes wealth more heavily

Q5. Skill-biased technical change (SBTC) is the idea that: a) All workers benefit equally from technology b) Technology raises demand for skilled workers and reduces demand for less-skilled workers c) Technology has no effect on wages d) Technology only affects the manufacturing sector

Q6. The college wage premium has approximately: a) Stayed the same since 1980 b) Halved since 1980 c) Doubled since 1980 d) Tripled since 1980

Q7. The Rawlsian "difference principle" says inequalities are acceptable only if: a) They maximize GDP b) They benefit the worst-off members of society c) They arise from free exchange d) They are smaller than 10:1

Q8. A libertarian evaluates inequality by asking: a) Is total welfare maximized? b) Are the worst-off as well off as possible? c) Did the inequality arise from voluntary exchange starting from a just initial position? d) Is the Gini below 0.30?

Q9. The EITC is: a) A wage floor b) A wage subsidy for low-income workers delivered through the tax system c) A wealth tax d) A universal basic income

Q10. The CEO-to-worker pay ratio in the U.S. today is approximately: a) 5:1 b) 20:1 c) 100:1 d) 300:1

Q11. Piketty's r > g thesis argues that: a) Growth always exceeds the return on capital b) When the return on capital exceeds growth, wealth concentrates over time c) Taxes should be eliminated d) Inequality is always decreasing

Q12. The expanded Child Tax Credit in 2021 reduced child poverty by approximately: a) 5% b) 15% c) 30% d) 50%

Short answer

SA1. What are the four main explanations for rising inequality since 1980?

SA2. Distinguish the utilitarian, Rawlsian, and libertarian frameworks in two sentences each.

SA3. Why does the MSU adjunct-tenure gap exist? Give two structural reasons.

SA4. What is the "leaky bucket" metaphor (Okun), and what does it tell us about the tradeoff between efficiency and equity?

SA5. Why might education alone be insufficient to reduce inequality?

True / False

TF1. The U.S. Gini coefficient has been falling since 1980. (True / False)

TF2. Most economists believe only one of the four explanations for rising inequality is correct. (True / False)

TF3. Cash transfers to the poor have been shown to be largely wasted on luxury goods. (True / False)

TF4. The EITC increases both income and labor force participation for low-income workers. (True / False)

TF5. A Rawlsian would accept any inequality that arises from voluntary exchange. (True / False)

Selected answers in appendices/answers-to-selected.md.