Multiple Choice Questions:

1. Which of the following is true?

a. There is substantial income inequality in the United States, and there has been little change in the distribution of measured income in the past few decades.

b. There is substantial income inequality in the United States, but there have been appreciable changes in the distribution of measured income in the past few decades.

c. There is very little income inequality in the United States, and there has been little change in the distribution of measured income in the past few decades.

d. There is very little income inequality in the United States, but there have been appreciable changes in the distribution of measured income in the past few decades.

2. As more women prepare for careers as professionals,

a. Their level of human capital will more closely approach that of men.

b. The ratio of female to male earnings will increase.

c. Their number of years of work experience will more closely approach that of men.

d. All of the above are likely to occur.

3. Evidence suggests that levels of inequality of income ___________ from 1935 to 1950, then ___________ until 1980, and have since ___________.

a. Increased; decreased; increased

b. Increased; remained relatively stable; decreased

c. Decreased; increased; decreased

d. Decreased; remained relatively stable; increased

e. Increased; decreased; remained relatively stable

4. Differences in monetary wages across jobs may result from

a. Differences in job amenities.

b. Differences in on-the-job hazards.

c. Differences in working conditions.

d. Differences in fringe benefits.

e. All of the above.

5. Diminishing marginal utility

a. Implies that increases in income will give less utility to a rich person than to a poor person.

b. Implies that a given amount of added income would tend to provide less utility to a given individual at higher levels of income than at lower levels of income.

c. Implies that income redistribution from higher- to lower-income persons will give more utility to the lower-income persons than it will take from the higher-income persons.

d. Implies that all of the above are true.

6. The principle of diminishing marginal utility is not enough to guarantee that transferring income from the rich to the poor will increase society’s utility because

a. The total utility of the rich will still be greater.

b. The rich get richer and the poor get poorer.

c. It is impossible to make utility comparisons between individuals.

d. diminishing marginal utility does not hold for everyone.

7. If complete equality of income was legislated, which of the following would be expected to occur?

a. People, on average, would become richer.

b. Society would become happier.

c. Individuals would work longer hours.

d. The incentive to produce would be largely eliminated.