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1. In the United States, labor earnings are about what percent of total income?
a.
75 percent
b.
70 percent
c.
67 percent
d.
50 percent
2. In the U.S. economy, labor earnings make up about
a.
one-half of total income.
b.
two-thirds of total income.
c.
three-fourths of total income.
d.
nine-tenths of total income.
3. Which of the following is most likely to occur when the government enacts policies to make the distribution of income
more equal?
a.
a more efficient allocation of resources
b.
a distortion of incentives
c.
unchanged behavior
d.
All of the above are correct.
4. The invisible hand of the marketplace acts to allocate resources
a.
efficiently but does not necessarily ensure that resources are allocated fairly.
b.
both fairly and efficiently.
c.
fairly but does not necessarily ensure that resources are allocated efficiently.
d.
neither fairly nor efficiently.
5. The marketplace allocates resources
a.
fairly.
b.
efficiently.
c.
to those desiring them least.
d.
both efficiently and equitably.
6. When the government redistributes income to achieve greater equality, it
a.
distorts incentives.
b.
improves efficiency.
c.
focuses on middle income brackets.
d.
relies on foreign aid to help balance the budget.
7. Government programs that take money from high-income people and give it to low-income people typically
a.
improve economic efficiency by reducing poverty.
b.
reduce economic efficiency because they distort incentives.
c.
have no effect on economic efficiency because they both reduce poverty and distort incentives.
d.
sometimes improve, sometimes reduce, and sometimes have no effect on economic efficiency.
8. When the government enacts policies to redistribute income,
a.
the objective is to enhance efficiency and a side effect is that the allocation of resources becomes more equal.
b.
the objective is to enhance efficiency and a side effect is that the allocation of resources becomes less equal.
c.
the objective is to enhance equality and a side effect is that the allocation of resources becomes more efficient.
d.
the objective is to enhance equality and a side effect is that the allocation of resources becomes less efficient.
9. Which of the following is correct?
a.
Governments can never improve market outcomes.
b.
Governments can sometimes improve market outcomes.
c.
Governments can always improve market outcomes.
d.
Government can never make the income distribution more equal.
10. Which of the Ten Principles of Economics do governments run into when they redistribute income to achieve greater
equality?
a.
Trade can make everyone better off.
b.
The cost of something is what you give up to get it.
c.
People face trade-offs.
d.
Markets are usually a good way to organize economic activity.
11. Which two of the Ten Principles of Economics are illustrated in this chapter?
a.
A country’s standard of living depends on its ability to produce goods & People face tradeoffs.
b.
Prices rise when the government prints too much money & Governments can sometimes improve market
outcomes.
c.
Governments can sometimes improve market outcomes & People face tradeoffs.
d.
People face tradeoffs & Prices rise when the government prints too much money .
12. A government's policy of redistributing income makes the income distribution
a.
more equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient.
b.
more equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.
c.
less equal, distorts incentives, alters behavior, and makes the allocation of resources more efficient.
d.
less equal, distorts incentives, alters behavior, and makes the allocation of resources less efficient.
13. Winston Churchill once said
a.
“The inherent virtue of capitalism is the unequal sharing of blessings. The inherent virtue of
socialism is the equal sharing of miseries.”
b.
“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism
is the equal sharing of miseries.”
c.
“The inherent vice of capitalism is the unequal sharing of blessings. The inherent vice of socialism is
the equal sharing of miseries.”
d.
“The inherent virtue of capitalism is the unequal sharing of blessings. The inherent vice of socialism
is the equal sharing of miseries.”
