Chapter 18

The distribution of wealth in Australia is such that it:
A. Is randomly distributed among income classes.
B. Reduces income inequality.
C. Has no perceptible impact on the distribution of income.
D. Contributes to income inequality.

The above table shows different scenarios of income distribution. Refer to the above table. The highest quintile of households in the (b) income distribution receives about:
A. 51% of the income.
B. 52% of the income.
C. 60% of the income.
D. 35% of the income.

The Lorenz curve is used to visualise the:
A. Extent to which our welfare system affects incentives to work.
B. Percentage of the population which is below the poverty line.
C. Degree of inequality in the distribution of income.
D. Progressiveness of the federal tax system.

The Lorenz curve:
A. Plots graphically the poverty rate over time.
B. Plots graphically the distribution of income.
C. Is located further from the diagonal when income is defined to include the value of non-cash transfers.
D. Is located closer to the diagonal today than it was immediately after World War 2.

Which of the following is a non-cash transfer?
A. Subsidised housing.
B. A pension payment to a retiree.
C. A payment to a single parent.
D. Unemployment benefits.

With respect to the overall impact of taxes and transfers upon the distribution of income, it can be said that:
A. Taxes reduce but transfers increase income inequality.
B. Taxes increase but transfers reduce income inequality.
C. Both taxes and transfers reduce income inequality.
D. Both taxes and transfers increase income inequality.

Which of the following contributes to income inequality?
A. Differences in ability and training.
B. Differences in property ownership.
C. All of the answers given are correct.
D. Differences in job tastes.

The above table represents income distribution in Australia. Refer to the above table. Which of the following statements concerning the table is correct?
A. The share of income going to the highest-income quintile was higher in 1990 than in 1967.
B. In 1967, the poorest 60% of the population earned 15% of the income.
C. The distribution of income was more equal in 1990 than in 1967.
D. In 1990, 20% of the population earned over half of the income.

The above table represents income distribution in Australia. Refer to the above table. Which of the following statements best describes the data in the table?
A. Between 1967 and 1990, the lowest 40% of households gained a larger share of total income at the expense of the highest 40%.
B. Between 1967 and 1990, the highest 40% of households gained a larger share of total income at the expense of the lowest 60%.
C. Between 1967 and 1990, the lowest and the highest quintiles gained larger shares of total income at the expense of the three middle quintiles.
D. Between 1967 and 1990, each quintile gained a larger share of total income because the level of total income increased greatly.

When compared with a before-tax Lorenz curve, a progressive income tax would cause an after-tax Lorenz curve to be:
A. A horizontal line.
B. A vertical line.
C. More bowed toward the south east.
D. Less bowed to the south east.