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Multiple Choice Quiz
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1
The superstar phenomenon
A)occurs only in some professions.
B)results in a small number of workers receiving a very large share of the rewards in the profession.
C)occurs because skills are not perfect substitutes and because consumers are willing to pay a premium for "the best."
D)requires the profession to be amenable to the technology of mass production.
E)all of the above.
2
The widening of the wage distribution during the 1980's occurred primarily because
A)the real wage of unskilled workers fell dramatically during the decade.
B)the real wage of skilled workers rose dramatically during the decade.
C)the real wage of unskilled workers fell dramatically during the decade and the real wage of skilled workers rose dramatically during the decade.
D)the educated, lower-middle class workers became increasingly poor during the decade.
3
The widening of the wage distribution during the 1980's occurred because
A)the rate of growth in the number of college graduates declined during the decade.
B)the demand for skilled workers shifted out by more than the demand for unskilled workers.
C)both (A) and (B).
D)neither (A) nor (B).
4
Wage inequality between skilled and unskilled workers may have increased during the 1980’s because
A)the trade deficit in durable goods, which are produced by largely unskilled workers, expanded during the 1980's.
B)unions lost some of their bargaining power during the decade as membership fell.
C)immigration to the U.S. during the 1980's was comprised largely of unskilled workers.
D)of skilled-biased technical change.
E)all of the above.
5
The Gini coefficient
A)measures the amount of inequality in an income distribution.
B)ranges from 0 to 1.
C)increases as inequality increases.
D)both (A) and (B).
E)all of the above.
6
The intergenerational correlation measures the relationship between the income of
A)brothers and sisters.
B)fathers and mothers.
C)identical (monozygotic) and non-identical (dizygotic) twins.
D)children and parents.
E)none of the above.
7
The phenomenon of regression to the mean is exhibited by the fact that
A)individuals of average ability tend to earn the average wage.
B)the average income of all persons in a family tends to equal the average income in the population.
C)income differences across families tend to get smaller and smaller over time.
D)both (A) and (B).
E)all of the above.
8
An example of social capital is
A)peer groups.
B)role models.
C)table manners.
D)a sense of humor.
E)all of the above.
9
Economic models predict a positively-skewed income distribution because
A)access to financial capital differs across individuals.
B)the rate at which persons can borrow for college is lower for the rich versus the poor.
C)both (A) and (B).
D)neither (A) nor (B).
10
The slope of the line from a regression of children's income on their parents’ income captures, in part,
A)the intergenerational correlation.
B)the human capital externaility.
C)the degree of positive skewness in the income distribution.
D)the social capital of the family.
E)all of the above.





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