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Multiple Choice Quiz
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1
Human capital refers to:
A)the amount of machinery per worker.
B)the stock of expertise accumulated by a worker.
C)the amount of mutual funds and other investments owned by workers.
D)workers in monotonous, repetitive jobs.
2
The economic cost of a year at school includes:
A)tuition, books, and transportation.
B)direct costs.
C)direct costs plus forgone earnings.
D)indirect costs.
3
All other things being equal, the education premium is likely to be ________ in the short run and ________ in the long run.
A)high; low
B)high; high
C)low; low
D)low; high
4
Students are often credit-constrained because:
A)they often don’t have full-time jobs.
B)human capital is very illiquid.
C)banks don’t like students.
D)they can’t make their credit card payments.
5
Education works as a signal to prospective employers because:
A)it demonstrates knowledge.
B)education provides job-ready skills.
C)education screens out the high-productivity workers.
D)there typically is an education premium.
6
With respect to the benefits of education, research tends to indicate that:
A)the private benefits are so low that government subsidies are required.
B)the education benefit falls to zero in the long run.
C)the high cost of education exceeds the benefits.
D)the higher income benefits of education exceed the cost.
7
Wage discrimination:
A)explains why doctors get paid more than dishwashers.
B)is the difference in earnings after correcting for differences in human capital.
C)explains why workers over 40 earn more than workers under 25.
D)is easy to identify and even easier to rectify.
8
The brain drain refers to:
A)the emigration of individuals with human capital.
B)the tendency of human capital to deteriorate with age.
C)the reduction in the number of students attending university.
D)the effect of a Friday night party.
9
The limit faced by women on their promotion possibilities within an organization is known as:
A)wage discrimination.
B)a price ceiling.
C)the glass ceiling.
D)the “old boys” club.
10
Income distributions are typically measured in something known as:
A)quarters.
B)quintiles.
C)quintets.
D)triads.
11
The graphical representation of quintile income distribution is known as a(n):
A)production possibilities curve.
B)income effect.
C)supply curve.
D)Lorenz curve.
12
According to the CIA World Factbook, the GINI Index for Canada is 1 and is 25 for Sweden. This indicates that:
A)Canada has a higher inflation rate than Sweden.
B)Swedes are generally younger than Canadians.
C)income inequality is greater in Canada than in Sweden.
D)income inequality is greater in Sweden than in Canada.
13
One reason that the GINI Index for Canada may be lower than the comparable index for the United States is because of:
A)generally higher incomes in the United States.
B)Canada’s Employment Insurance (EI) benefits.
C)the warmer climate in the southern latitudes.
D)the greater prevalence of social programs in the United States.
14
An increase in income inequality is most likely a result of:
A)reduced taxes for lower-income individuals.
B)reductions in student loans.
C)globalization and outsourcing.
D)technological change having more effect on the productivity of skilled workers.
15
All other things being equal, if immigrants to Canada typically earn incomes lower than the existing average, we would expect to see:
A)Canada’s GINI Index rising.
B)Canada’s GINI Index falling.
C)the Lorenz curve getting closer to the 45-degree line.
D)an increase in the minimum wage.





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