26)The regular earnings profile of
an individual throughout his or her lifetime is A) the Lorenz curve.

B) the age-earnings cycle.
C) wealth.

D) income-in-kind.

27)Which of the following statements
are correct about the age-earnings cycle? A) Earnings generally
increase up till age 30 and then steadily decrease.

B) Earnings increase throughout a
prison’s lifetime until they reach retirement.

C) Earnings increase with age
because workers become more productive as they age until around 50 years.
Around 50 the effects of aging outweighs the further increases in productivity.

D) Since every person is different
we can reach no general conclusions about the age-earnings cycle.

28) The earnings of most people

A)increase steadily until

B)increase with age until around age
50 due to increased experience, training, and hours worked.

C)increase with age until around age
40 due to increased experience and hours worked.

D)increase with age until around age
60 due to increased experience, training, and hours worked, then level off as
hours worked levels off.

29)Suppose all people have the
same age-earnings profile and the percent of the population in each
age category is the same. The distribution of income at any point in time will

A) equal because all have the same

B) equal because incomes and wealth
levels must then be the same. C) unequal because other sources of income will

D) unequal because incomes differ by

30)One reason earnings tend to fall
before retirement age is that

A)the experience of people is no
longer valuable after they are 50 or 55.

B)people tend to reduce the number
of hours they work after age 50.

C)people are retiring earlier.

D)firms discriminate against older

Answer: B


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31)Refer to the above figure. Which
of the graphs are consistent with the age-earnings profile? A) Panel

B) Panel B C) Panel C D) Panel D

32)In a competitive economy, workers
will be paid according to their



C)marginal productivity.


33)Which of the following is not a
determinant of an individual’s marginal product? A) talent

B) money income C) experience

D) educational level

34)Which of the following sources of
productivity is the most difficult to acquire? A) education

B) experience C) talent

D) training

35)The return on human capital

A)tends to be much greater than the
return on physical capital.

B)tends to be much lower than the
return on physical capital.

C)is similar to the return on
physical capital.

D)cannot be related to the return on
physical capital since human capital and physical capital are so different.

36) The main cost of a college
education is

A)tuition if one goes to a private
college and room and board if one goes to a public college.

B)dependent upon whether one’s
parents pay for the college or not.

C)the lack of practical experience
from spending time in college.

D)the opportunity cost of not

37) When measuring the benefits from
investing in human capital

A)the only benefits come from the
increase in salary because of going to school.

B)in addition to the monetary
benefits, the benefit from expanding horizons should be included.

C)we must include the costs of
tuition and books but not the money made from part-time jobs.

D)we must include the foregone
earnings in the benefit calculation.

38)Inheritance is responsible for
about ________ percent of the income inequality in the United States.

A) 10 B) 25 C) 40 D) 60

39)Economic discrimination exists

A)there is an unequal distribution
of income in a country.

B)both income and wealth are
unequally distributed in a country.

C)there is unequal access to

D)workers with the same marginal
revenue products are paid different wages.

40) Economic discrimination against
minorities exists when

A)minorities have less education and
training than whites.

B)minorities are paid less than
whites on average.

C)minorities are paid less than
whites with the same education, experience, and training.

D)minorities are in different
occupations than whites.

41)Unequal pay that is caused by
economic discrimination will be due to A) a noneconomic factor.

B) differences in the marginal
revenue product. C) a monopolistic labor market.

D) difference in human capital.

42)Which of the following is a
reason for economic discrimination to occur? A) differences in access to

B) differences in gender

C) differences in the quality of

D) barriers to entry
in higher-paying occupations

43)The age-earnings profile
for most people indicates

A)earnings rise continually until a
person retires.

B)earnings initially decline and
then rise continually until retirement.

C)that when you adjust for
inflation, earnings are constant throughout the entire workplace experience.

D)earnings rise until the age of
about 50 and then begin to fall until retirement.

44) Which of the following is NOT
considered a determinant of income differences?




D)equity or fairness

45)Which of the following does NOT
contribute to the marginal productivity of workers? A) discrimination

B) talent

C) experience D) education

46)Inheritance accounts for about

A)5 percent of income inequality.

B)10 percent of income inequality.

C)15 percent of income inequality.

D)30 percent of income inequality.

47)Which of the following would NOT
be considered a determinant of marginal productivity? A) talent

B) gender

C) experience D) training

48)Determinants of income
differences include all of the following EXCEPT


B)marginal productivity.

C)moral hazard.


49)Typically, the major cost of a
college education is A) tuition.

B) books.

C) foregone income. D) housing.

50)Determinants of the marginal
productivity of labor include all of the following EXCEPT A) talent.

B) education. C) experience. D)

Answer: D

51)Going to college to get more
knowledge and skills is considered to be an increase in

A)physical capital.


C)human capital.

D)net exports.

52) All of the following lead to a
difference in income EXCEPT

A)sales tax.


C)the age-earnings cycle.

D)marginal productivity.

53)On average the productivity of an
individual usually peaks when the individual is about A) 20.

B) 30. C) 50. D) 60.

54)If a goal of a nation’s residents
is to increase marginal productivity, they should increase A) expenditures on

B) the inheritance tax. C) exports.

D) the marginal propensity to

55)All of the following contribute
to income inequality EXCEPT

A)differences in education and

B)differences in job tastes.

C)differences in talent.

D)government transfer programs.

56) The typical age-earnings cycle
shows that

A)there is a positive relationship
between age and earnings that eventually turns into a negative relationship.

B)there is a constant positive
relationship between age and earnings.

C)there is a constant negative relationship
between age and earnings.

D)there is no relationship between
age and earnings.

57)The age-earnings cycle
is an earnings profile of an individual throughout the person’s lifetime. The
profile shows that

A) earnings usually peak at age 25
and then decline.

B) earnings gradually rise until
they peak around age 50. C) earnings and age have no particular correlation.

D) younger workers have the most

58)The opportunity cost of going to
college for a student receiving a scholarship

A)is the income that she would have
earned if she did not go to college.

B)is the risk of dropping out.

C)is the food and living expenses
that she has to purchase while in college.

D)is zero because she does not have
to pay tuition.

59)Why doesn’t the age-earning cycle
continuously increase until retirement age? Answer: The typical worker sees a
decline in earnings as he or she approaches retirement

60)What is
the age-earnings cycle? What is the
typical age-earnings profile for a U.S. resident?

61)Earnings usually reflect a
person’s productivity. What are factors that cause differences in productivity
across people so that earnings differ too?

typical age-earning cycle provides evidence of economic
discrimination by age.” Do you agree or disagree? Why?


Question_Doc13_15Dec_4th_-_Answer.docx (32.84 KB)

Preview: all xxxxxx have xxx same age-earnings profile and xxx percent of xxx population xx xxxx age xxxxxxxx is the xxxx The distribution xx income xx xxx point xx time will xxxx equal because xxx have xxx xxxx profile xx equal because xxxxxxx and wealth xxxxxx must xxxx xx the xxxx C) unequal xxxxxxx other sources xx income xxxx xxxxxx D) xxxxxxx because incomes xxxxxx by age xxxxxxx D30)One xxxxxx xxxxxxxx tend xx fall before xxxxxxxxxx age is xxxxxxxxx experience xx xxxxxx is xx longer valuable xxxxx they are xx or xx xxxxxxxx tend xx reduce the xxxxxx of hours xxxx work xxxxx xxx 50 xxxxxxxx are retiring xxxxxxx D)firms discriminate xxxxxxx older xxxxxxx xxxxxxx B xxxxxxxx to the xxxxx figure Which xx the xxxxxx xxx consistent xxxx the age-earnings profile? A) xxxxx AB) Panel x C) xxxxx x D) xxxxx D Answer: x 32)In a xxxxxxxxxxx economy, xxxxxxx xxxx be xxxx according to xxxxxxxxxxxxx B)age C)marginal xxxxxxxxxxxx D)need xxxxxxx xxxxxxxxx of xxx following is xxx a determinant xx an xxxxxxxxxxxx xxxxxxxx product? xx talentB) money xxxxxx C) experienceD) xxxxxxxxxxx level xxxxxxx xxxxxxxxx of xxx following sources xx productivity is xxx most xxxxxxxxx xx acquire? xx educationB) experience xx talentD) training xxxxxxx C xxxxxx xxxxxx on xxxxx capitalA)tends to xx much greater xxxx the xxxxxx xx physical xxxxxxx B)tends to xx much lower xxxx the xxxxxx xx physical xxxxxxx C)is similar xx the return xx physical xxxxxxx xxxxxxxx be xxxxxxx to the xxxxxx on physical xxxxxxx since xxxxx xxxxxxx and xxxxxxxx capital are xx different Answer: x 36) xxx xxxx cost xx a college xxxxxxxxx isA)tuition if xxx goes xx x private xxxxxxx and room xxx board if xxx goes xx x public xxxxxxx B)dependent upon xxxxxxx one’s parents xxx for xxx xxxxxxx or