UCSB ECON 1 - EXAM 1 Questions
with Correct Answers 2026
Income inequality - CORRECT ANSWER -when there is a significant disparity in the distribution
of income, where some people or groups have much more money or earnings than others. It is
large and rising in the U.S.
21% of overall income - CORRECT ANSWER -What percentage of the total income do the top 1%
of Individuals earn?
10% of overall income - CORRECT ANSWER -What percentage of the total income do the top
0.1% of Individuals earn?
Income inequality in the U.S. - CORRECT ANSWER -The U.S. shows higher levels of income
inequality than other advanced democracies
Which is larger? Wealth inequality or Income Inequality? - CORRECT ANSWER -Wealth
inequality is even larger than income inequality
40% of overall wealth - CORRECT ANSWER -What percentage of the total wealth do the top 1%
of Individuals own?
90% of overall wealth - CORRECT ANSWER -What percentage of the total wealth do the top 20%
of Individuals own?
Unawareness of inequality - CORRECT ANSWER -Most individuals are unaware of high levels of
inequality and would prefer wealth and income to be more evenly distributed
, Intergenerational mobility - CORRECT ANSWER -The extent to which children of poor parents
earn as much as children of rich parents
Inherited advantage - CORRECT ANSWER -Approximately 50% of your (dis-)advantage is
inherited from parents in the U.S.
Positive correlation - CORRECT ANSWER -There is a positive correlation between income
inequality and intergenerational persistence
Poverty rate - CORRECT ANSWER -The fraction of people below the poverty line; approximately
12% in the U.S.
Poverty line - CORRECT ANSWER -The income level below which a family is considered poor
Absolute poverty measures - CORRECT ANSWER -Measures the adequacy of resources to
maintain a basic standard of living
Relative poverty measures - CORRECT ANSWER -Measures the adequacy of resources relative to
others in society
minorities, children, single mothers, and the unemployed - CORRECT ANSWER -What groups
have the highest poverty rates?
Long-term poverty - CORRECT ANSWER -Most poor individuals are in long-term poverty (median
duration > 8 years)
Safety net programs - CORRECT ANSWER -Programs that can reduce poverty but come at a cost
with Correct Answers 2026
Income inequality - CORRECT ANSWER -when there is a significant disparity in the distribution
of income, where some people or groups have much more money or earnings than others. It is
large and rising in the U.S.
21% of overall income - CORRECT ANSWER -What percentage of the total income do the top 1%
of Individuals earn?
10% of overall income - CORRECT ANSWER -What percentage of the total income do the top
0.1% of Individuals earn?
Income inequality in the U.S. - CORRECT ANSWER -The U.S. shows higher levels of income
inequality than other advanced democracies
Which is larger? Wealth inequality or Income Inequality? - CORRECT ANSWER -Wealth
inequality is even larger than income inequality
40% of overall wealth - CORRECT ANSWER -What percentage of the total wealth do the top 1%
of Individuals own?
90% of overall wealth - CORRECT ANSWER -What percentage of the total wealth do the top 20%
of Individuals own?
Unawareness of inequality - CORRECT ANSWER -Most individuals are unaware of high levels of
inequality and would prefer wealth and income to be more evenly distributed
, Intergenerational mobility - CORRECT ANSWER -The extent to which children of poor parents
earn as much as children of rich parents
Inherited advantage - CORRECT ANSWER -Approximately 50% of your (dis-)advantage is
inherited from parents in the U.S.
Positive correlation - CORRECT ANSWER -There is a positive correlation between income
inequality and intergenerational persistence
Poverty rate - CORRECT ANSWER -The fraction of people below the poverty line; approximately
12% in the U.S.
Poverty line - CORRECT ANSWER -The income level below which a family is considered poor
Absolute poverty measures - CORRECT ANSWER -Measures the adequacy of resources to
maintain a basic standard of living
Relative poverty measures - CORRECT ANSWER -Measures the adequacy of resources relative to
others in society
minorities, children, single mothers, and the unemployed - CORRECT ANSWER -What groups
have the highest poverty rates?
Long-term poverty - CORRECT ANSWER -Most poor individuals are in long-term poverty (median
duration > 8 years)
Safety net programs - CORRECT ANSWER -Programs that can reduce poverty but come at a cost
