Title: QUIZ: Education, Income, and Wealth -- Page One Economics®
Course: Kelly's Copying and Exporting Course > Section: Education, Income, and Wealth -- Page One Economics®

Q: What has been the trend in income inequality in the United States since the 1970s?
- Increasing steadily
- Decreasing steadily
- Remaining stable
- Fluctuating without a clear trend
A: Increasing steadily

Q: According to the essay, the primary use of income for most people is to
- save and build wealth.
- pay taxes, buy goods and services, and save.
- invest in the stock market.
- donate to charity.
A: pay taxes, buy goods and services, and save.

Q: Which of the following correctly distinguishes income from savings?
- Income is a stock of wealth, while savings is a regular flow of money.
- Income and savings are both flow variables representing regular earnings.
- Income is future spending, while savings is current consumption.
- Income is a flow of money earned, while savings is the accumulated money set aside.
A: Income is a flow of money earned, while savings is the accumulated money set aside.

Q: Which of the following best describes wealth?
- Wealth is the total value of a person’s income over their lifetime.
- Wealth is the total value of a person’s assets minus their liabilities.
- Wealth refers only to the value of a person’s liquid assets.
- Wealth is the annual amount of money a person saves and invests.
A: Wealth is the total value of a person’s assets minus their liabilities.

Q: What financial behavior is common among well-educated families to build wealth?
- Spending all income on consumption
- Investing in a single type of asset
- Keeping debt low relative to assets
- Relying solely on inheritances
A: Keeping debt low relative to assets

Q: People invest in human capital, such as education, to
- save money for the future.
- increase income and job opportunities.
- avoid paying taxes.
- reduce their net worth.
A: increase income and job opportunities.

Q: Which of the following statements best describes how income changes over a person's lifetime according to the Life Cycle Theory?
- Income remains constant throughout a person's life.
- Income generally starts high in early adulthood and decreases in later years.
- Income is typically low in early adulthood, peaks during midlife, and decreases in retirement.
- Income only increases continuously from youth to retirement.
A: Income is typically low in early adulthood, peaks during midlife, and decreases in retirement.

Q: What does the term "consumption smoothing" mean in the context of the Life Cycle Theory?
- Spending only on essential items throughout one’s life
- Adjusting consumption to match income changes exactly
- Reducing consumption significantly during retirement to save money
- Keeping consumption steady despite income fluctuations
A: Keeping consumption steady despite income fluctuations

Q: According to the Life Cycle Theory, individuals tend to save during their peak earning years to
- cover current expenses and maintain lifestyle.
- build wealth for future periods of lower income, like retirement.
- minimize tax liabilities on their income.
- invest in high-risk assets for short-term gains.
A: build wealth for future periods of lower income, like retirement.

Q: What does “correlation does not imply causation” mean regarding education and income?
- A link between education and income doesn’t mean one causes the other.
- Education always guarantees a higher income.
- Higher income always leads to more education.
- Education and income are not related in any way.
A: A link between education and income doesn’t mean one causes the other.