Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 23, Problem 5DQ
To determine
The causes of income inequality.
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Which would be evidence of an increase in income inequality over time in the United
States?
O a decrease in the percentage of total personal income received by the highest quintile
O an increase in the percentage of total personal income received by the highest quintile
O an increase in the percentage of total personal income received by the four lowest quintiles
O an increase in the percentage of total personal income received by the lowest quintile
As income transfer programs accompanying the War on Poverty increased beginning in the latter half of the 1960s, what happened to poverty in the
United States? Check all that apply.
O The adjusted poverty rate has declined rapidly and is now less than half of the official poverty rate.
O The poverty rate declined substantially in the period before the War on Poverty, but not in the period after the start of the War on
Poverty.
O In 2018, the adjusted poverty rate was only 4 percentage points lower than the official rate in 1970.
O The War on Poverty has been largely ineffective in reducing the rate of poverty in the United States.
Wealth, earnings, and disposable income are just three of several ways of looking at inequality. Imagine a household that earns $80,000 per year from labor. In that year, it also receives an income of $3,000 from investments, pays $12,000 in tax, and receives $7,000 in transfers from the state. Which of the following is its market income and its disposable income? O $83,000; $71,000. O $83,000 $78,000. O $80,000; $68,000. O $80,000; $75,000. J
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- %24 A household with income that is two-thirds of the poverty threshold has ratio of income to poverty of O 0.67. O 1.50. O 3.20. O0.23. Unit 7- Chapter 1..xlsx 0Unit 7- Chapter 1..xlsx Topic 2 (2).docx Topic 2 (1).docx 11:07 PM 73 F ENG 自 ins prt sc delete f12 pue LL3 114 SI unu backspace -> bock 7. 5. 55 enter () H. pause * shift ctrlarrow_forwardThe government announces programs designed to reduce the share of income going to the top quintile from 60% to 20%. You predict that the most likely result is that: O mean household income will fall, because the highest income earners will earn less and work less. median household income will rise, because some of the 40% of redistributed income will be transferred to the third quintile. after redistribution, each quintile will receive 20% of total wealth. O the lowest quintile will receive the 40% taken from the top quintile and switch places.arrow_forward"Growth and improvement in inequality are important to alleviate poverty.' а. Examine any FOUR (4) factors that can influence poverty eradication and income distribution in Malaysia. [12 marks] b. Describe any FOUR (4) factors that affect the income distribution in Malaysia.arrow_forward
- 4. Suppose country A has the following cumulative distribution of income: Cumulative Cumulative Percent of Percent of Families Total Income 20 5 40 15 50 27 60 30 80 50 90 70 95 82 Compute the quintile shares. What is the share of total income of the top 10 percent of families and of the top 5 percent of families?arrow_forwardCompleted 15 out of 20 Submit All Question 9 of 20 If the poverty guideline for a family of four is $25,750, what is the most that a household can earn to be considered "near- poor"? O $19,312.50 O $12,875 O $32,187.50 O $25,750arrow_forward10. Consider the following distribution of income in a 12-person economy, with the modern urban wage 3, the traditional rural income = 1, and the informal urban wage = 2: (1,1,1,1,2,2,2,2,3,.3,3,3). The poverty line through expanded agricultural exports. What happens to relative inequality? Absolute poverty? Calculate the Ahluwalia-Chenery welfare index for terciles (3 fractiles) under GNP weights and equal weights. Why is the equal-weighted index higher? 1.25. Suppose rural incomes are raised to 1.5arrow_forward
- Show instructions Question 1 Income poverty is about the lack of access to the basic rights of food, clothes and shelter, education, proper health care, clean water -- rights that most of us take for grante ○ True O False Question 2 ( Population is not a direct cause of poverty, but it does compound the problem of poverty. True O False Question 3 Income levels do not necessarily reflect levels of poverty. O True O False Questions 1-10 of 10 | Page 1 of 1 Question 4 War is perhaps the most devastating and serious cause of poverty. O True O False Question 5 The World Bank has established an international poverty line of $10 a day per person in 1985 purchasing power parity (PPP) prices. O True O False Question 6 Analysts have found a strong positive relationship between economic growth and poverty reduction. O True O False Question 7 Most of the world's poor live in South Asia. True O Falsearrow_forward20.7 Essay: How Economic Inequality Arises 1) What is "human capital" and why is it considered an investment? 2) What is "human capital"? How is it important in the determination of a worker's wage rate? 3) How is human capital acquired? 4) How does the demand for high-skilled workers compare to the demand for low-skilled workers? Why does this difference exist? 5) How does an increase in the cost to acquire a skill affect the vertical distance between the supply curves of high-skilled and low-skilled workers?arrow_forwardQuestions: what are some of the dimensions of economic inequality and what is considered income? As in the case of income distribution, calculation of wealth distribution is done by different entities using different measurements, resulting in a disparity in outcomes. In fact, commonly, wealthis narrowly defined as financial wealth—namely, cash on handand the money value of tangible and nonliquid assets. Even justthe market valuation of financial portfolios is commonly used todefine financial wealth. However, some may extend the definitionto include the value of income streams and insurance rights that,for the most part, cannot be transacted or encumbered. Theseinclude Medicare, Medicaid, and Social Security. When suchtransfers and public assistance are included, the poor and manyelderly could benefit, reducing the wealth disparity (Galbraith2016). To obtain net wealth, the value of the debts are subtractedsubtracted from the value of the assets. Galbraith stated thatfinancial wealth…arrow_forward
- The area between the Lorenz curve of a country and the diagonal of perfect equality represents: O A. the area of equality. ОВ. the area of inequality. C. The Gini coefficient. O D. The quantile ratio. O E. the cumulative percentage of the population.arrow_forwardQ-what are some of the dimensions of economic inequality and what is considered income? Page 3 As in the case of income distribution, calculation of wealth distribution is done by different entities using different measurements, resulting in a disparity in outcomes. In fact, commonly, wealthis narrowly defined as financial wealth—namely, cash on handand the money value of tangible and nonliquid assets. Even justthe market valuation of financial portfolios is commonly used todefine financial wealth. However, some may extend the definitionto include the value of income streams and insurance rights that,for the most part, cannot be transacted or encumbered. Theseinclude Medicare, Medicaid, and Social Security. When suchtransfers and public assistance are included, the poor and manyelderly could benefit, reducing the wealth disparity (Galbraith2016). To obtain net wealth, the value of the debts are subtractedsubtracted from the value of the assets. Galbraith stated thatfinancial wealth is…arrow_forwardUse the information above to help answer these last two questions Would this transfer increase, decrease, or have no effect on income inequality in this group? Redistributing income from the highest earner to the lowest one would reduce the utility of the top earner and increase the utility of the lowest earner. But what would happen to overall utility in the economy? Would it increase, decrease, or remain the same? Explain your answer. (Hint: does the marginal utility of income diminish as one earns more?)arrow_forward
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