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80 70 SWE DEN NOR 60 NLD FIN 50 NZL JPN CHE CAN AUS 40 AUT ESP "IRL ITA DEU USA 30 GBR BEL GRC ISR 20 FRA SGP 10 PRT 2 6. 7 10 Income inequality (Ratio q5/q1) Line of best fit: Y = 77.05 -6.53 X R = 0.44 Figure 7 Trust in relation to income inequality for selected OECD countries Based on data from Wilkinson and Pickett (2009) The graph in Figure 7 plots a variable Y against a variable X for 23 OECD countries using 2005 data. Variable Y is an indicator of the level of trust in a country (measured by the percentage of the population who agree with the statement 'Most people can be trusted'). Variable X is a measure of income inequality (measured as the ratio of the disposable income of the top quintile, q5, to the disposable income of the bottom quintile, q1). Figure 7 also shows the regression equation for the line of best fit and the value of R2 which measures the strength of association between X and Y. This question has two parts; please answer both part (i) and part (ii). i) Examine Figure 7 and select the statements which are correct. (Choose one or more answers) O R2 at around 0.44 indicates a positive association between the two variables. O Under half of the variability of the proportion of people who agree with the trust statement is associated with the variability of the level of income inequality. O The higher the level of income inequality, the larger the proportion of respondents who trust each other. O The more respondents agree that people can be trusted, the lower the level of income inequality in a country. ii) Using the regression equation, calculate the change in the percentage of people who agree with the trust statement (change in variable Y) associated with a decrease in the inequality indicator (change in variable X) of 2. Give your answer to two decimal places. percentage points Proportion agreeing: 'Most people can be trusted' (%)

80 70 SWE DEN NOR 60 NLD FIN 50 NZL JPN CHE CAN AUS 40 AUT ESP "IRL ITA DEU USA 30 GBR BEL GRC ISR 20 FRA SGP 10 PRT 2 6. 7 10 Income inequality (Ratio q5/q1) Line of best fit: Y = 77.05 -6.53 X R = 0.44 Figure 7 Trust in relation to income inequality for selected OECD countries Based on data from Wilkinson and Pickett (2009) The graph in Figure 7 plots a variable Y against a variable X for 23 OECD countries using 2005 data. Variable Y is an indicator of the level of trust in a country (measured by the percentage of the population who agree with the statement 'Most people can be trusted'). Variable X is a measure of income inequality (measured as the ratio of the disposable income of the top quintile, q5, to the disposable income of the bottom quintile, q1). Figure 7 also shows the regression equation for the line of best fit and the value of R2 which measures the strength of association between X and Y. This question has two parts; please answer both part (i) and part (ii). i) Examine Figure 7 and select the statements which are correct. (Choose one or more answers) O R2 at around 0.44 indicates a positive association between the two variables. O Under half of the variability of the proportion of people who agree with the trust statement is associated with the variability of the level of income inequality. O The higher the level of income inequality, the larger the proportion of respondents who trust each other. O The more respondents agree that people can be trusted, the lower the level of income inequality in a country. ii) Using the regression equation, calculate the change in the percentage of people who agree with the trust statement (change in variable Y) associated with a decrease in the inequality indicator (change in variable X) of 2. Give your answer to two decimal places. percentage points Proportion agreeing: 'Most people can be trusted' (%)

Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter20: Poverty, Inequality, And Discrimination
Section: Chapter Questions
Problem 5DQ
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80 70 SWE DEN NOR 60 NLD FIN 50 INZL JPN CAN CHE 40 AUS AUT USA ESP "IRL ITA DEU GBR 30 BEL GRC ISR 20 FRA SGP 10 PRT 2 3 4 6. 7 8 9 10 Income inequality (Ratio q5/q1) Line of best fit: Y = 77.05 –- 6.53 X R2 = 0.44 Figure 7 Trust in relation to income inequality for selected OECD countries Based on data from Wilkinson and Pickett (2009) The graph in Figure 7 plots a variable Y against a variable X for 23 OECD countries using 2005 data. Variable Y is an indicator of the level of trust in a country (measured by the percentage of the population who agree with the statement 'Most people can be trusted'). Variable X is a measure of income inequality (measured as the ratio of the disposable income of the top quintile, q5, to the disposable income of the bottom quintile, q1). Figure 7 also shows the regression equation for the line of best fit and the value of R2 which measures the strength of association between X and Y. This question has two parts; please answer both part (i) and part (ii). i) Examine Figure 7 and select the statements which are correct. (Choose one or more answers) O R2 at around 0.44 indicates a positive association between the two variables. O Under half of the variability of the proportion of people who agree with the trust statement is associated with the variability of the level of income inequality. O The higher the level of income inequality, the larger the proportion of respondents who trust each other. O The more respondents agree that people can be trusted, the lower the level of income inequality in a country. ii) Using the regression equation, calculate the change in the percentage of people who agree with the trust statement (change in variable Y) associated with a decrease in the inequality indicator (change in variable X) of 2. Give your answer to two decimal places. percentage points Proportion agreeing: 'Most people can be trusted (%)
Transcribed Image Text:80 70 SWE DEN NOR 60 NLD FIN 50 INZL JPN CAN CHE 40 AUS AUT USA ESP "IRL ITA DEU GBR 30 BEL GRC ISR 20 FRA SGP 10 PRT 2 3 4 6. 7 8 9 10 Income inequality (Ratio q5/q1) Line of best fit: Y = 77.05 –- 6.53 X R2 = 0.44 Figure 7 Trust in relation to income inequality for selected OECD countries Based on data from Wilkinson and Pickett (2009) The graph in Figure 7 plots a variable Y against a variable X for 23 OECD countries using 2005 data. Variable Y is an indicator of the level of trust in a country (measured by the percentage of the population who agree with the statement 'Most people can be trusted'). Variable X is a measure of income inequality (measured as the ratio of the disposable income of the top quintile, q5, to the disposable income of the bottom quintile, q1). Figure 7 also shows the regression equation for the line of best fit and the value of R2 which measures the strength of association between X and Y. This question has two parts; please answer both part (i) and part (ii). i) Examine Figure 7 and select the statements which are correct. (Choose one or more answers) O R2 at around 0.44 indicates a positive association between the two variables. O Under half of the variability of the proportion of people who agree with the trust statement is associated with the variability of the level of income inequality. O The higher the level of income inequality, the larger the proportion of respondents who trust each other. O The more respondents agree that people can be trusted, the lower the level of income inequality in a country. ii) Using the regression equation, calculate the change in the percentage of people who agree with the trust statement (change in variable Y) associated with a decrease in the inequality indicator (change in variable X) of 2. Give your answer to two decimal places. percentage points Proportion agreeing: 'Most people can be trusted (%)
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