In the United States, the richest quintile of the population receives 13 times as much income as the poorest quintile. However, the richest quintile only spends 4 times as much as the poorest quintile. Identify the possible reason or reasons for this stark difference between income inequality and consumption inequality. The poverty line does not reflect relative poverty. Intergenerational mobility allows children to consume more than their parents. The richest quintile has the ability to save a larger percentage of its income. Individuals experiencing temporary fluctuations in their incomes are more likely to maintain moderate spending habits. O O
In the United States, the richest quintile of the population receives 13 times as much income as the poorest quintile. However, the richest quintile only spends 4 times as much as the poorest quintile. Identify the possible reason or reasons for this stark difference between income inequality and consumption inequality. The poverty line does not reflect relative poverty. Intergenerational mobility allows children to consume more than their parents. The richest quintile has the ability to save a larger percentage of its income. Individuals experiencing temporary fluctuations in their incomes are more likely to maintain moderate spending habits. O O
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter12: Income Distribution, Poverty, And Discrimination
Section: Chapter Questions
Problem 17SQ
Related questions
Question
Transcribed Image Text:In the United States, the richest quintile of the population receives 13 times as much income as the poorest quintile. However,
the richest quintile only spends 4 times as much as the poorest quintile.
Identify the possible reason or reasons for this stark difference between income inequality and consumption inequality.
The poverty line does not reflect relative poverty.
Intergenerational mobility allows children to consume more than their parents.
The richest quintile has the ability to save a larger percentage of its income.
Individuals experiencing temporary fluctuations in their incomes are more likely to maintain moderate spending habits.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Survey of Economics (MindTap Course List)
Economics
ISBN:
9781305260948
Author:
Irvin B. Tucker
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning