Look at the following ratios: • 90/10 ratio the ratio of Decile 10 income to Decile 1 income • 90/50 ratio the ratio of Decile 10 income to Decile 5 income (the median) • 50/10 ratio = the ratio of Decile 5 income (the median) to Decile 1 income. (a) For each of these ratios, explain why policymakers might want to compare the two deciles in the income distribution. (b) What kinds of policies or events could affect these ratios?

Look at the following ratios: • 90/10 ratio the ratio of Decile 10 income to Decile 1 income • 90/50 ratio the ratio of Decile 10 income to Decile 5 income (the median) • 50/10 ratio = the ratio of Decile 5 income (the median) to Decile 1 income. (a) For each of these ratios, explain why policymakers might want to compare the two deciles in the income distribution. (b) What kinds of policies or events could affect these ratios?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: The Distribution Of Income And Poverty

Section15.2: Measuring Income Equality

Problem 1ST

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Look at the following ratios:⚫ 90/10 ratio= the ratio of Decile 10 income to Decile 1 income• 90/50 ratio = the ratio of Decile 10 income to Decile 5 income (the median)• 50/10 ratio = the ratio of Decile 5 income (the median) to Decile 1 income.(a) For each of these ratios, explain why policymakers might want to compare the two deciles in the income distribution.(b) What kinds of policies or events could affect these ratios?
Consider the national income model:Y = C + I0 + G0 + (X0 − M) … … . . … . (1)C = a + byd, (a > 0,0 < b < 1) … … . (2)Yd = Y − T … … … … … … … … … … … . . . (3)T = T0 + ty … … … … … … … … … … … . . (4)M = M0 + my … … … … … … … … … … . . (5)Where: (T) = taxes, (t) = income tax rateIdentify: 4/ Behavioral equations.5/ Definitional equation.6/ Constants., give the Economic meaning of them.7/ Coefficients. give the Economic meaning of them.
Suppose there are two possible income distributionsin a society of ten people. In the first distribution,nine people have incomes of $60,000 and one personhas an income of $20,000. In the second distribution,all ten people have incomes of $50,000.a. If the society had the first income distribution,what would be the utilitarian argument forredistributing income?b. Which income distribution would Rawls considermore equitable? Explain.c. Which income distribution would Nozick considermore equitable? Explain.
Given: C = 250 + 0.8 Y I = 150 G = 300 TR = 100 NX = 100 t =0.25 i) Find the equilibrium level of income. ii) Suppose, because of current COVID-19 situation C falls to 50, MPS falls to .05, I falls to 10, G falls to 100 and NX falls to 10. How much TR should the government increase to have the same level of equilibrium income as in part i)? iv) Draw a graph to show the appropriate changes between part i) and part ii).
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Suppose there is an economy where 80 percent ofpeople earn more than their parents and 40 percentend up in a different income quintile than theirparents. What measure of the income distributiondoes the first statistic tell you about? What aboutthe second?