Principles of Microeconomics
8th Edition
ISBN: 9781337470384
Author: N. Gregory Mankiw
Publisher: Cengage Learning US
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Question
Chapter 20, Problem 2CQQ
To determine
The comparison of income inequality between US and other countries.
Expert Solution & Answer
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Students have asked these similar questions
A10.
What is “relative inequality” and how is it measured? How is relative inequality different to absolute inequality?
The figure below shows the distribution of income across and within countries in 2014.
The height of each bar represents the annual income of the population (for each decile),
measured in 2005 US$, while the width of each country's bar represents its population.
The red countries were the poorest countries in 1980, while the green countries were the
richest in 1980.
80,000
60,000-
40,000-
20,000-
India
Nigeria
Indonesia Botswana China
Brazil
Japan
US
UK Norway
Poorer countries
2014
Richer countries
Annual income (2005 $ PPP)
Economists experience difficulties in accurately measuring income inequality because of which of the following?
Choose one or more:
A. The Gini index calculation discriminates against the poor in developed economies.
B. Government programs are inefficient and difficult to monitor.
C. large, underground economies that lack the reporting of income to the government
D. Measurements tend to use "before tax" income, not "after tax" income (disposable income), which is the
income people actually have available to purchase goods and services.
E. The population size of an economy impacts the distribution of data, causing large economies to show more
inequality than smaller economies.
F. do-it-yourself production of goods and services (such as growing own food or making own clothing) that are
not bought or sold in the market
G. in-kind transfers where goods and services are given as aid to the poor instead of cash
Chapter 20 Solutions
Principles of Microeconomics
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- US has one of the World's largest income inequality disparities. Discuss the reasons for this Gap. List at least four reasons.arrow_forwardWhich of the following statements are true about income inequality? Choose all that apply. A. Income inequality in the United States can be largely blamed on corruption. B. Extreme income inequality can be harmful to society C. Income inequality in the United States has improved dramatically over the last few decades D. Income inequality will likely always exist in free societies with free marketsarrow_forward"How can Income Inequality in the United States be Reduced"?arrow_forward
- Select all facts about the evolution of inequality in the world between 1960 and 2017? U Inequality at the individual level has decreased. The proportion of poor countries has increased. Inequality at the individual level did not increase as much as inequality at the country level. Inequality of the real per capita GDP across countries has increased. Inequality at the individual level has increased. The proportion of poor countries has decreased. Inequality of the real per capita GDP across countries has decreased. Inequality at the individual level did not decrease as much as inequality at the country level.arrow_forwardWhat is poverty and why do we need to measure poverty in the country?arrow_forwardSuppose country A has five families. Their incomesare $10,000, $20,000, $30,000, $40,000, and $50,000.What is the average income of families.arrow_forward
- (a) Suppose that your professor asks you to compare China and India based on income inequality. Which measure would you use and explain how would you determine which country is doing better based on the chosen measure? (b) Suppose that your professor asks you to compare China and India based on economic development. Which measure would you use and explain how would you determine which country is dbing better based on the chosen measure?arrow_forwardIn order to measure income inequality, economists look at how income is distributed in ... Group of answer choices a. quintiles b. degrees c. five percent brackets d. ten percent bracketsarrow_forwardHow do gains in income inequality influence economic growth and expenditure rates?arrow_forward
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