
The most equally distributed type of income.

Explanation of Solution
Yes, the life cycle income is more equally distributed than the transitory income. This is because when an individual joins an employment after studies, the initial level of salary will be lower and as and when he moves on with experience, his salary also increases. It will reflect on the annual income, which is lower at the younger periods and higher in the elder periods. Thus, people have temporarily high or low income, and this means that the annual income does not represent the true inequality in the living standards. This means that the distribution of income over the life time will be more equal than the income at a specific period.
Life-cycle theory: Life cycle theory developed by Franco Modigliani and Richard Brumberg relates to the spending and saving habits of an individual to the course of their life time.
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Chapter 15 Solutions
Microeconomics: Principles for a Changing World
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