Econ Micro (book Only)
Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 18, Problem 1P
To determine

Reason for shift of the U.S. income distribution in last two decades.

Expert Solution & Answer
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Explanation of Solution

In recent decades(from 1980s onward), the share of income earning by the top fifth has increased, and the share earnings by the bottom fifth has declined. The richest fifth’s share of income increased from 43.7 percent in 19900= to 51.1 percent in 2014. The foremost contributor to the larger share of income earning by the highest group has been the growth of two-earner households in that top group.

Note that in the top quantile, almost three out of the four households have two or more than two working. A major contributor to the smallest share earned by the lowest group has been the growth of single parent household in the bottom group.

Because of significant reduction in the marginal tax rates (in 1990 and 1996), high-income people had no incentive to engage in avoidance of tax, so their reported income increased. This boosted the share of reported earned income by the richest 5 percent of the households.

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(a) Briefly explain the National Income Accounts and the balance of payments (b) Briefly describe any two macro-policies by the government of Zambia which are aimed at promoting the agricultural sector in Zambia.3|| Page (c) Using the economic information in the table below, you are required to calculate the GDP for the economy represented by this information. Table.1. Information about GDP ITEM VALUE (K) Final Sales to Consumers 4,924,300,00O Final Sales to Businesses 1,065,300,000 Final Sales to Government 1,358,500,000 Final Sales to Foreigners - 102,300,000
Page 551 5. Using the following national income accounting data, compute (a) GDP, (b) NDP, and (c) NI. All figures are in bilions. Compensation of employees $194.2 U.S. exports of goods and services 17.8 Consumption of fixed capital 11.8 Government purchases 59.4 Taxes on production and imports 14.4 Net private domestic investment 52.1 Transfer payments U.S. Imports of goods and services 13.9 16.5 Personal taxes 40.5 Net foreign factor income 2.2 Personal consumption expenditures 219.1 Statistical discrepancy
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