Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 20, Problem 1DQ
To determine
Leaky bucket analogy.
Expert Solution & Answer
Explanation of Solution
When the government introduces the process of redistribution of income among its citizens to reduce the income inequality of the economy, there merges many leaks in the income, and they are together known as the leaky bucket. When the topic of leaky bucket analogy is discussed, the students who are interested in more equitable distributionwould be willing to accept a greater leakage in percentage terms. On the other hand, the students who are more interested in efficiency, they will accept a much lesser percentage.
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Students have asked these similar questions
Which of the following statements is not correct?
Select one:
a.
The economic life cycle theory explains why gifts of goods and services reduce poverty for the very young and the very old.
b.
Because people can borrow and save to smooth out changes in income, their standard of living in any one year depends more on lifetime income than on a particular year's income.
c.
The percentage of the population that suffers from long-term poverty is far smaller than the percentage of the population that suffers from short-term poverty because there is a high level of economic mobility in the United States.
d.
Permanent income is a better measure of a family's ability to buy the necessities of life than is transitory income.
What would best explain why economics is important for understanding policies that deal with
inequality and poverty?
When a policy changes, people tend to change the way they behave.
Poverty and inequality involve measuring income in currency.
Economics gives strong moral reasons for dealing with these issues.
Which set of policies is more likely to cause a tradeoff between economic output and equality: policies of redistribution or policies aimed at the ladder of opportunity? Explain how the production possibility frontier tradeoff between economic equality and output might look in each case.
Chapter 20 Solutions
Economics: Principles & Policy
Knowledge Booster
Similar questions
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