Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 33, Problem 12E
To determine
(a)
To explain:
Whether it is expected to see a case in which Gini coefficient for a nation is smaller than the average of the Gini coefficients for all nations.
To determine
(b)
To explain:
Whether it is expected to see a case in which the Gini coefficient for income distribution among nations is larger than the average of all nations.
To determine
(c)
To explain:
Whether it is expected to see a case in which Gini coefficient is zero.
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The table shows the distribution of market income.
Suppose the government redistributes income by taxing
the 60 percent of households with the highest market
incomes 10 percent, then distributing the tax collected
as an equal benefit to the 40 percent with the lowest
market income.
What percentage of total market income is redistributed
to the second 20 percent of households?
What is the income share of the third 20 percent of
households after tax and redistribution?
>>> Answer to 1 decimal place.
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The second 20 percent of households receives benefits
equal to percent of total market income.
The third 20 percent of households earns percent of
total income after tax and benefits.
I
point(s)
Households
Lowest 20 percent
Second 20 percent
Third 20 percent
Fourth 20 percent
Highest 20 percent
Market income
(percentage of total
market income)
5
9
20
30
36
Next
1. How does the population of a low-income country such as Ethiopia differ from that of a high-income nation such as the United States in terms of poverty? Do you think the people living in high-income nations have a responsibility to address poverty in the rest of the world ? If so, why? If not, why not?
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Similar questions
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- Explain how a country may experience greater equality in the distribution of income, yet still experience high rates of poverty Hint: Look at the Clear It Up "How is poverty measured in low-income countries?" and compare to Table 14.5. Table 14.5arrow_forwardWhat is the urban inequality rate compared to national inequality rate in Rio de Janeiro? Give a comparison of urban poverty and urban inequality rates in Rio.arrow_forwardWhen does absolute poverty exist? Do we see this in the Philippines? defend your answerarrow_forward
- How does inequality affect the developing countries? (Example The Philippines).arrow_forwardExplain the vicious circle of poverty that afflicts low-income nations.arrow_forwardThe Lorenz curve is used to show which of the following? a. The total income generated from all activities b. The degree of inequality in the distribution of income within a country c. The progressivity of the income-tax structure within a country d. The extent of wage differences among workers in similar occupations e. The change in the poverty rate within a country over timearrow_forward
- 4. a. Draw, on the same graph, a Lorenz curve representing Perfect income equality Perfect income inequality i. ii. ii. A typical rich country with a lot of redistribution A typical middle-income country with little redistribution b. Consider a country that makes its social support programs (like “food stamps", insurance, or programs that provide goods like housing or health care to the poor) more generous, while taxing the rich more in order to fund the programs. How will that economy's Lorenz curve change? c. Suppose a country becomes richer, such that over 10 years, every person's income exactly doubles. What happens to that economy's Lorenz curve? iv. unemploymentarrow_forwardWhich statements are TRUE? Perfect inequality in distribution of income can be exhibited in reality. Holding all other incomes constant, if we transfer some income from a richer person to a poorer person, the resulting new income distribution is more unequal. There is absolute poverty below the international poverty line. Modern sector enlargement assures a better Lorenz Curve for a nation. The average poverty gap measures the sum of the differences the income of each person from the absolute poverty line. The multidimensional poverty index gives equal weight to all eight indicators. The normalized income shortfall is a measure of income inequality. When government’s intervention to poverty and income inequality are thoroughly planned, implemented and monitored, a nation is secured of achieving economic development. When the S-shaped function cuts the 45-degree line of equality from above, the equilibrium achieved is stable. Underdevelopment can be fully explained by coordination…arrow_forwardShould a nation’s income be distributed to its members according to their contributions to the production of that total income or according to the members’ needs? Should society attempt to equalize income or economic opportunities? Are the issues of equity and equality in the distribution of income synonymous? To what degree, if any, is income inequality equitable?arrow_forward
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