How does the idea of a leaky bucket relate to the study of income distribution?
The idea is drawn from the writings of the late Arthur Okun, who used it to illustrate the trade-off between equality and efficiency. If we wish to transport water with a leaky bucket, some is lost. A small loss may be acceptable, but a larger loss may mean that we need a new bucket. By analogy, an income redistribution program that reduces inequality and entails a small loss of efficiency (GDP output and growth) may be acceptable. However, redistribution that has a large loss of efficiency will be unpopular and may not be wise.
You might also like to view...
Cowboy Hat Markets Cody's Cowboy Hat Emporium has two stores Fort Worth, TX. One in the Stockyards area that caters to tourists and another a mile further north that caters to ranch hands. Why doesn't Cody sell to both customer types out of one store?
The Keynesian equilibrium is defined to be when:
A. planned investment is equal to domestic consumption. B. planned inventories equal to actual inventories, which leads to national net income equal to planned aggregate expenditure. C. planned inventories equal to actual inventories, which leads to national income equal to planned aggregate expenditure. D. planned spending is equal to expected spending from households.
According to the Heckscher-Ohlin theory, if the proportion of labor to capital in a country is greater than the proportion of labor to capital in the rest of the world, we can conclude that the country is labor-abundant and will have a comparative advantage in the production of goods that use labor intensively.
Answer the following statement true (T) or false (F)
Bonnie is debating whether to take a job as a professional therapist or a florist. She will earn $40,000 a year as a therapist or $30,000 a year as a florist. If she chooses to be a therapist, the opportunity cost is
A) $40,000. B) $30,000. C) $10,000. D) unable to determine.