What are the major arguments in the case for income inequality?
What will be an ideal response?
The case for income inequality is based on incentives and economic efficiency. Redistribution of income from the higher-income groups to the lower-income groups reduces the economic incentives of both groups to work, save, or invest. The high-income groups will not reap the full rewards from their efforts and the low-income groups may become less motivated to improve their condition. Thus, the productive output of both groups may be reduced, resulting in less productive activity for the economy and a smaller aggregate income to distribute.
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________ refers to a period when the ________ decreases
A) Recession; growth rate of nominal GDP B) Recession; growth rate of output per person C) Productivity growth slowdown; growth rate of real GDP D) Productivity growth slowdown; growth rate of output per person
Helga owns Viking, Inc., started with her $100,000 inheritance. Helga’s accountant informs her that her firm earned a profit of $100,000 last year, and that if she chooses to invest the money she can expect a 10 percent return. If Helga did not run Viking, she would not work. What were Helga’s economic profits last year?
A. Zero B. $100,000 C. $90,000 D. $95,000
If both money demand and commodity demand are unstable, as many activists believe, which type of policy target would most likely lead to a stable economy? (assume no supply-side shocks, and a fixed price level)
A) money supply target B) real GDP target C) interest rate target D) none of the above
MFP growth represented by a will be higher than the growth of labor productivity if
A) k > n. B) k < n. C) k = n. D) None of the above. The relative size of k and n do not affect MFP growth.