From 1970 to 2006, the largest percentage increase in average real income for households in the United States occurred in which quintile?
A) the bottom quintile
B) the second quintile
C) the middle quintile
D) the top quintile
D
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You are an economist for the City Subway Commission. Presently, the price of a subway ride is 80¢, and 200,000 seats are filled weekly. The price elasticity of demand for subway rides is -0.40, and the income elasticity of demand is -0.60.
(i) The Commission wants to ensure that the subway has enough excess capacity to handle any extra demand that might occur during an economic decline. If a recession lowered area incomes by 5%, how many additional seats per week would the subway need? (ii) The Commission has just approved a subway price increase of 10¢ per ride. The Commission wants to know if it can use the opportunity to retire two aging subway cars that each provide 8,000 seats weekly. When the price hike goes into effect, can neither, one, or both cars be retired?
Which of the following statements describes what most likely occurred in this economy?
a. Unemployment fell below the natural rate of unemployment.
b. There was a temporary negative shock to demand-side forces.
c. A rightward shift in SRAS caused an inflationary gap.
d. An increase in input prices caused a recessionary gap.
Refer to the above diagram. An expansionary fiscal policy can best be represented by a:
A. shift in the aggregate demand curve from AD3 to AD2. B. shift in the aggregate demand curve from AD1 to AD2. C. movement along the aggregate demand curve. D. shift in the aggregate demand curve from AD2 to AD1.
Should people typically pay more attention to their real income or their nominal income? If you choose the latter, why would that make sense in today’s world? Would your answer be the same for the 1970s?
What will be an ideal response?