What is the difference between the functional and the personal distribution of income?
What will be an ideal response?
The functional distribution of income shows how total income is divided among the factors of production. The personal distribution of income shows how total income is divided among households.
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Following the 2007-2009 financial crisis, many people feared that Greece might leave the euro and resume using the drachma. If that happened, the drachma might be worth less than the euro
When using fiat money like the drachma, the key to acceptance is that households and firms have confidence that if they accept drachma in exchange for goods and services, the drachma will not lose much value during the time they hold them. If sellers were not willing to accept the drachma in exchange for goods and services, the drachma would not serve as A) a medium of exchange. B) fiat money. C) legal tender. D) a unit of account.
The size of the underground economy is probably large when:
A. the cost of doing business legally is low. B. bribes are often necessary to cut through bureaucratic red tape. C. taxes are low. D. All of these statements are true.
According to supply-side economists, lowering corporate income taxes:
a. results in wage hikes for employees but no economic growth. b. moves society toward greater income equality. c. checks the expansion of real GDP and employment. d. stimulates investment and economic growth. e. does not create enough incentive for producers to increase production.
The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is known as
A. Zero coupon bonding. B. Federal funds operations. C. Fiscal policy. D. Open market operations.