The above table shows the distribution of income in two imaginary countries, Alpha and Beta
a) What does the table tell you about the second 20 percent group in each country?
b) Calculate the cumulative percentage for both countries.
c) Interpret the cumulative percentage for the third 20 percent group in both countries.
a) The second 20 percent group earns 10 percent of the income in country Alpha and 6 percent of the income in country Beta.
Household percentage Cumulative percentage of income Alpha Cumulative percentage of income Beta
Lowest 20 percent 5 3
Second 20 percent 15 9
Third 20 percent 35 21
Fourth 20 percent 65 45
Highest 20 percent 100 100
b) The table above has the cumulative percentages.
c) In country Alpha, the poorest 60 percent of households earns 35 percent of income. In country Beta, the poorest 60 percent of households earns 21 percent of income.
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Since the 1950s
A) U.S. business cycle fluctuations have become milder. B) U.S. business cycle fluctuations have not changed. C) U.S. business cycle fluctuations have becomes more volatile. D) the United States has not experienced a business cycle.
One productivity standard for income distribution stated in the text is
A) income distribution should be based on contribution to society's total output. B) tax payments are higher for higher income people. C) poor people pay too much in taxes. D) the poor should contribute more to society.
The total social cost of production is equal to
A) external cost minus internal cost. B) internal cost minus external cost. C) external cost plus internal cost. D) internal cost plus opportunity cost.
Most Keynesians suggest that the Fed
A. use fiscal policy to combat inflation in the long run. B. follow a rule, such as keeping the money growth rate at 3%, regardless of the state of the economy. C. use discretion in setting monetary policy. D. use fiscal policy to combat unemployment in the short run.