What is the sociopolitical significance of income shares; that is, what might income shares tell us about the overall character of our society? What implications might income shares have for economic stability? For economic growth?
What will be an ideal response?
The greater degree of income coming from property income, the greater amount of income is earned by the wealthy who own the land, capital, and entrepreneurial resources. Unless wealth is very evenly distributed, which it is not, the greater amount going to property income means more inequality in the distribution of income. It also means, of course, a lesser share going to labor. Since profits, rent, and interest income tend to be less stable than labor income, the greater the share going to these income forms, the greater the economic instability. The promise of profits and a return on capital are vital for economic growth. At the same time, there seems to be a certain stability in the relative shares going to labor and capital over time, which would suggest that labor needs to maintain its share as incentive for increasing productivity. In other words, the owners of all types of resources, labor, land, and capital must have the promise of income reward for a healthy, growing economy.
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The substitution effect of a change in the price of bananas refers to the way in which a change in the
a. price of a substitute affects the demand for bananas b. price of bananas affects the ability to buy them c. relative price of bananas changes demand for them d. relative price of bananas changes the quantity demanded of bananas e. price of a substitute affects the quantity demanded of bananas
Since World War II,
A. air pollution has worsened in most U.S. cities. B. many new pollutants have been introduced or identified. C. the federal government has reduced its reliance on economic incentives as a means of reducing pollution. D. the United States has polluted more per capita than China and India.
Which of the following allows an economist to conclude that the welfare or happiness of society as a whole is clearly increasing?
A) A decrease in nominal GDP B) A decrease in real GDP C) An increase in nominal GDP D) An increase in real GDP E) None of the above.
The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit. If the wage is $5 per hour, a ten cent specific tax on the good sold by the firm will cause the firm to
A) demand less labor. B) demand more labor. C) offer its workers only $4.90 per hour. D) hire 0 units of labor per hour.