quanda20 - Chapter 20 1. a. Use Table 20.2 from Chapter 20...

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Practice Questions to accompany Mankiw & Taylor: Economics 1 Chapter 20 1. Use Table 20.2 from Chapter 20 in your text to answer this question. a. In the most recent year available, what percentage of income did the bottom fifth of the income distribution receive? What percent of income did the top fifth of the distribution receive? Roughly, what is the relationship between what the bottom fifth received and what the top fifth received? Answer: Bottom fifth = 7.5 per cent. Top fifth = 42.0 per cent. The top fifth received nearly six times what the bottom fifth received. b. What is the range of the percentage of income received by the bottom fifth of the income distribution over the last 33 years? What is the range for the top fifth? Describe the trend for each group over the last 33 years. Answer: Bottom fifth range is from 10.0 per cent to 7.5 per cent. Top fifth range is from 35.0 per cent to 42.0 per cent. For the bottom fifth, their share fell between 1979 and 1990 and appears to have remained constant thereafter. For the top fifth, their share rose between 1979 and 1990 and seems to have remained quite constant since. c. Describe three reasons why the measure of income distribution used in Table 20.2 in Chapter 20 may not truly measure someone's ability to maintain a certain standard of living. As a result, are the standard measures of income distribution likely to exaggerate or understate the true distribution of the standard of living? Explain. Answer:
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quanda20 - Chapter 20 1. a. Use Table 20.2 from Chapter 20...

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