Principles of Economics- Mankiw (5th) 427

Principles of Economics- Mankiw (5th) 427 - CHAPTER 20...

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CHAPTER 20 INCOME INEQUALITY AND POVERTY 439 ± What problems arise in measuring the amount of inequality? ± How often do people move among income classes? These measurement questions are the natural starting point from which to discuss public policies aimed at changing the distribution of income. U.S. INCOME INEQUALITY There are various ways to describe the distribution of income in the economy. Table 20-1 presents a particularly simple way. It shows the percentage of families that fall into each of seven income categories. You can use this table to find where your family lies in the income distribution. For examining differences in the income distribution over time or across coun- tries, economists find it more useful to present the income data as in Table 20-2. To see how to interpret this table, consider the following thought experiment. Imag- ine that you lined up all the families in the economy according to their annual in- come. Then you divided the families into five equal groups: the bottom fifth, the
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