Quintile%2bGroups%2bEffect%2bon%2bGDP%281%29

Quintile%2bGroups%2bEffect%2bon%2bGDP%281%29 - 3. Impact on...

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Impact of a 10% Increase in Output by a Specific Quintile Group Total Output Produced Across All Income Earners (100% of all income earning households) = $10 Trillion $10 Trillion Total output produced by all 5 quintile groups combined (100% of income earners) Breakdown of each quintile's contribution to total output: Top Quintile Group: 60% Bottom Quintile Group: 5% TOP QUINTILE: A 10% increase in output by the Top Quintile would have the following effect on GDP $ 6.00 Tr 60% of $10 Trillion = $6 Trillion $ . 60 Tr A 10% rise in output by this one group alone would cause GDP to rise by $600 Billion 3. Impact on GDP $ 10.6 Tr GDP would increase to: $10.6 Trillion 4. Percent change in GDP BOTTOM QUINTILE: A 10% in output by the Bottom Quintile would have the following effect on GDP $500 B 5% of $10 Tr = $500 Billion $50 B a 10% increase in the income of bottom quintile causes GDP to rise by only $50B
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Unformatted text preview: 3. Impact on GDP $10.05 Tr So, total GDP rises to $10.05 Trillion, and 4. Percent change in GDP: Ratio between a 10% rise in income for top quintile vs. a 10% rise in income for bottom quintile: 12-to-1 Top Quintile's impact on GDP: $ 600 Billion ($600 Billion / $50 Billion) = 12 / 1 or 12-to-1 ratio Bottom Quintile's impact on GDP: $ 50 Billion 1. Calculate the dollar value of top quintile's output 2. Calculate the change in the top quintile's output by 6% % Change in GDP as a result of a 10% rise in this group's output = ($10.6 Tr - $ 10 Tr) / $10Tr = + 6% 1. Calculate the dollar value of the bottom quintile's output 2. Calculate the change in this group's output by 0.5% % change in GDP as a result of a 10% rise in this group's output is = ($10.05Tr - $10Tr) / $10Tr = + 0.5%...
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