How do income and wealth change over a person's lifetime? How does this affect the distribution of income at a point in time?
What will be an ideal response?
On the average, incomes start out low, increase as the household's workers gain experience and other human capital, peak when the household's workers reach retirement age, and then fall after retirement. On the average, wealth also starts out low, increases as income increases and workers save for retirement, peaks at the point of retirement, then falls after retirement. Because there are always people at all stages of life, the distribution of income at a point in time overstates the actual inequality. The discrepancy would be greater for countries with large percentages of young and retired workers.
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John Maynard Keynes argued that the fundamental problem which led to the world depression was
A) insufficient demand for goods and services. B) a shortage of goods and services. C) negative net exports on goods and services. D) a decreasing supply of goods and services.
The slope of an isoquant tells us
A) how much output increases when both inputs are increased. B) the increase in MPL when capital increases. C) the decrease in capital necessary to keep output constant when labor increases by one unit. D) the decrease in capital necessary to keep MPL constant when labor increases by one unit.