Explain the importance in understanding the difference between income inequality and consumption inequality
What will be an ideal response?
When analyzing someone’s well-being, comparing annual consumption may be more meaningful than their annual income. Recent findings have shown the differences in consumption inequality are far less than the inequality of incomes. The products consumed by the rich and the poor are far closer in functionality today than at any other time in history.
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For this question, assume that investment spending depends only on the interest rate and no longer depends on output. Given this information, a reduction in the money supply
A) will cause investment to decrease. B) will cause investment to increase. C) may cause investment to increase or to decrease. D) will have no effect on output. E) will cause a reduction in output and have no effect on the interest rate.
The major reason that presidents of major corporations receive an average salary of over $1 million a year while police officers receive an average salary of about $56,000 a year can best be explained by:
A. Discrimination B. Lack of job information C. Compensating differences D. Noncompeting labor groups