Imagine two cities, Hometown and Visitorsville, where the rich, middle, and poor income recipients in one city have annual incomes identical to their counterparts' incomes in the other city. In Hometown, the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that. In Visitorsville, however, the poor remain poor and
the rich remain rich. Which of the following is true about the two cities?
a. Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical.
b. The degree of lifetime income inequality in the two cities is identical.
c. The income mobility of people in the two cities is identical.
d. The distribution of annual income is more unequal in Visitorsville.
A
You might also like to view...
In swap transactions, the trader is interested in
A) the difference between spot and forward rates. B) only the spot rate. C) only the forward rate. D) both the spot and deposit interest rate.
Which of the following statements is true?
a. The United States today comes closer to the socialist form of economic organization than it does capitalism. b. When central planners set prices above equilibrium for goods and services they create shortages. c. According to Karl Marx, under capitalism, workers would be exploited and would revolt against the owners of capital. d. Adam Smith argued that government's role in society would be to do absolutely nothing.