What role might contests among superstars play in accounting for income inequality?
What will be an ideal response?
Contests can explain why the super-rich have incomes that have increased greatly over the years. With increased globalization, the pool of "contestants" has increased dramatically. With the larger number of conspiracy, each contestant's probability of winning has shrunk. So contests need to have larger differences in payouts for the winners versus the losers so as to induce larger efforts to win the contest. The result is that the contest winners—be they sports stars, entertainment stars, of CEOs—nowadays have much larger incomes than the vast number of losers.
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Imports tend to fall whenever a nation's currency appreciates because foreign products become more expensive to domestic consumers
Indicate whether the statement is true or false
Which of these is not among the principal determinants of economic growth?
A) institutions B) education C) research and development D) balanced trade E) saving and investment