What effect does the age of a household have when estimating the degree of inequality in income among households?
What will be an ideal response?
Household income changes over the life cycle of the household, which leads to an overestimation of inequality among households. At young ages, income is relatively low, peaks in middle ages, and then falls after retirement. The standard measures of income distribution do not account for age differences among households. They, therefore, overestimate the inequality because the distribution of lifetime income is more equal than the distribution of annual income.
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If the United States imposes a tariff on foreign chocolate, how are U.S. buyers of chocolate affected?
A) Their demand for chocolate increases because the U.S. production chocolate increases. B) The price they pay for chocolate falls, but they consume less chocolate because less is imported. C) The quantity they consume is unchanged. D) The price they pay for chocolate falls, and they consume more chocolate. E) The price they pay for chocolate rises.
Research on the effects of recessions on the real level of GDP shows that
A) recessions cause only temporary reductions in real GDP, which are offset by growth during the expansion phase. B) recessions cause large, permanent reductions in the real level of GDP. C) recessions cause both temporary and permanent declines in real GDP, but most of the decline is temporary. D) recessions cause both temporary and permanent declines in real GDP, but most of the decline is permanent.