Ch.19 MicroEcon

positively skewed

A ___________ distribution means that it has a long tail of high values. This distribution contrast with the bell that describes the distribution of people's heights.

subsidized services

A great deal of redistribution takes place in the United States through the provision of ________________--services provided by the government at prices below the cost of production.

increases

A growing global economy increase the demand for services that employ high-skilled workers, and the value of marginal product and the demand for high-skilled labor ___________.

quintiles

Another way of looking at the distribution of income is to measure the percentage of total income received by each given percentage of households. Data are reported for five groups--called ___________ or fifth shares--each consisting of 20% of households.

redistribution

Finland and Sweden represent income distributions very similar to many European countries in which governments pursue aggressive income ___________ policies.

10

For the US, an average person in the highest quintile receives just under ____ times the amount received by an average person in the lowest quintile

across

How can the world income distribution become less unequal while individual countries become more unequal? Average incomes in poorer countries are rising much faster than average incomes in rich countries. While the gap between rich and poor is widening with countries, it is narrowing _____ countries.

equally

If income were distributed _________ across all the households, each quintile would receive 20 percent of total income and the cumulative percentages of income received would equal the cumulative percentages of households, so the Lorenz curve would be the "line of equality"

human capital; discrimination; contests among superstars

Inequality arises from unequal labor market outcomes and from unequal ownership of capital. Three features of labor markets contribute to differences in income

different stages

Inequality in annual income and wealth data overstates lifetime inequality because households are at ____________ in their life cycle.

Brazil; South Africa

Inequality is large in countries like _________ and __________ because they have a relatively small but rich European population and a large and relatively poor indigenous population

substitutes; compliments

Information technologies are _________ for low-skilled workers: They perform tasks that previously were performed by low-skilled labor. High-skilled labor and the information technologies are ___________

wage rate; employment

Prejudice/discrimination is reflected in the ___________ and _______________.

0.64

The world Gini ratio is about ______.

wealth

Wealth is a stock of assets, and income is the flow of earnings that results from the stock of _________.

human capital

Why is the distribution of wealth more unequal than distribution of income if they are just two different ways of looking at the same thing? Because wealth data do not include the value of ___________, while the income data measure income from all wealth, including human capital.

low; high

for household income, median is less than mean, and mode is less than median. this feature of distribution of income tells us that there are more households with ___ incomes than with ____incomes.

money income

market income plus cash payments to households y government

mode

most common household income, called the ________ income, was received by the 6 percent of the households whose incomes fell between $20,000 and $25,000

poverty

situation in which a household's income is too low to be able to buy the quantities of food, shelter, and clothing that are deemed necessary.

proportional income tax

taxes income at a constant average rate, regardless of the level of income

regressive income tax

taxes income at an average rate that decreases as income increases.

progressive income tax

taxes income at an average rate that increases as income increases

social security programs, unemployment compensation, welfare programs

three main types of programs redistribute income by making direct payments

market income

wages, interest, rent and profit earned in factor markets, before paying income taxes

big tradeoff

The redistribution of income creates what has been called the__________, a tradeoff between equity and efficiency. Arises because redistribution uses scarce resources and weakens incentives.

median

The middle level of household income in 2009, called the ________ income, was $49,777.

less; increased

The Gini ratio has clearly increased, which mean s that on this measure, incomes have become __________ equal. The major change is that the share of income received by the richest households has ___________.

demand for supply

The __________ of each type of labor determine the wage rates that each type earns.

mean

The average household income in 2009, called the ________ income, was $67, 976. This number equals total household income divided by the million households

more equal

The closer the Lorenz curve is to the line of equality, the _________ is the distribution of income.

wealth; period of time

The distribution of wealth provides another way of measuring economic inequality. A household's __________ is the value of the things that it owns at a point in time. In contrast, income is the amount that the household receives over a given _____________.

lowered

The entry of China and other developing countries into the global economy has _________ the prices of many manufactured goods. Lower prices for the firm's output lowers the value of marginal product of the firm's workers and decreases the demand for their labor.

Lorenz curve

The income _________ graphs the cumulative percentage of income against the cumulative percentage of households. Provides a direct visual clue about the degree of income inequality by comparnig it with the line of equality

degree of income inequality; zero; one

The larger the Gini ratio, the greater is the ____________. If income is equally distributed, the Lorenz curve is the same as the line of equality, so the Gini ratio is ______. If one person has all the income and everyone else has none, the Gini ratio is _____.

Gini ratio

based on the Lorenz curve and equals the ratio of the area between the line of equality and the Lorenz curve to the entire area beneath the line of equality