ONLINECO 

Chapter 20. Income Inequality and Poverty. Gregory Mankiw. Exercises 1-4 Principles Economics. 7th edition.

 

1. Table 2 shows that income inequality in the United States has increased since 1970. Some factors contributing to this increase were discussed in Chapter 19. What are they?

 

2. Table 3 shows that the percentage of children in families with income below the poverty line far exceeds the percentage of the elderly in such families. How might the allocation of government money across different social programs have contributed to this phenomenon? (Hint: See Chapter 12.)

 

3. This chapter discusses the importance of economic mobility-

a. What policies might the government pursue to increase economic mobility within a generation?

b. What policies might the government pursue to increase economic mobility across generations?

c. Do you think we should reduce spending on current welfare programs to increase spending on programs that enhance economic mobility? What are some of the advantages and disadvantages of doing so?

 

4. Consider two communities. In one community, ten families have incomes of $100,000 each and ten families have incomes of $20,000 each. In the other community, ten families have incomes of $200,000 eachand ten families have incomes of $22,000 each.

a. In which community is the distribution of income more unequal? In which community is the problem of poverty likely to be worse?

b. Which distribution of income would Rawlsprefer? Explain.

c. Which distribution of income do you prefer? Explain.

d. Why might someone have the opposite preference?