Consider an income distribution in which 1/3 of the population earns X dollars, 1/3 of the...
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Consider an income distribution in which 1/3 of the population earns X dollars, 1/3 of the population earns Y> X dollars, and 1/3 of the population earns Z> Y> X dollars. (a) Derive a formula for GDP per capita. (b) Derive a formula for the income share of the top 10%. (c) Derive a formula i for the Gini index. (d) Assume that X changes to X', Y changes to Y' and Z changes to Z'. Do the two measures of inequality (the income share of the top 10% and the Gini index) necessarily change in the same direction, or is it possible that one increases while the other decreases? Consider an income distribution in which 1/3 of the population earns X dollars, 1/3 of the population earns Y> X dollars, and 1/3 of the population earns Z> Y> X dollars. (a) Derive a formula for GDP per capita. (b) Derive a formula for the income share of the top 10%. (c) Derive a formula i for the Gini index. (d) Assume that X changes to X', Y changes to Y' and Z changes to Z'. Do the two measures of inequality (the income share of the top 10% and the Gini index) necessarily change in the same direction, or is it possible that one increases while the other decreases?
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Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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