Intervention

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Intervention When.a government fixes its exchange rate, it must “intervene” in foreign exchange markets to maintain the rate. Government exchange-rate intenentioD occurs when the government buys or sells foreign exchange to affect exchange rates. For example, the Japanese government on a given day might buy $1 billion worth of Japanese yen with U.S. dollars. This would cause a rise in value, […]

The leaky bucket

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In taking steps to redistribute income from the rich to the poor; governments may harm economic efficiency and reduce the amount of national income available to distribute. On the ocher hand, If equality Is a social good. it is one worth pay for. Redistribution Costs In Diagrams We can illustrate Roku’s point by using the income possibility curve of Figure 19-5.This […]

Who Are the Poor?

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Who Are the Poor? Poverty hits some groups harder than others. Table 19-4 shows the incidence of poverty in different groups for 1998.While 12.7 percent of the total population was counted as falling below the 1998 poverty line, the rate among black and Hispanic families was 212 times that of whites. Why are so many female-headed and minority families poor? What […]

Entrepreneurship

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Entrepreneurship Compared to thrift, entrepreneurship is a much !flore important road to riches. Table 19-3 displays the experience of the top 100 wealth holders in 1999. ~ .These data suggest that most of the richest people .in America got that Wily by taking risks and creating profitable new businesses, such as computer software’ companies, television networks, and retail chains, The people who […]

Life-Cycle Saving as a Source of Wealth

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Life-Cycle Saving as a Source of Wealth While most people scrimp and save to put away a few for their retirement, such thrift is probably the major source of wealth in the United States. e difficulty of accumulating a large fortune by save out of normal labor earnings can be illustrated . g a realistic example. Suppose that the average class […]

INEQUALITY IN PROPERTY INCOME

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INEQUALITY IN PROPERTY INCOME The greatest disparities in income arise from differences in property income, which consists of income on assets like stocks, bonds, and real estate. With few exceptions, the people at the very top of the income pyramid derive most of their money from property income: By contrast, the poor own’ few’financial assets and therefor earn no income on their nonexistent […]

Other Factors

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Other Factors In addition to abihty, intensity of work, and occupation, other factors affect the inequality of wage earnings. We saw in Chapter 13 that discrimination and exclusion from certain occupations have played an important role in keeping down the incomes of women and many minority groups. In addition, the home life and community experience of children have a major impact […]

Occupations

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Occupations One important source of income inequality is people’s occupations. At the low end of the scale we find domestic servants, fast-food personnel, and unskilled service workers. A full-time, year-round employee at McDonald’s or at a car wash might earn $10,000 a year today. At the other extreme are the high-earning professionals. What single profession seems to make the most money? In […]

Intensities of Work

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Intensities of Work The intensity of work-varies enormously among individuals. The workaholic may log 70 hours a week on the job, never take a vacation, and postpone retirement indefinitely. An ascetic might work just .enough to pay for life’s necessities. Differences in income might be great simply because of differences in work effort, yet no one would say that economic opportunity was […]

Abilities and Skills

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Abilities and Skills People vary enormously in their abilities-in physical, mental, and temperamental dimensions. However, these personal differ~nces are oflittle help in explaining the puzzle of income dispersion. Physical traits (such as strength or height or girth) and measured mental traits (such as intelligence quotient or tone perception) explain relatively little of the difference among the earnings of people. This is ‘not […]