What would happen to consumption inequality

Reference no: EM132119342

Question: Inequality and the neoclassical consumption model: As discussed extensively in Chapter 7, income inequality has risen in recent decades in the United States. This question considers the implications for consumption inequality.

(a) Suppose a substantial part of the rise in inequality is due to the rising returns to education, so that more highly educated workers are permanently richer than less educated workers. According to the neoclassical consumption model, what would happen to consumption inequality? Why?

(b) Alternatively, suppose that most of the rise in inequality is due to an increase in the frequency and magnitude of temporary shocks (like unemployment or temporary booms and busts in particular industries). What would happen to consumption inequality in this case? Why?

Reference no: EM132119342

Questions Cloud

Calculate the dissociation constant of nh4oh : Calculate the dissociation constant of NH4OH(aq) if the degree of dissociation of 0.006 mol/kg solution is 0.053 and the activity coefficients of all species eq

Describe the accommodations approved by your state board : Describe the accommodations approved by your State Board of Education, local district, or school for Academic Achievement Testing for ELLs.

Was it ethical for goodman to deny liability : Was it ethical for Goodman to deny liability? If the corporation had been properly formed, would Goodman have been liable

Evaluate performance metrics and dimensions : design a network, the first step is to collect network requirements. The network requirements are gathered from users and business requirements

What would happen to consumption inequality : Suppose a substantial part of the rise in inequality is due to the rising returns to education, so that more highly educated workers are permanently richer.

Forms an equilibrium mixture containing : What is the calculation of Kc for the following reaction if an initial reaction mixture of 0.600 mole of CO and 1.80 mole of H2 in a 6.00 liter container forms

Determine the amounts of sales revenue : Determine the amounts of sales revenue and interest revenue that MMMM Corporation should recognize in its income statement for the year ended December

How will consumption respond according to the argument : Ricardian equivalence: Suppose that the government fears the economy might be heading into a recession and decides to cut income taxes today in an effort.

Is this violating her first amendment rights as a teacher : Immediately, there is an "uprising" from parents who are calling for her dismissal. Is this violating her First Amendment rights as a teacher?

User Account

All Pages