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Practice mode Income Inequality

What is permanent income?

Correct answer C. A person's normal or average income

Explanation

Milton Friedman's permanent income is the income a person expects to receive on average over the long term, excluding temporary windfalls or losses. Spending tends to follow it rather than current income.

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Question 01 Income Inequality

Because incomes vary over the life cycle and are hit by temporary shocks, how do standard measures of income distribution relate to inequality in living standards?

Correct answer B. They exaggerate the inequality of living standards

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Question 03 Income Inequality

Ranked from the philosophy favouring the most income redistribution to the one favouring the least, what is the correct order of utilitarianism, liberalism and libertarianism?

Correct answer B. Liberalism, utilitarianism, libertarianism

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Question 04 Income Inequality

From what reasoning does Rawls derive his suggestion that policy should aim to maximise the welfare of the least well-off person in society?

Correct answer D. The idea that people should consider policy as if behind a veil of ignorance about their circumstances in society, and the idea that people will then be particularly concerned about the possibility that they might find themselves at the bottom of the income distribution

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