Imagine two cities, Hometown and Visitorsville, where the rich, middle, and poor income recipients in one city have annual incomes identical to their counterparts' incomes in the other city. In Hometown, the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that. In Visitorsville, however, the poor remain poor and the rich remain rich. Which of the following is true about the two cities?

a. Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical.

b. The degree of lifetime income inequality in the two cities is identical.

c. The income mobility of people in the two cities is identical.

d. The distribution of annual income is more unequal in Visitorsville.

Question

Business

Yasmin Gross

13 October, 05:01

Imagine two cities, Hometown and Visitorsville, where the rich, middle, and poor income recipients in one city have annual incomes identical to their counterparts' incomes in the other city. In Hometown, the poorest families one year almost always end up as the richest families the next year and become middle-income families the year after that. In Visitorsville, however, the poor remain poor and the rich remain rich. Which of the following is true about the two cities?

a. Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical.

b. The degree of lifetime income inequality in the two cities is identical.

c. The income mobility of people in the two cities is identical.

d. The distribution of annual income is more unequal in Visitorsville.

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Answers (1)

Know the Answer?

Selina Obrien · Answer 1

The answer is letter A.

Explanation:

The true statement is Annual data on the distribution of income will indicate that the degree of income inequality in the two cities is identical.