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QUESTION 9 Consider the following GDP levels and income distributions in the years...

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Finance

QUESTION 9

  1. Consider the following GDP levels and income distributions in the years 1950 and 2020 (the dollar values are inflation-adjusted).

    Year

    GDP

    Income of 1st Tercile

    Income of 2nd Tercile

    Income of 3rd Tercile

    1950

    1 trillion

    0.2 trillion

    0.3 trillion

    0.5 trillion

    2020

    8 trillion

    0.4 trillion

    1.2 trillion

    6.4 trillion

    Compute Peoples growth between 1950 and 2020.

    a.

    432%.
    b.

    250%.
    c.

    526%.
    d.

    500%.

QUESTION 10

  1. The Second Welfare Theorem states that

    a.

    competitive markets are efficient and fair, as long as there are no externalities and no concentration of market power.
    b.

    competitive markets are always efficient and fair, even if there are externalities.
    c.

    when there are no externalities and no concentration of market power, an efficient and fair market outcome can be achieved via redistribution of wealth/opportunity.
    d.

    substantial inequality is a necessary by-product of an economy that operates efficiently.

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