Author Question: Limiting protectionism means A) reducing political dishonesty. B) reducing consumer fraud. C) ... (Read 122 times)

fahad · **on:** Jun 30, 2018

Limiting protectionism means

A) reducing political dishonesty. B) reducing consumer fraud.
C) reducing trade barriers. D) reducing corruption.

Question 2

Consider two countries: a) In the first country there are 1,000 individuals; among them 500 earn 20,000 per month and the remaining 500 earn 400 per month.

b) In the second country there are 1,000 people; among them 500 earn 12,000 per month and the remaining 500 people earn 600 per month. Which of the two countries has more inequality and which country is poorer of the two?

jaygar71 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

C

Answer to Question 2

The per capita income in the first country is equal to (500 20,000 + 500 400)/1,000 = 10,200.
The per capita income in the second country is equal to (500 12,000 + 500 600)/1000 = 6,300.
From the per capita income figures we can conclude that the second country is poorer than the first country.
Now, ratio of rich-to-poor incomes in the first country = 10,000,000/20,000 = 50. The same ratio in the second country = 6,000,000/30,000 = 20.
It is seen that the ratio of high earners income to low earners income is much higher in the first country. Thus, inequality is more in the first country.