Economics: The Basics 1st Edition by Mike Mandel

Exercise 2

The table below gives the 80 th and 20 th percentiles of household income for 1996 and 2006, measured in inflation-adjusted 2006 dollars.

a) Calculate the 80/20 ratio for each year.
b) Did inequality increase between 1996 and 2006? Explain.
c) Based on this table, do you think that poor families were worse or better off in 2006 compared to 1996? Explain.