Question

If we wish to measure and understand income inequality today, what is the better indicator, the size distribution of income or the functional distribution of income?

(A question about choosing between indicators of income inequality)
A) The size distribution of income is the better indicator because many capitalists, such as owners of small retail stores, are in the lower income scale, but many wage earners, such as professional athletes, are in the upper income scale.
B) The functional distribution of income is the better indicator because social class coincides closely with income class.
C) The size distribution of income is the better indicator because most wage earners are in the lower part of the income scale.
D) The functional distribution of income is the better indicator because most landowners are in the upper part of the income scale.

Answer 1

The size distribution of income is the better indicator to measure and understand income inequality today.

Step-by-step explanation:

The better indicator to measure and understand income inequality today is the size distribution of income. This is because it considers the entire population and divides it into groups, such as quintiles, to calculate the share of income received by each group. In contrast, the functional distribution of income focuses on the social class and does not provide a comprehensive view of the income distribution.