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The table below indicates the disparity in actual vs expected income given the economic growth rate over the 43-year period from 1975 to 2018.* Income

The table below indicates the disparity in actual vs expected income given the economic growth rate over the 43-year period from 1975 to 2018.*

Income distribution for Adults with Income in 2018 dollars

Percentile

Actual

1975

Actual

2000

Actual

2018

2018 Expected1:

25th%

$9,000

$13,000

$15,000

$20,000

50th%

$26,000

$32,000

$36,000

$57,000

75th%

$46,000

$57,000

$65,000

$100,000

95th%

$80,000

$125,000

$164,000

$174,000

99th%

$162,000

$479,000

$491,000

$343,000

*From Carter Price and Kathryn Edwards, Trends in Income from 1975 to 2018 August 14,2020. RAND Corp.

1 Adds 118% GDP Growth rate since 1975 to the original 1975 amount for an expected % increase of 118%.

A. Look up and give the definition for percentile.

What do we mean by the 50th percentile?

What do we mean by the 99th percentile?

B. For each of the five percentile categories, give simplified fractions, and the corresponding decimal form expressing the ratio of actual to expected 2018 income. You will have five ratios using the two sets of 2018 numbers(Round to the hundredth when necessary)

Express each decimal in percent form.

Which of the five percentile categories shows actual income to be the smallest percent of expected?

Which percentile shows actual to be the greatest percent of expected?

C. For the year 1975 and again for 2018 actual incomes:

  • For each of the above years, make a ratio of the 25th percentile income to the 99th percentile income, expressing that ratio in fraction, decimal, and percent form, rounding to the hundredth when necessary.

D What conclusions regarding income inequality could be supported by these numbers?

What if there were income amounts for 2020? Thinking of the unusual events of 2020, do you think that 2020 numbers would support greater equality, or inequality in income? Why?

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