Suppose That a Family Saves and Borrows to Buffer Itself

question 431

Multiple Choice

Suppose that a family saves and borrows to buffer itself against changes in income. These actions relate to which problem in measuring inequality?

• A)in-kind transfers
• B)negative income tax
• C)transitory versus permanent income
• D)economic mobility

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Definitions:

Chi-square Test of Homogeneity

A nonparametric statistical test used to determine if there are significant differences between the distributions of categorical variables across different populations.

Binomial Experiment

A statistical experiment that meets the criteria of having a fixed number of trials, only two possible outcomes, independence between trials, and a constant probability of success.

Goodness-of-fit Test

A statistical test used to determine how well observed data fit the expected distribution.

Two-way Classification

A method of organizing data that involves two independent variables to understand the relationship between them and their impact on a dependent variable.