Many Argue the Poor Are Getting Poorer, at Least in a Relative

question 88

Multiple Choice

Many argue the poor are getting poorer, at least in a relative sense. Evidence that contradicts this is that

• A) household income of the lowest twenty percent of households relative to the highest twenty percent of households has fallen over the last thirty years.
• B) the official poverty level of income has increased over the years.
• C) household spending of the lowest twenty percent of households relative to the highest twenty percent of households has held constant over the last thirty years.
• D) the pretax distribution of income is more equal than the after-tax distribution of income.

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Definitions:

Inflation Risk

The risk that the value of assets or income will be eroded as inflation diminishes the value of a country’s currency.

Firm-Based Risk

Refers to the potential for financial loss arising from factors unique to a specific company, such as management decisions, product demand, or operational efficiency.

Market-Based Risk

The risk of losses stemming from factors that affect the overall market, including fluctuations in interest rates, stock prices, and currencies.

Investment Risk

The possibility of losing some or all of the original investment, often measured by the volatility of returns.