In nation X,inequality is measured with reported income and does not include welfare benefits.Suppose welfare benefits are increased and those on welfare who continue to work cut slightly back on their hours of work.Measured inequality will ________ and true inequality will likely ________.

Question

Quizplus · Accepted Answer

Measured inequality will increase because reported income decreases as people work fewer hours. True inequality will decrease because welfare benefits increase the overall income of those on welfare, reducing the gap between different income groups.

In Nation X,inequality Is Measured with Reported Income and Does