Consider the following distribution of income in a 12-person economy, with the modern urban
wage = 3, the traditional rural income = 1, and the informal urban wage = 2: (1,1,1,1,2,2,2,2,3,3,3,3).The poverty line = 1.25.Suppose rural incomes are raised to 1.5 through expanded agricultural exports.What happens to relative inequality? Absolute poverty? Calculate the Ahluwalia-Chenery welfare index for terciles (3 fractiles) under GNP weights and equal weights.Why is the equal-weighted index higher?

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The Answer of Consider the following distribution of income in a 12-person economy, with the modern urban
wage = 3, the traditional rural income = 1, and the informal urban wage = 2: (1,1,1,1,2,2,2,2,3,3,3,3).The poverty line = 1.25.Suppose rural incomes are raised to 1.5 through expanded agricultural exports.What happens to relative inequality? Absolute poverty? Calculate the Ahluwalia-Chenery welfare index for terciles (3 fractiles) under GNP weights and equal weights.Why is the equal-weighted index higher?

Consider the Following Distribution of Income in a 12-Person Economy