Examples of the Rich/Poor Ratio from the 2020 Distribution

Analyzing Internal Income Inequality

Consider two hypothetical countries. In Country A, the average annual income for the richest 10% of the population is $100,000, and for the poorest 10% it is $5,000. In Country B, the average annual income for the richest 10% is $40,000, and for the poorest 10% it is $1,000. Based on the ratio of the richest 10% income to the poorest 10% income as a measure of internal inequality, which statement is accurate?

Evaluating the Rich/Poor Ratio as an Inequality Metric

Country A has a rich/poor ratio of 40, while Country B has a rich/poor ratio of 20. This information alone is sufficient to conclude that the wealthiest 10% of the population in Country A have a higher average income than the wealthiest 10% in Country B.

Calculating and Interpreting Income Inequality

You are given the rich/poor ratio for four different countries. This ratio compares the average income of the wealthiest 10% of the population to that of the poorest 10%. Match each country with the most accurate description of its internal income inequality based on its ratio.

A country implements a new economic policy that results in a 15% increase in the average income for the poorest 10% of its population. During the same period, the average income for the wealthiest 10% of the population remains unchanged. How would this change affect the country's rich/poor ratio, which is used as a measure of internal income inequality?

In a specific country, the average annual income for the wealthiest 10% of the population is $150,000. If the country's rich/poor ratio, a measure of internal inequality calculated by comparing the income of the wealthiest 10% to the poorest 10%, is 30, then the average annual income for the poorest 10% of the population is $____.

Imagine a chart that visualizes a country's internal income inequality by showing the average annual income for its wealthiest 10% of citizens as a tall back bar and the average for its poorest 10% as a shorter front bar. The ratio of the back bar's height to the front bar's height is used as the measure of inequality.

• For Country A, the back bar is 50 units high and the front bar is 1 unit high.
• For Country B, the back bar is 100 units high and the front bar is 10 units high.

Based on an analysis of the ratios derived from this chart, which statement is correct?

A country experiences a decade of strong economic growth. Despite this, a report shows that its rich/poor ratio, which compares the average income of the wealthiest 10% to that of the poorest 10%, has worsened, increasing from 20 to 50. Which of the following statements provides the most accurate analysis of this situation?