Question

The personal distribution of income: a. measure the flow of income allocated to the functional divisional...

The personal distribution of income:

a. measure the flow of income allocated to the functional divisional of labor (agriculture, services and manufacturing)

b. splits income among factors of production

c. measures the Gini coefficient

d. splits income into quintiles or fifths

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Answer #1

Personal income distribution reflect how income is divided among individuals in a country. It concentrates on why there is a difference in the income distribution between different groups of people.

Generally population of the country are spilitted into five parts less than 20%, 21-40%, 41-60% 61-80% and 81-100%.

These tables will split the population into fifths. The bottom fifth is the bottom 20% of households, the second fifth is the next 20%, and so on to the top fifth that is the top 20%. Then, next to each fifth is the share of the total income in the economy earned by each fifth.

Hence it can be said that the personal distribution of income splits income into quintiles or fifths.

Hence option d is the correct answer.

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