What is a Lorenz curve and what does it show?
What will be an ideal response?
A Lorenz curve graphs the cumulative percentage of income (or wealth) against the cumulative percentages of households. The curve shows how equally income (or wealth) is distributed across households.
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Which of the following is a factor that determines the shape of the aggregate demand curve?
A) the real-balance effect B) the wage effect C) the nominal-balance effect D) the price level effect
Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE) sites—Brown County, Wisconsin, and St
Joseph County, Indiana—John Mulford of Rand Research estimates the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners. Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites? A) Housing expenditures will decrease by a small amount. B) Housing expenditures will increase significantly. C) Housing expenditures in HASE sites will fall significantly as recipients move out of these areas to higher-income areas. D) Housing expenditures will increase, but not significantly.
When the invisible hand is at work,
a. the price system will sometimes give incorrect cost signals to consumers. b. the price system will allocate resources based only on consumer need. c. all prices will be set equal to marginal costs. d. there will be some shortages and surpluses that cannot be avoided.
Individuals with higher saving and investment rates will more likely
A) earn poverty level incomes. B) experience financial difficulties. C) have higher current consumption rates. D) have higher incomes in the future.