What does the 45-degree line in the Lorenzo curve model indicate?
a. It shows how the population is distributed in the country.
b. It shows the actual distribution of income with the population distribution.
c. It divides income distribution in half with population distribution.
d. It shows perfect equality between income distribution and population distribution.
d. It shows perfect equality between income distribution and population distribution.
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Real rates of return are
A. not taxed. B. not adjusted for inflation. C. adjusted for inflation. D. used in individual financing and not corporate financing.
Criticisms of the Brander-Spencer model include all EXCEPT which of the following?
A) the problem of insufficient information B) the problem of likely foreign retaliation C) the problem of harm to interests of consumers D) the problem of adverse effects of trade policy politics E) the problem of simultaneously causing harm to other industries
Many governments actively work to:
A. attract foreign direct investment, hoping it will build up their capital stock when domestic savings aren't sufficient. B. attract foreign direct investment, so that when foreign companies invest in local firms, they can transfer human capital to local managers. C. discourage foreign direct investment, in an effort to encourage locals to invest in their own economy. D. discourage foreign direct investment, in an effort to avoid "crowding out."
Under what circumstances is it most clear that the government should pursue neither fiscal nor monetary policy?
A. The economy is experiencing deflation B. The economy is below potential output C. Unemployment rate exceeds the target rate of unemployment D. There is no inflation and the unemployment rate equals the target rate of unemployment