How can the degree of income inequality be shown by a Lorenz curve?
What will be an ideal response?
In a Lorenz curve, the percentage of households is plotted on the horizontal axis and the percentage of income is plotted on the vertical axis. The diagonal line between the two axes represents a perfectly equal distribution of income. A Lorenz curve that is bowed to the right from the diagonal shows income inequality.
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The circular flow of income shows
A) the dollar value of output is less than the total income. B) the dollar value of output is exactly equal to the total income. C) the dollar value of output is more than the total income because of the existence of profits. D) the dollar value of output is more or less than the total income, depending on whether profits are positive or negative.
If a country that fixes its exchange rate has an undervalued exchange rate, then it will ________ reserves, unless it ________ its money supply to the appropriate level
A) gain; increases B) lose; increases C) lose; decreases D) gain; decreases
A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________, everything else held constant
A) decrease; right B) decrease; left C) increase; right D) increase; left
An example of a way employers can minimize moral hazard is to:
A. monitor employees' computer activity. B. offer bonuses for consistent productivity. C. videotape the workplace. D. All of these are ways to minimize moral hazard.