Using the table provided above to construct Lorenz curves representing 1990 and 2011, what do you discover and how is this interpreted?
A) The Lorenz curve for 1990 is further away from the line of equality than the curve for 2011. This means that inequality is decreasing.
B) The Lorenz curve for 1990 is further away from the line of equality than the curve for 2011. This means that inequality is increasing.
C) The Lorenz curve for 2011 is further away from the line of equality than the curve for 1990. This means that inequality is increasing.
D) The Lorenz curve for 2011 is further away from the line of equality than the curve for 1990. This means that inequality is decreasing.
C
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The current account deficits incurred by the United States in the 1980s were caused, in the opinion of many economists, by
A) federal budget deficits. B) a sharp decline in private saving. C) "flight to quality" as foreign investors favored U.S. investments. D) Both B and C are correct.
An indication that Insurance companies anticipate adverse selection is
a. they do not require a deductible b. they do not classify clients into different risk types according to their claim history c. they do not classify clients into different risk types according to pre-existing conditions d. they require a co-payment
Which of the following is most vital if the firms in an industry are going to earn economic profit in the long run?
a. an inelastic demand for the product produced by the firms b. an elastic demand for the product produced by the firms c. managerial efficiency d. high barriers to entry into the industry
Suppose the economy is self-regulating and the (actual) unemployment rate is less than the natural unemployment rate. This means that the economy is producing a level of output
A) above its natural level and will eventually cut back on output. B) below its natural level and will eventually increase output. C) below its natural level but no forces exist to automatically increase output. D) above its natural level and institutional constraints will automatically be reduced so as to allow the economy to continue producing this level. E) none of the above