On the Lorenz curve, which of the following indicates that income inequality has increased from Year A to Year B?
a. The Year B line is to the left of the perfect equality line, and the Year A line is to the right.
b. The Year A line is longer than the Year B line.
c. The Year B line is farther from the perfect equality line than is the Year A line.
d. The Year A line is farther from the perfect equality line than is the Year B line.
c. The Year B line is farther from the perfect equality line than is the Year A line.
In a Lorenz curve diagram, a more unequal distribution of income will loop farther down and away from the 45-degree line (representing perfect equality), while a more equal distribution of income will move the line closer to the 45-degree line. The greater inequality of the income distribution between Year A and Year B is shown when the line for Year B is farther from the perfect equality line than the line for Year A.
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