If government programs to assist the poor are successful at equalizing the income distribution, then the Lorenz curve should shift ____________ and the Gini coefficient should ______________.Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.atoward the diagonal; decreasebaway from the diagonal; increasectoward the diagonal; increasedaway from the diagonal; decreaseeto a straight line; increase
Question
If government programs to assist the poor are successful at equalizing the income distribution, then the Lorenz curve should shift ____________ and the Gini coefficient should ______________.Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.atoward the diagonal; decreasebaway from the diagonal; increasectoward the diagonal; increasedaway from the diagonal; decreaseeto a straight line; increase
Solution
The correct answer is: toward the diagonal; decrease.
Here's why:
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The Lorenz curve is a graphical representation of income or wealth distribution. It plots the cumulative percentage of total income earned against the cumulative percentage of recipients, starting with the poorest individual or household. The further the Lorenz curve is from the diagonal, the more unequal the distribution of income.
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If government programs are successful at equalizing income distribution, the Lorenz curve should shift closer to the diagonal. This is because the diagonal line represents perfect equality (where everyone has the same income). So, a shift toward the diagonal means that income distribution is becoming more equal.
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The Gini coefficient is a measure of inequality of a distribution. It is a number between 0 and 1, where 0 corresponds with perfect equality (where everyone has the same income) and 1 corresponds with perfect inequality (where one person has all the income and others have none).
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Therefore, if government programs are successful at equalizing income distribution, the Gini coefficient should decrease. A decrease in the Gini coefficient means that income distribution is becoming more equal.
Similar Questions
If the government increases tax rates to the richest households in the distribution, then the Lorenz curve should shift ____________ and the Gini coefficient should ______________.Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.atoward the diagonal; decreasebaway from the diagonal; increasectoward the diagonal; increasedaway from the diagonal; decreaseeto a straight line; increase
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A way to graphically represent income or wealth inequalityGroup of answer choicesNAFTALorenz curveInvisible handAmericanization
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