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Consider a simple economy where 90 percent of citizens report an annual income of $10,000 while...

Consider a simple economy where 90 percent of citizens report an annual income of $10,000 while the remaining 10 percent report an annual income of $110,000.

A. What is the Gini coefficient associated with this economy?

B. Suppose the poorest 90 percent of citizens actually have an income of $15,000 because each receives $5,000 of unreported income from the underground economy. What is

the Gini coefficient now?

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