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The Lorenz curve is a.a graph of the income distribution that expresses the relationship between the...

The Lorenz curve is

a.a graph of the income distribution that expresses the relationship between the cumulative percentage of households and the cumulative percentage of wealth.

b.a graph of the income distribution that expresses the relationship between the cumulative percentage of individuals and the cumulative percentage of income.

c.a graph of the income distribution that expresses the relationship between the cumulative percentage of households and the cumulative percentage of income.

d.a graph of the tax share distribution that expresses the relationship between the cumulative percentage of households and cumulative percentage of income.

e.none of the above

A Gini coefficient of __________ is consistent with the line of perfect income equality.

a.zero

b.1

c.0.5

d.2

e.none of the above

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Answer #1

1. Option C.

  • A Lorenz curve is a graph of income distribution which shows the relationship between cumulative Percentage of households and the cumulative Percentage of income.
  • This curve shows how Income is distributed among all members of a population.
  • It graphically expresses income inequality among various individuals or groups within a society.

2. Option A.

  • A Gini coefficient of zero is consistent with the line of perfect income equality.
  • This is because, a Gini index of zero coefficient will show same values for each level of income.
  • That is when it is zero, the income level will be the same for all the individuals of an economy.
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