ECONOMICS
INCOME DISTRIBUTION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the most equitable income distribution
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how unequally incomes are distributed.
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how much redistribution occurs.
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the income distribution if everyone received the same income.
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Detailed explanation-1: -The Lorenz curve is often accompanied by a straight diagonal line with a slope of 1, which represents perfect equality in income or wealth distribution; the Lorenz curve lies beneath it, showing the observed or estimated distribution.
Detailed explanation-2: -One of the five major and common macroeconomic goals of most governments is the equitable (fair) distribution of income, which is a crucial element of a functioning democratic society. With regard to this macroeconomic goal, the distribution of income or wealth in an economy is represented by a Lorenz curve.
Detailed explanation-3: -The Gini coefficient is usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y-axis) that is cumulatively earned by the bottom x% of the population. The line at 45 degrees thus represents perfect equality of incomes.
Detailed explanation-4: -It refers to the distribution of income that is ‘fair, ’ but the concept of ‘fair’ is subjective. Distribution of wealth and income is the way in which the wealth and income of a nation are divided among its population. Or the way in which the wealth and income of the world are divided among nations.