ECONOMICS
INCOME DISTRIBUTION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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more equally wealth is distributed.
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more equally income is distributed.
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less equally income is distributed.
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None of the above.
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Detailed explanation-1: -The farther the Lorenz curve is from the line of equality, the more unequal is the distribution. Income is the amount of earnings received by an indi-vidual over a period of time while wealth is the value of things the individual owns at a point in time.
Detailed explanation-2: -The closer the Lorenz curve is to the line of equality, the less inequality exists. The further the Lorenz curve is to the line of equality, the more inequality exists.
Detailed explanation-3: -Thus further the Lorenz curve is from the line of equality, the more is the inequality that is, income is unevenly distributed.
Detailed explanation-4: -When the lorenz curve shifts farther away from the line of equality, the gini coefficient keeps increasing. When the lorenz curve is closer to the line of equality, the gini coefficient is lower, meaning the unequal distribution of income or wealth is lower.
Detailed explanation-5: -Charting the Lorenz curve and Gini coefficient The line from 0 to 100 represents perfect equality and is referred to as the “line of equality.” Because no population has achieved perfect income or wealth equality, the Gini index compares perfect equality to the projected distribution of the Lorenz curve.