34) According to the textbook, which of the following are problems that complica
ID: 2440177 • Letter: 3
Question
34)
According to the textbook, which of the following are problems that complicate the interpretation of official data on the distribution of income?
(2pts)
the quintiles contain unequal populations
the people in each quintile do not work the same number of hours
there is considerable upward income mobility over time
all the above
none of the above
35)
The Lorenz Curve shows which of the following?
(2pts)
what happens to a person’s consumption of a good as income increases
people’s attitudes about the fairness of the income distribution
none of the other answers are correct
the relationship between cumulative percentage of households and cumulative percentage of income
total income earned by households in each tax bracket
36)
Assume that most people would prefer to see less poverty and so might be willing to give some of their income to help the poor. The idea that the free market might provide less redistribution than individuals would like is the basis for which justification for government involvement in income redistribution?
(2pts)
relative inequality
veil-of-ignorance
public good-free rider
absolute equality
social-insurance
37)
A country has a more equal distribution of income in which of the following cases?
(2pts)
the further the Lorenz curve is from the 45-degree line
the steeper is the slope of the Lorenz curve
the flatter is the slope of Lorenz curve
the closer the Gini coefficient is to 0
the closer the Gini coefficient is to 1
Explanation / Answer
34. all the above. There are many assumptions in compiling official data which are not true and skew the final result and hence interpretation.
35. the relationship between the cumulative percentage of households and cumulative percentage of income. Lorenz curve shows that with an increase in the cumulative percentage of households, income distribution starts getting unequal and if very far from perfect equality line in the middle range of household and income. The distance between the Lorenz curve and the 45-degree line shows income inequality. Higher the distance higher the inequality.
36. relative inequality. Government interferes in the market with an aim to bring in more income equality using taxation and subsidies which is not completely possible under the free market.
37. the closer the Gini coefficient is to 0. It shows the Lorenz curve is close to the 45-degree line showing perfect distribution and hence when the Gini coefficient is zero, there is perfect equality.
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