Economic

Q: Economists James Buchanan and Gordon Tullock are well-known for developing A) the impossibility theorem. B) the voting paradox. C) the public choice model. D) the concept of government failure.

Q: Both presidents Kennedy and Reagan proposed significant cuts in income taxes. Opponents of these tax cut proposals argued that A) the tax cuts would benefit high-income taxpayers. B) cutting state sales taxes, rather than federal income taxes, would result in greater economic efficiency. C) while the tax cuts would result in greater economic efficiency, there was too much opposition to the tax cuts in Congress. As it turned out, Congress ultimately approved both tax cut proposals. D) it would be better to cut taxes on corporate profits.

Q: Both presidents Kennedy and Reagan proposed significant cuts in income taxes because A) at the time of their proposals the federal government was experiencing budget surpluses; that is, tax revenue exceeded government expenditures. B) they wanted to offset their proposals to increase other taxes. C) state governments had increased their taxes and they believed the tax cuts they proposed would result in most citizens paying about the same total state and federal taxes. D) they believed that the tax cuts would enhance economic efficiency.

Q: Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product. Which of the following is the best example of regulatory capture? A) The Food and Drug Administration (FDA) has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug. B) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits. C) The head of an agency is required to testify before Congress because Congress controls the size of the agency's budget. Congress "captures" the agency because of its budget authority. D) Firms that were regulated by the Interstate Commerce Commission (ICC) attempted for many years to influence the ICC's actions.

Q: What is regulatory capture? A) It is a situation in which a policy maker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign. B) It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents. C) It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest. D) It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest.

Q: One important difference between the political process and the market process is that A) the political process results in collective actions in which not everyone is required to participate, while in the market process individuals are obliged to participate. B) the political process results in collective actions in which everyone is obliged to participate, while in the market process individuals are free to participate or not. C) the political process results in collective actions that maximize economic surplus, while the market process may lead to efficiency losses. D) the political process results in collective actions in which everyone is made better off, while the market process results in actions that favor some groups only.

Q: Rational ignorance A) explains why consumers ignore sunk costs when they vote. B) explains the Arrow impossibility theorem. C) refers to attempts by special interests to use government action to make themselves better off at the expense of others. D) helps to explain why rent seeking by special interest groups occurs.

Q: What is meant by the term "rational ignorance"? A) It refers to the absence of a negative incentive, for example, a fine for not voting, which results in a low voter turnout. B) It refers to a situation where one policymaker deliberately approves a bill he does not support in exchange for a future favorable vote for his own cause. C) It means the lack an economic incentive for voters to become informed about a pending legislation. D) It refers to the fact that policymakers and their constituents have different ideas of what it means to behave rationally and each party deliberately ignores the other's view.

Q: Logrolling may result in A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. B) a majority of Congress supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group. C) members of Congress selling their votes on proposed legislation to the highest bidder. D) creating limited incentives for policymakers to consider the immediate consequences of their proposed legislation.

Q: What is logrolling? A) a situation where a policymaker votes to approve a bill in exchange for favorable votes from his colleagues on other bills B) a situation where policymakers transfer resources from those voters who are unlikely to have a huge impact on the political outcome to those who contribute to political campaigns C) a situation where a policymaker accepts bribes to prevent proposed legislation from coming to a vote D) a situation where a policymaker gets the government to fund a non-essential project benefiting her family members

Q: A situation where a member of Congress votes to approve a bill in exchange for favorable votes from other members on other bills is called A) rent seeking. B) logrolling. C) regulatory capture. D) special interest legislation.

Q: Which of the following statements about rent seeking is false? A) Rent seeking often involves governments because governments transfer huge amounts of funds that economic agents must compete for. B) A person is engaging in rent seeking behavior when he uses the political process to acquire ownership of a resource that belongs to the public. C) Because rent seeking redistributes society's resources, anyone engaging in such behavior is violating the law. D) If a firm can benefit from government intervention in the economy, it is more likely to spend resources attempting to secure this intervention than toward innovating its product to gain a competitive edge in the market.

Q: Which of the following isnot an example of rent seeking behavior? A) competition for subsidies B) lobbying the government to impose tariffs on certain imported products C) competition for the exclusive right to import a product D) engaging in aggressive advertising that slams a competitor's product

Q: The median voter model implies that A) many people will be satisfied with the amount of spending on government funded projects. B) many people will be dissatisfied with the amount of spending on government funded projects. C) people in the political middle will be dissatisfied with the amount of spending on government funded projects. D) spending on government funded projects reflects the preferences of only those far away from the median.

Q: Why is a typical person likely to gather more information when buying a new car than when voting for a member of Congress? A) because a person's preferences are more likely to be met with little effort in the political sphere but this is not the case when buying a car in the private marketplace B) because it is less costly to acquire information about consumer items than it is about political candidates C) because buying a new car affects a person more immediately and personally compared to voting for a member of Congress; in the latter, a person's vote is only one of many voters and therefore, not likely to have a large impact on the outcome D) because the effects of buying a car are long term while a member of Congress has a relatively short tenure

Q: The median voter theorem will be an accurate predicator of the outcomes of elections A) only when voter turnout is very high. B) when a majority of voters have preferences very similar to those of the median voter. C) when a majority of voters have preferences different from those of the median voter. D) regardless of whether preferences among voters are similar or different from those of the median voter.

Q: The Arrow impossibility theoremstates that A) no system of voting can be devised that will always consistently represent the underlying preferences of voters. B) it is impossible for a majority voting system not to consistently represent the preferences of voters. C) it is impossible to separate corporate desires from public bureaucracy. D) no system of voting can be devised that will ensure a 100 percent voter turnout.

Q: The median voter theorem states that the outcome of a majority vote A) tends to favor the preferences of high income individuals and ignore the median voter. B) is likely to represent the preferences of society's middle-income voter. C) is likely to represent the preferences of the voter who is in the political middle. D) is determined by the average consumer and producer in an economy.

Q: What is the voting paradox? A) the observation that less than 60 percent of those eligible to vote actually vote B) the observation that majority voting may not always result in consistent choices C) the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority D) people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians

Q: The voting paradox suggests that the "voting market," as represented by elections A) lead to a superior outcome in representing consumer preferences compared to the private market for goods and services. B) may often lead to an inefficient outcome in representing consumer preferences compared to the private market for goods and services. C) is no different from the private market for goods and services in terms of representing consumer preferences. D) may not lead to an efficient outcome but certainly leads to a more equitable outcome in terms of distributing goods and services.

Q: Suppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: a. subsidies for education b. research on Alzheimer's c. increased border security If voters prefer a to b and b to c, then if preferences are transitive, A) they should prefer a to c. B) they should prefer c to a. C) they should be indifferent between a and c. D) it is not always possible to rank voters' preferences between a and c.

Q: Table 18-1IvyJasmineRoseSubsidies for education2nd3rd1stResearch on Alzheimer's3rd1st2ndIncreased border security1st2nd3rdSuppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: 1. Subsidies for education, 2. Research on Alzheimer's or 3. Increased border security. Table 18-1 shows three voters' rankings of the alternatives.Refer to Table 18-1.Suppose a series of votes are taken in which each pair of alternatives is considered in turn. The first pair considered is between subsidies for education and research on Alzheimer's. The second pair considered is between Alzheimer's research and increased border security. The third pair considered is between education subsidies and increased border security. In this case, the collective preferences of the votersA) turn out to be transitive and will yield a consistent outcome.B) turn out to be transitive but will not result in a consistent outcome.C) turn out not to be transitive and will not result in a consistent outcome.D) turn out not to be transitive but will yield a consistent outcome.

Q: Table 18-1IvyJasmineRoseSubsidies for education2nd3rd1stResearch on Alzheimer's3rd1st2ndIncreased border security1st2nd3rdSuppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: 1. Subsidies for education, 2. Research on Alzheimer's or 3. Increased border security. Table 18-1 shows three voters' rankings of the alternatives.Refer to Table 18-1. Suppose a series of votes are taken in which each pair of alternatives is considered in turn. If the vote is between allocating funds to subsidies for education and research on Alzheimer'sA) Ivy and Jasmine vote for education subsidies, Rose votes for Alzheimer's research, and education subsidies wins.B) Ivy and Rose vote for education subsidies, Jasmine votes for Alzheimer's research, and education subsidies wins.C) Jasmine and Rose vote for Alzheimer's research, Ivy votes for education subsidies, and Alzheimer's research wins.D) Jasmine and Ivy vote for Alzheimer's research, Rose votes for education subsidies, and Alzheimer's research wins.

Q: The public choice model A) examines the degree of market power that the public exerts in a market economy. B) examines the public's role in appointing politicians and ensuring that elected officials act in ways to reflect the public's preferences. C) applies economic analysis to government decision making. D) applies economic analysis to the collective decision making of consumers.

Q: According to public choice theory, policymakers A) place the interests of the public above their own self-interest. B) are likely to pursue their own self-interest, even if their self-interest conflicts with the public interest. C) act in ways to maximize economic efficiency. D) act in ways to bring about an equitable distribution of society's wealth.

Q: What are the two types of taxes that working individuals pay on their earnings? A) individual income tax and sales tax B) payroll tax and sales tax C) individual income tax and social insurance taxes D) property tax and payroll tax

Q: Table 18-12Income QuintileAgraria Percentage of Total IncomeUrbana Percentage of Total IncomeLowest 20%3%5%Second quintile9%14%Third quintile14%20%Fourth quintile24%24%Highest 20%50%37%Table 18-12 shows income distribution data for two countries. Use this data to answer the following questions.Refer to Table 18-12.a. Draw a Lorenz curve for each country.b. Which country has the more equal distribution of income?c. Based on the Lorenz curve for the two countries, can you determine which country has the more progressive tax system? Explain your answer.

Q: Tax laws affect A) economic efficiency but not equity. B) equity but not economic efficiency. C) consumption and production, not efficiency and equity. D) both efficiency and equity.

Q: Figure 18-9 Refer to Figure 18-9 to answer the following questions. a. Did the distribution of income become more equal in 2010 that it was in 2009, or did it become less equal? Explain. b. If area A = 1,600, area B = 200, and area C = 3,200, calculate the Gini coefficient for 2009 and the Gini coefficient for 2010.

Q: One argument advanced in favorof not increasing the income tax on individuals with high income is that A) increasing income tax increases wealth which contributes to increases in GDP. B) increasing the income tax on these individuals will reduce economic efficiency. C) increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes. D) not increasing income taxes will discourage corporations from increasing investment.

Q: Figure 18-8 Refer to Figure 18-8 to answer the following questions. a. Did the distribution of income become more equal in 2012 than it was in 2011, or did it become less equal? Explain. b. If area A = 1,900, area B = 450, and area C = 2,650, calculate the Gini coefficient for 2011 and the Gini coefficient for 2012.

Q: Table 18-11Income QuintileSvetlana Percentage of Total IncomeGrodsky Percentage of Total IncomeLowest 20%8%4%Second quintile12%10%Third quintile16%16%Fourth quintile20%24%Highest 20%44%46%Table 18-11 shows income distribution data for two countries. Use this data to answer the following questions.Refer to Table 18-11.a. Draw a Lorenz curve for each country.b. Which country has the more equal distribution of income?c. Based on the Lorenz curve for the two countries, can you determine which country has the more progressive tax system? Explain your answer.

Q: What is a Lorenz curve and what is a Gini coefficient?

Q: What is the difference between the poverty line and the poverty rate?

Q: Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Q: Describe the main factors economists believe cause inequality of income.

Q: From 1970 to 2006, the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

Q: Income inequality increases as the Gini coefficient approaches 1.

Q: A Lorenz curve summarizes the information provided by a Gini coefficient.

Q: Rapid economic growth tends to increase the degree of income mobility.

Q: Holding all other factors constant, income earned from capital is more unequally distributed than income earned from labor.

Q: If the Gini coefficient for Cartland is 1, it means that income distribution is perfectly equal in this society.

Q: The decision to make the U.S. income tax system progressive was A) a progressive decision. B) a positive decision. C) a decision that was needed to minimize the excess burden of taxation. D) a normative decision.

Q: Between 1970 and 2006, the poverty rate in East Asia declined dramatically from about 60 percent to less than 2 percent, while the poverty rate in Sub-Saharan Africa decreased from 40 percent to only 32 percent. The main reason for this is that A) the population growth rate decreased in East Asia and increased in Sub-Saharan Africa. B) Governments in East Asia increased transfer payments to poor families over this period of time. The governments of Sub-Saharan Africa had practically no transfer payment programs from 1970 to 2006. C) The countries of East Asia have progressive income tax systems. The countries of Sub-Saharan Africa all have regressive income tax systems. D) East Asia experienced higher economic growth than Sub-Saharan Africa.

Q: Which of the following statements is true? A) If transfer payments such as Social Security payments to the retired and disabled were excluded from official statistics used to estimate the percentage of people with incomes below the poverty line, the amount of poverty in the United States would be much greater. B) Because the federal income tax system is progressive, measuring poverty using after-tax incomes results in a higher poverty rate than if poverty is measured using before-tax incomes . C) If non-cash benefits such as food stamps and rent subsidies were added to the incomes of low-income families, poverty would be eliminated. D) In the United States, income remaining after federal taxes are paid is more equally distributed than income before taxes.

Q: Economists caution that conventional statistics used to estimate the extent of poverty in the United States fail to account for benefits people receive that, if considered, would reduce the amount of poverty. Which of the following is an example of these benefits? A) Individuals can use tax credits and the personal exemption to reduce their taxable incomes. This reduces what they owe the government and increases their disposable incomes. B) The federal income tax system is progressive. As a result, the poor have higher after-tax incomes than they would have if the income tax system was proportional or progressive. C) Individuals with low incomes receive non-cash benefits such as free school lunches and food stamps. D) The federal minimum wage forces employers to pay workers with low skills an efficiency wage.

Q: Sheldon Cleaver commented on the difficulty people have in overcoming poverty in the United States: "Most people whose incomes fall below the poverty line have difficulty pulling themselves above the line in future years. In this sense, poverty becomes a vicious cycle. I believe the psychological damage households face when they are branded with the 'poverty' label in our society is a major factor in their remaining in poverty. Despair is a major reason why the percentage of people with incomes that lie below the poverty line never falls below 10 percent." Which of the following correctly evaluates Cleaver's statement? A) Cleaver is correct. Economists often fail to take into account psychological factors when they analyze poverty and the distribution of income in the United States. Policies must take such factors into account if we are to make progress in eliminating poverty. B) Cleaver is correct when he notes that poverty is a chronic problem. The best way to reduce poverty is to force the poor to become better educated so that they can work their way out of poverty. C) Cleaver is correct, but he is looking at the wrong statistic. The official poverty line understates the true degree of poverty in the United States. D) Cleaver assumes that all those with incomes below the poverty line in one year remain in poverty in subsequent years. In fact, research has shown that the number of people who remain in poverty for many years is much smaller than the number who are in poverty during any one year.

Q: The Gini coefficient for the United States in 1980 was 0.403. In 2011, the coefficient was equal to 0.477. This means that A) per capita income in the United States rose from 1980 to 2011. B) there was a decrease in the amount of government transfer payments from 1980 to 2011. C) cuts in federal income tax rates in the early 1980s and 2001 helped to reduce income inequality. D) income inequality increased from 1980 to 2011.

Q: Which of the following is a transfer payment? A) the food stamp program B) a tax deduction C) Social Security payments D) an income tax credit

Q: Studies by the U.S. Census Bureau have shown that A) families remain below the poverty line for an average of five years. B) there is significant income mobility in the U.S. over time. C) income mobility in the U.S. is minimal. D) over half the people below the poverty line never move out of poverty.

Q: If official poverty statistics for the United States included transfer payments individuals receive from the government, such as Social Security payments and other non-cash benefits such as food stamps, A) the poverty rate would be lower. B) poverty would be eliminated. C) income inequality would be greater. D) the poverty rate would be overstated.

Q: Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. Refer to Figure 18-7. The second highest 20 percent of households A) earn 24 percent of the society's total income. B) earn 28 percent of the society's total income. C) earn 42 percent of the society's total income. D) earn 72 percent of the society's total income.

Q: Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. Refer to Figure 18-7. The second lowest 20 percent of households A) earn 12 percent of the society's total income. B) earn 16 percent of the society's total income. C) earn 28 percent of the society's total income. D) earn 40 percent of the society's total income.

Q: All Gini coefficients must lie between 0 and 1. The lower the value A) the more unequal the income distribution. B) the closer the income distribution is to being equal. C) the greater the degree of poverty. D) the lower the degree of poverty according to the federal government's definition of poverty.

Q: Measures of poverty (for example, the poverty line) and the distribution of income (for example, the Lorenz curve and the Gini coefficient) are misleading for which of the following two reasons? A) First, these measures do not take into account income mobility over time. Second, these measures ignore the effects of government programs meant to reduce poverty. B) First, none of these measures are adjusted for inflation. Second, they do not measure income on a per capita basis. C) First, these measures fail to include the income U.S. citizens earn working for foreign firms that have operations located in the United States. Second, these measures fail to include income foreign citizens earn working for U.S. firms that have operations in foreign countries. D) First, these measures fail to include dividend and interest income earned on stocks and bonds. Second, these measures fail to include the value of goods and services citizens make for their own consumption that are not sold in markets.

Q: As a group, people with high incomes are likely to have A) greater-than-average family inheritances and greater than average SAT scores. B) greater-than-average holdings of stocks and bonds and lower-than-average productivity. C) greater-than-average productivity and greater-than-average amounts of capital. D) a stable marriage and no children.

Q: Income inequality in the United States has increased somewhat over the past 25 years. Two factors that appear to have contributed to this are A) tax cuts on high income individuals and large increases in prices of stocks. B) strong economic growth and low inflation. C) rapid technological change and expanding international trade. D) outsourcing of jobs by U.S. firms and cuts in taxes on capital gains.

Q: A Gini coefficient of ________ means that an income distribution is perfectly equal and a Gini coefficient of ________ means the income distribution is perfectly unequal. A) 0; 1 B) 1; 0 C) 0, 100 D) 100, 0

Q: Which of the following summarizes the information provided by a Lorenz curve? A) the Lorenz coefficient B) the income distribution ratio C) the Gini coefficient D) the slope (the rise divided by the run) of the Lorenz curve at a particular point on the curve

Q: What does a Lorenz curve illustrate? A) a comparison of the distribution of income in two different countries B) the distribution of income within a country in a given time period C) the share of taxes paid by different groups of households D) the change over time in the percentage of households with incomes that place them below the poverty line

Q: Which of the following groups had the highest poverty rate in 2011 in the United States? A) Asians B) blacks C) Hispanics D) female heads of families

Q: The poverty rate is defined as the percentage of the A) labor force that is poor according to the federal government's definition of poverty. B) population that is exempt from paying federal income taxes. C) population who qualify to receive welfare payments and food stamps. D) population that is poor according to the federal government's definition of poverty.

Q: Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States? A) Reductions in income tax rates have favored high-income individuals more than low-income individuals. As a result, reductions in federal income tax rates have led to more income inequality. B) Reductions in income tax rates have created greater incentives for low-income individuals to work, save and invest. As a result, reductions in federal income tax rates have led to less income inequality. C) Reductions in income tax rates probably have had little impact on the distribution of income. D) Reductions in income tax rates have been offset by increases in corporate income tax rates and payroll taxes. As a result, greater income inequality in the 1990s has been followed by a more equal distribution of income since 2001.

Q: Which of the following statements about the distribution of income in the United States is true? A) The United States has the most unequal distribution of income of any high-income country in the world. B) The United States has a more unequal distribution of income than Bolivia and Botswana. C) The distribution of income in the United States is fairly equal and there have been no dramatic changes over time. D) The distribution of income in the United States is unequal and has become significantly more unequal over time.

Q: Absolute poverty measures vary from country to country. For example, in 2013, the poverty line in the United States for a family of four with two children was an annual income of $23,550 but economists often use a much lower threshold income of $1 per day when calculating the rate of poverty in poor countries. How is this absolute poverty measured? A) by comparing the percentage of households living below the poverty line to the total population B) by comparing a household's income to the income required to maintain the average standard of living in a society at a particular time C) by comparing the amount of goods and services that a household's income can purchase to an objective measure of the amount of income needed to sustain a certain predetermined standard of living D) by comparing the amount of goods and services that a household's income can purchase in one country to the amount of goods and services that a household's income can purchase in another country of comparable living standard

Q: Which of the following tax systems would help reduce income inequality the most? A) a regressive tax system B) a proportional tax system C) a progressive tax system D) a consumption tax system

Q: In the United States A) the income tax system has little or no impact on the distribution of income. B) the after-tax income distribution of income is more equal than the before-tax distribution. C) once a person is in poverty, it is very difficult for a person to get out of poverty. D) the degree of income mobility is relatively low.

Q: Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. Refer to Figure 18-6. If area X = 2,060, area Y = 240, and area Z= 2,700, calculate the Gini coefficient for Syldavia. A) 0.05 B) 0.12 C) 0.46 D) 0.85

Q: Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. Refer to Figure 18-6. If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia. A) 0.41 B) 0.45 C) 0.70 D) 0.76

Q: Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. Refer to Figure 18-6. Which country has the more unequal distribution of income? A) Islandia B) Syldavia C) They may have the same absolute income distribution although their relative income distribution is different. D) There is insufficient information to answer the question.

Q: Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. Refer to Figure 18-5. The highest 20 percent of households A) earn 24 percent of the society's total income. B) earn 28 percent of the society's total income. C) earn 42 percent of the society's total income. D) earn 72 percent of the society's total income.

Q: Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. Refer to Figure 18-5. The middle 20 percent of households A) earn 20 percent of the society's total income. B) earn 36 percent of the society's total income. C) earn 48 percent of the society's total income. D) earn 50 percent of the society's total income.

Q: Suppose the United States has a Gini coefficient of 0.4 and Sweden has a Gini coefficient of 0.25. Which of the following statements is true? A) The distribution of income is more equal in the United States. B) The distribution of income is more equal in the Sweden. C) Income distribution is changing faster in the United States. D) Without information on population, it is not possible to compare income distribution between countries.

Q: Figure 18-4 Refer to Figure 18-4. Rank the above panels in terms of most unequal income distribution to least unequal income distribution. A) Panel A, Panel B, Panel C B) Panel B, Panel C, Panel A C) Panel A, Panel C, Panel B D) Panel C, Panel B, Panel A

Q: As the value of the Gini coefficient approaches one A) income distribution becomes less unequal. B) income distribution becomes more unequal. C) the percentage of the population under the poverty line increases. D) the percentage of the population under the poverty line decreases.

Q: As the value of the Gini coefficient approaches zero A) income distribution becomes less unequal. B) income distribution becomes more unequal. C) the percentage of the population under the poverty line increases. D) the percentage of the population under the poverty line decreases.

Q: The Gini coefficient is measured by A) summing up the cumulative income percentages on the Lorenz curve. B) summing up the total income earned by the population and dividing by the size of the population. C) using the formula: area between perfect inequality and Lorenz curve area between the line of perfect equality to the Lorenz curve. D) using the formula: area between the line of perfect equality and the Lorenz curve the area under the line of perfect equality.

Q: A statistical tool used to measure inequality is A) the Lorenz curve. B) the Gini coefficient. C) the absolute poverty rate. D) the relative poverty rate.

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