Using the Lorenz curve,the degree of income inequality is measured by _____
A)the slope of the line connecting all points for which a given percentage of families receive exactly the cumulative percentage of income.
B)the distance of the Lorenz curve from the line of perfect equality.
C)the slope of the curve.
D)the number of times the Lorenz curve crosses the line of perfect equality.
E)dividing the number of people below the poverty line by the total population.

Question

Quizplus · Accepted Answer

The degree of income inequality is measured by the distance of the Lorenz curve from the line of perfect equality. The closer the Lorenz curve is to the line of perfect equality, the lower the degree of income inequality, and vice versa. The slope of the Lorenz curve simply indicates the rate at which income is distributed among the population but does not necessarily indicate the degree of inequality. The number of times the Lorenz curve crosses the line of perfect equality is irrelevant to measuring the degree of inequality. Dividing the number of people below the poverty line by the total population only gives a measure of poverty, not inequality.

Using the Lorenz Curve,the Degree of Income Inequality Is Measured