The difference between the 45-degree line and the Lorenz curve shows the:

Question

Quizplus · Accepted Answer

The 45-degree line represents perfect income equality, where every household earns the same amount of income. The Lorenz curve shows the actual distribution of income, and any deviation from the 45-degree line indicates the degree of income inequality. Therefore, the correct answer is D - the difference between the 45-degree line and the Lorenz curve shows the degree of income inequality. A and B are incorrect because they refer to gaps in the economy that are unrelated to the measurement of income inequality, and C is incorrect because the Lorenz curve does not directly measure the number of households classified as poor.

The Difference Between the 45-Degree Line and the Lorenz Curve