Using the Lorenz Curve, the Degree of Income Inequality Is

question 2

Multiple Choice

Using the Lorenz curve, the degree of income inequality is measured by

• A)The line connecting all points for which a given percentage of families receives exactly the cumulative percentage of income
• B)the distance of the Lorenz curve from the line of perfect equality
• C)the flat diagonal line that applies to a perfectly elastic demand curve
• D)the number of times the Lorenz curve crosses the line of perfect equality
• E)is derived by dividing the number of people below the poverty line by the total population

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Definitions:

Subsidiary Ledgers

Detailed ledgers that contain information about specific accounts, which then summarize into a control account in the general ledger.

Accounts Payable

Short-term liabilities of a company, representing amounts owed to creditors for goods or services received.

Accounts Receivable

Funds that customers owe to a business for goods or services that have been provided but remain unpaid.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership interest in the company.