The Larger the Gap Between the Income Lorenz Curve and the Line

question 8

Multiple Choice

The larger the gap between the income Lorenz curve and the line of equality,

• A)the greater is the equality in the income distribution.
• B)the less is the inequality in the income distribution.
• C)the poorer are the top 50 percent of households.
• D)the richer are the lowest 50 percent of households.
• E)the greater is the inequality in the income distribution.

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Definitions:

Poor Fit

Indicates that a statistical model does not adequately capture the observed data or relationships among variables.

Quadratic Model

A mathematical model or equation that involves terms up to the second degree, typically represented as ax^2 + bx + c = 0.

Second-Order Polynomial Model

A model representing a relationship between variables as a quadratic equation, including linear, squared, and potential interaction terms.

MSR / MSE

MSR (Mean Square Regression) and MSE (Mean Square Error) are measures in regression analysis, where MSR evaluates the variance explained by the model, and MSE measures the average error of the model’s predictions.