The Closer the Income Lorenz Curve Is to the Line

question 7

Multiple Choice

The closer the income Lorenz curve is to the line of equality,

• A)the more equal is the income distribution.
• B)the less equal is the income distribution.
• C)the more unfair is the income distribution.
• D)the richer are the highest 5 percent of households.
• E)the poorer are the highest 5 percent of households.

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Definitions:

Earning Power

The ability of a company to generate profit from its operations over time.

Stock Portfolio

A collection of stocks held by an individual or institution, designed to achieve specified financial goals.

Bond Portfolio

A collection of bonds held by an individual or institution as an investment strategy to diversify risk and generate income.

Maturity

The final payment date of a loan or financial instrument, at which point the principal (and all remaining interest) is due to be paid.