We Wish to Compare the Income Distribution in Two Countries

question 20

Multiple Choice

We wish to compare the income distribution in two countries using a Gini coefficient.If Country A has a Gini coefficient of .197,which of the following would indicate a country with a more equal distribution?

• A).123
• B).197
• C).450
• D)Gini coefficients cannot be directly compared.

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Definitions:

Normal Good

A good whose demand increases as consumers' income rises, holding all other factors constant.

Consumption

Consumption refers to the use of goods and services by households. It is a primary component of the economy, encompassing the spending on goods and services by consumers.

Income

Money received, especially on a regular basis, for work or through investments.

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.