Consider an Economy with a Particular Distribution of Income

question 27

Multiple Choice

Consider an economy with a particular distribution of income. Over the next 10 years, the income of all households increases by $20,000. How will the Gini coefficient change over those 10 years?

• A) The Gini coefficient will increase.
• B) The Gini coefficient will decrease.
• C) The Gini coefficient will stay the same as all households received the same increase in income.
• D) The Gini coefficient will become more negative.
• E) It is impossible to determine how the Gini coefficient will change as it will depend on the original income distribution.

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