The Figure Above Shows Lorenz Curves for a Nation

question 17

Multiple Choice

The figure above shows Lorenz curves for a nation.
-Based on the figure above,if the poorest 20 percent group of households increased the share of the nation's income they receive,then

• A) there is a movement up along the Lorenz curve for income.
• B) there is a movement down along the Lorenz curve for income.
• C) the Lorenz curve for income shifts toward the line of equality.
• D) the Lorenz curve for income shifts away from the line of equality.
• E) Both answers A and C are correct.

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Definitions:

Net New Equity

The amount of equity capital that is generated by a company through the sale of new shares, after deducting any costs associated with issuing the new equity.

Dividends Paid

The portion of a company's earnings distributed to shareholders, usually on a regular basis.

Operating Expenses

The costs related to the day-to-day operations of a business, excluding cost of goods sold.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods a company has sold during a period.