Table 156 Table 156 Shows Income Distribution Data for Two Countries

question 129

Essay

Table 15.6
$\begin{array}{|c|c|c|}\hline \text { Income Quintile } & \begin{array}{c}\text { Agraria } \\\text { Percentage of Total } \\\text { Income }\end{array} & \begin{array}{c}\text { Urbana } \\\text { Percentage of Total } \\\text { Income }\end{array} \\\hline \text { Lowest 20\% } & 3 \% & 5 \% \\\hline \text { Second quintile } & 9 \% & 14 \% \\\hline \text { Third quintile } & 14 \% & 20 \% \\\hline \text { Fourth quintile } & 24 \% & 24 \% \\\hline \text { Highest 20\% } & 50 \% & 37 \% \\\hline\end{array}$
Table 15.6 shows income distribution data for two countries. Use this data to answer the following questions.
-Refer to Table 15.6.
a.Draw a Lorenz curve for each country.
b.Which country has the more equal distribution of income?
c.Based on the Lorenz curve for the two countries, can you determine which country has the more progressive tax system? Explain your answer.

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Definitions:

CPI

Stands for Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

US$

The United States Dollar, the official currency of the United States, represented as USD.

Euro

The official currency of 19 of the 27 European Union countries, which together make up the Eurozone.

Buying Power

The capacity of an individual or company to purchase goods and services, often related to the amount of money available.