If the Income Distribution Is More Unequal Than the Wealth

question 129

Multiple Choice

If the income distribution is more unequal than the wealth distribution,then the

• A) Lorenz curve for income will be farther away from the line of equality than the Lorenz curve for wealth.
• B) government has imposed a higher tax rate on income.
• C) Lorenz curve for wealth will be farther away from the line of equality than the Lorenz curve for income.
• D) Lorenz curve for wealth will lie above the Lorenz curve for income.
• E) It is not possible to draw the Lorenz curve for wealth on the same figure with the Lorenz curve for income.

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Definitions:

Harry Markowitz

An American economist known for his pioneering work in modern portfolio theory, emphasizing diversification and risk management in investing.

Interest-Rate Sensitivity

A measure of how much the value of an investment or a portfolio will change in response to a change in interest rates.

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The cost at which a bond is trading, which can fluctuate based on interest rates, the bond's credit quality, and other factors.

Coupon Rate

The per annum interest rate of a bond, depicted as a percentage of its principal amount.