A Lorenz Curve Showing the Current Distribution of Pre-Tax Income

question 61

Multiple Choice

A Lorenz curve showing the current distribution of pre-tax income in Canada is not an entirely accurate depiction of Canadian income distribution because

• A)Statistics Canada does not actually collect data on Canadian household income.
• B)Canada's tax-and-transfer system reduces income inequality,which causes the Lorenz curve to be flatter and closer to the diagonal than the pre-tax curve.
• C)the data collected on Canadian income distribution does not allow for an accurate plotting of a Lorenz curve.
• D)a Lorenz curve cannot depict the distribution of income after government transfer payments have been distributed to households.
• E)a Lorenz curve cannot depict the distribution of after-tax income.

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Definitions:

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