If Earnings Inequality Continues to Increase,the Lorenz Curve Will Shift

question 6

Multiple Choice

If earnings inequality continues to increase,the Lorenz curve will shift:

• A)away from the diagonal and the Gini coefficient will rise
• B)away from the diagonal and the Gini coefficient will fall
• C)toward the diagonal and the Gini coefficient will rise
• D)towards the diagonal and the Gini coefficient will fall

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, which accurately reflects the value of goods and services produced by an economy.

Business Quarter

A division of a year into four parts, each typically lasting three months, used in financial reporting and forecasting.

Nominal Rate

The interest rate before adjustments for inflation, representing the face value of financial products.

Real Rate

The interest rate that has been adjusted for inflation, reflecting the true cost of borrowing or the actual earnings on an investment.