The 45° Line on a Lorenz Curve Represents

question 13

Multiple Choice

The 45° line on a Lorenz curve represents

• A) complete income equality.
• B) complete income inequality.
• C) complete wealth equality.
• D) complete wealth inequality.

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Definitions:

Multiplier

In economics, a factor by which an increase in spending leads to a greater increase in national income.

Open-market Purchase

Transactions where central banks buy securities in the open market to increase the money supply and stimulate economic activity.

Interest Rates

The cost of borrowing money or the return earned from lending money, often expressed as a percentage of the principal.

Aggregate Demand

The aggregate need for various products and services across an economy at varying price points, throughout a particular timeframe.