Chapter 19 Flashcards
In-kind benefits are a way of correcting
Inequity
Public housing is an example of
in-kind income
Wealth refers to
the market value of assets people own.
How income is distributed is typically measured using
Personal income
A graphic illustration of the cumulative size distribution of income is known as the
lorenz curve
If income is distributed equally, the
Lorenz curve is a straight line.
If a greater portion of income is distributed to those in the highest income quintile, the
Lorenz curve sags below the diagonal line of absolute equality.
If the area between the diagonal line of absolute equality and the Lorenz curve is greater for the United States than for Japan, we can conclude that the
distribution of income in Japan is closer to being equal than in the United States.
If the area between the diagonal line of absolute equality and the Lorenz curve is greater for China than for the United States, we can conclude that the
distribution of income in China is less equal than in the United States.
The federal income tax is designed to
shift the Lorenz curve inward.
A mathematical summary of inequality based on the Lorenz curve is known as the
Gini coefficient.
In the United States between 2000 and 2019, the Gini coefficient
increased, indicating greater income inequality.
If the Gini coefficient is greater for the United Kingdom than for Japan, we can conclude that the
distribution of income in the United Kingdom is less equal than in Japan
The size distribution of income
tells how personal income is divided up among households or income classes.
(Figure 33.1) In Alpha, the lowest 20 percent of families receive approximately what percentage of income?
5 percent
(Figure 33.1) In Omega, the lowest 40 percent of families receive approximately what percentage of income?
10 PERCENT
(Figure 33.1) Suppose that the Gini coefficient for Omega is 0.55. The Gini coefficient for Alpha must be
less than .55
Which of the following is an example of an explicit income transfer?
a Social Security pension paid to a retired factory worker
The argument against greater equality in the distribution of income in the United States hinges predominantly on
loss of incentive
(Figure 33.2) Based on the Lorenz curves for the four different economies, which economy would the lowest 20 percent of families receive the smallest share of the total income?
A
