STATEMENT or FALSE? EXPLANAΤION 1. A policy that leads to an increase in the Headcount Index and the Poverty Gap Index will also necessarily lead to an increase in the FGT4=2 index. 2. A policy that leads to an increase in the Total Poverty Gap will also necessarily lead to an increase in the Poverty Gap Index. 3. Kelly owns a bike shop in Davis. The salary of the accountant she hires to do taxes for the bike shop IS counted in California GDP, but the sales from used bikes in her store are NOT counted in California GDP. 4. If we increase the incomes of everyone in an economy by 50%, the Gini coefficient of income inequality will also increase by 50%. 5. A regressive transfer between two individuals will always cause the Gini Coefficient to increase.

STATEMENT or FALSE? EXPLANAΤION 1. A policy that leads to an increase in the Headcount Index and the Poverty Gap Index will also necessarily lead to an increase in the FGT4=2 index. 2. A policy that leads to an increase in the Total Poverty Gap will also necessarily lead to an increase in the Poverty Gap Index. 3. Kelly owns a bike shop in Davis. The salary of the accountant she hires to do taxes for the bike shop IS counted in California GDP, but the sales from used bikes in her store are NOT counted in California GDP. 4. If we increase the incomes of everyone in an economy by 50%, the Gini coefficient of income inequality will also increase by 50%. 5. A regressive transfer between two individuals will always cause the Gini Coefficient to increase.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter20: Poverty, Inequality, And Discrimination

Section: Chapter Questions

Problem 5DQ

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IM R %24 How does progressive taxation and redistribution policies affect the Lorenz curve and Gini coefficient? O The Lorenz curve becomes less curved and the Gini coefficient increases. O The Lorenz curve becomes less curved and the Gini coefficient decreases. O The Lorenz curve becomes more curved and the Gini coefficient increases. O The Lorenz curve becomes more curved and the Gini coefficient decreases. 10:44 PM earch 13 12/12/2021 ins prt sc f12 delete 114 144 Po backspace lock 4. 7. home enter 7. 4. K. pause 1 shift ctrl
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