For Question 7 please refer to the chart below of the Lorenz Curve for Paraguay and Germany for 2014: Percent of Total Income 0 Paraguay Germany Percent of Total Population Based on the table above, which of the following is true; Paraguay has a greater degree of Income Inequality Germany has a lower Gini-Coefficient Paraguay has a higher Gini-Coefficient Germany has a greater degree of Income Inequality

3. Comparing Gini coefficients of different countries Aa Aa The following diagram shows the Lorenz curves for three countries. Country X's Lorenz curve is shown in blue, Country Y's Lorenz curve is shown in red, and Country Z's Lorenz curve is shown in green. Region I is the area above Country X's Lorenz curve and below the 45-degree line. Region II is the area below Country X's Lorenz curve and above Country Y's Lorenz curve. Region III is the area below Country Y's Lorenz curve and above Country Z's Lorenz curve. Region IV is the area below Country Z's Lorenz curve. INCOME (Cumulative percent) 100 80 60 40 20 0 The Gini coefficient for Country Z is given by Couny X 20 Country Y Country Z 11 III 60 IV 40 100 HOUSEHOLDS (Cumulative percent) 80 has the highest Gini coefficient.

Incomes in China and India are a small fraction of incomes in the United States. But incomes in China and India are growing more quickly those in the United States. Draw the world Lorenz curve before the growth in income in China and India. Label it Before. >>> Reposition the label by clicking on the edge of the label box and dragging it. Draw the world Lorenz curve after the growth in income in China and India. Label it After. Inequality between the people in China and India and the people in the United States is O A. increasing OB. staying relatively constant C. decreasing OD. increasing in some years and decreasing in other years % 5 6 Selected: none Oll 87 & 7 O * 8 O 100- 80- 60- 40- 20- 0 Cumulative percentage of income ( 9 20 40 80 60 Cumulative percentage of households >>> Draw only the objects specified in the question. Delete Clear * ? ) 0 Next x 10 an rld" it fe dust real- lesto SITI Oriente 1 C++ ( Camp.o NS 1 ye Coding hool Stu Mihailescu NS 2 year. ython - Fu ers [Tutoria…

GDP per capita does not account for distribution; consequently, economic growth may actually reduce inequality equality

Use the data from the table below to construct a Lorenz curve.  Income Shares in the United States Lowest 20% Second Lowest 20% Third 20% Fourth 20% Highest 20% 5.2 10.3 15.3 22.4 46.9

Q2] Given is the data for Country A and B: Population Fraction Country A's Income Country B's Income bottom 25% 5 million 10 million 2nd 25% 10 million 15 million 3rd 25% 30 million 20 million top 25% 55 million 55 million a) Compute the cumulative income share and neatly plot (using Excel) the Lorenz curve for these two countries with labels. Feel free to use excel template that I have uploaded and copy paste the plot. b) Compute the Gini coefficient assuming the region beneath the two respective Lorenz curve is For country A = 0.2875 For country B = 0.3250

2. Constructing a Lorenz curve from income shares data The following table shows the approximate income distribution for Peru, Bulgaria, and Lithuania in 2016. In particular, it shows the income shares of each fifth of the income distribution. Percentage Share, 2016 Percentage of Families Peru Bulgaria Lithuania Lowest fifth 4 9 7 Second-lowest fifth 8 14 12 Middle fifth 12 17 16 Second-highest fifth Highest fifth 20 22 22 56 38 43 has the most total income. On the following graph, plot the Lorenz curves for the three countries. Plot Peru's Lorenz curve using the green points (triangle symbol), Bulgaria's Lorenz curve using the blue points (circle symbol), and Lithuania's Lorenz curve using the purple points (diamond symbol). Be sure to plot the first point of each Lorenz curve at (0,0). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. CUMULATIVE PERCENTAGE OF MONEY INCOME graph.) 100 20 40 60 80 100…