Question

Which of the following is a correct statement about the distribution of income and wealth in the United​ States? A. The share of money income received by the lowest quintile has increased significantly since World War II. B. The United States is close to perfect income equality comma as measured by the Lorenz curve. C. If pension plans are added to measures of wealth comma it is clear that the majority of households have low levels of wealth. D. The share of total income received by the lowest quintile has more than doubled since World War II. E. All of the above answers are correct.

Answer 1

Answer:

The correct answer is letter "B": The United States is close to perfect income equality comma as measured by the Lorenz curve.

Explanation:

Named after American economist Max Lorenz (1901-1975), the Lorenz curve portraits the income inequality of a country. It shows a straight diagonal line with a slope of 1 meaning perfect income equality and a curve underneath the line that shows the real distribution.  

The area between the line and the curve is represented by the Gini coefficient (named after Corrado Gini, 1884-1965). The coefficient fluctuates between 0 and 1, 0 being perfect equality and 1 implying households have all the income available. In 2018, the U.S. had a Gini of 0.378.