Below is a Lorenz Curve for a given country. Suppose its government cuts spending on Medicaid, Supplemental Nutrition Assistance Program and other aids to the poor. Show how the spending cuts would affect income inequality by drawing the new Lorenz Curve.

Below is a Lorenz Curve for a given country. Suppose its government cuts spending on Medicaid, Supplemental Nutrition Assistance Program and other aids to the poor. Show how the spending cuts would affect income inequality by drawing the new Lorenz Curve.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 22RQ: Who is included in the top income quintile?

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Question

1
OB
0.8
0.6
0.4
Actual
Lorenz Curve
0.2
C
0.2
0.4
0.6
0.8
1
Share of Households
Share of Income

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