11. Using the diagram above, which of the following is true? a. In country S the
ID: 1094969 • Letter: 1
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11. Using the diagram above, which of the following is true? a. In country S the poorest 30 percent of the population receive 13 percent of the available income in country S. b. In country T the richest 10 percent of the population receive 23 percent of the available income in country T. c. In country S the richest 10 percent of the population receive 55 percent of the available income in country S. d. Country T has a less equal distribution of income than does country S. a None of the above is true. 12. Suppose, as a policymaker, that you could order a single change to reduce the incidence of poverty. Which of the following changes is most likely to be effective? a. Engineering a sustained period of economic growth b. Reducing, if not eliminating, the minimum wage c. Increase taxes on the rich and redistribute it to the poor.Explanation / Answer
11. B
.Lorenz curve shws the percentile of income recieved by given percentage of population.
S lowest 30% recieve 3%
T lowest 30% recieve 13%
S top 10% recieve 45%
T top 10% recieves 100-77 = 23%
Country T has more equatable distribution than s as it lie close to 45 degree line.
12. A
If the benefits of growth are translated into poverty reduction through the existing distribution of income, then more equal societies will be more efficient transformers of growth into poverty reduction. A number of empirical studies have found that the responsiveness of income poverty to growth increases significantly as inequality is lowered.
Others have suggested that greater equity comes at the expense of lower growth and that there is a trade-off between growth and equity when it comes to poverty reduction. A large number of recent empirical studies, however, have found that there is not necessarily such a trade-off and that equity in its various dimensions is growth enhancing.
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