Census: Income Fell Sharply Last Year The U.S. Census Bureau reported that in 20

Question

Census: Income Fell Sharply Last Year The U.S. Census Bureau reported that in 2008 the median household income fell 3.6%. The share of people living in poverty rose to 13.2% in 2008 from 12.5% in 2007. Only households led by people aged 65 or older enjoyed income gains-a 1.2% increase. Source: USA Today, September 11, 2009 The change in the median income and the change in the poverty rate tell us To know how the changes described changed the U.S. Lorenz curve we would need to know A. the mode income ° C. the change in income received by the households in the bottom quintile O A· the Lorenz curve in 2008 is the same as the Lorenz curve in 2007 curve in 2007 O C. nothing about the U.S. Lorenz curve 0 D, the Lorenz curve in 2007 is closer to the line of equality than the Lorenz and in the top quintile | D. the mean income curve in 2008

Explanation / Answer

With the given information we are provided that the median income of the household decreased in 2008. We can expect the income level to go down which means more number of people will now be under the poverty line. Hence there is an increase in income inequality. The lorenz curve will now move away from a perfect line of equality to show greater economic and income inequality. Option d is correct.

Option C is correct for the next question because we need to know the income received by households in bottom quintile and top quintile. We do not need Mean Median Mode about Income.

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