If income is distributed equally, the: Lorenz curve is a straight line. Line of

Question

If income is distributed equally, the: Lorenz curve is a straight line. Line of equality sags below the Lorenz curve. Lorenz curve sags below the line of equality. Gini coefficient is greater than zero. If Ashwin makes $50, 000 per years as a computer programmer and pays $6,000 in taxes while makes $50, 000 per years as a roofing contractor and pays $7,000 in taxes, this is an example A regressive tax system. Horizontal inequity A flat tax. Vertical inequity. When there is no deflation or inflation: Prices of all goods change by the same percentage. Relative prices remain unchanged. Average prices rise by zero percent. Full employment is achieved. Which of the following is true about a period of inflation? Prices of all goods slay the same or are rising. All prices are rising. The average price level is rising. All of the above.

Explanation / Answer

16. Horizontal Equity is the one in which 2 persons with same income pays same tax irrespective of their profession. Whereas Horizontal Inequity means paying different tax with same conditions as above. So case mentioned in this question is clearly matching with Horizontal Inequity.

So option B is correct

17. Deflation is decrease in prices and inflation is increase in prices.

So when there is no deflation or inflation, average prices of all goods has to be equal. Please note that in this case relative prices may differ.

So option C is correct which is equivalent to average prices rise by 0%

18. Inflation is when average of all goods are rising. Relative pricing may differ.

So option C is correct.

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