Economics Homework Help

Table1: Gini coefficients of adjusted market, total and after-tax income

Release date: 2021-03-23

Geography: Canada

Canada

Income concept

2015

2016

2017

2018

2019

Adjusted market income

0.436A

0.432A

0.439A

0.428A

0.421A

Adjusted total income

0.354A

0.347A

0.352A

0.345A

0.338A

Adjusted after-tax income

0.314A

0.306A

0.310A

0.303A

0.299A

Symbol legend:

A

data quality: excellent

Source: Centre for Income and Socioeconomic Well-being Statistics, Statistics Canada

Question 1 (6 points)

Given the information provided in the previous table, which of the following statements is right. There is only one correct option.

Question 1 options:

The adjusted total income is the household income before taxes and transfers divided by the OECD scale (in the case of Canada).

The adjusted market income is the household income before taxes and transfers divided by the square root of the household size (in the case of Canada).

The adjusted total income is the household income before taxes and transfers divided by the square root of the household size (in the case of Canada).

The adjusted market income is the household income before taxes and transfers divided by the oxford scale (in the case of Canada).

Question 2 (6 points)

Given the information provided in the previous table, which of the following statements is right. There is only one correct option.

Question 2 options:

The Lorenz curve for Canada in 2019 is not a 45-degree line.

The Gini coefficient for 2019 is 0.421+0.338+0.299. This means that there is income inequality in Canada in 2019 because the Gini coefficient is above 1.

The Lorenz curve for Canada in 2019 is a 45-degree line.

The Gini coefficient for 2018 is 0.345 (using the adjusted total income). This means that there is no income inequality in Canada in 2018 because the Gini coefficient is below 1.

Question 3 (6 points)

Given the information provided in the previous table, which of the following statements is wrong. There is only one correct option.

Question 3 options:

In 2016 the Lorenz curve when using the adjusted market income will be further away from the 45 degree line than the Lorenz curve when using the adjusted total income.

In 2015 income inequality is higher when using the adjusted market income than when using the other income definitions.

In 2019 income inequality is lower when using the adjusted market income because redistribution has been taken into account.

In 2019 income inequality is lower when using the adjusted after-tax income because redistribution has been taken into account.