Consider the graph below, which depicts Lorenz curves for countries X, Y, and Z.
a. Which country has the least income inequality?
b. Which country has the most income inequality?
c. Countries Y and Z are identical in all but one respect: population distribution. The share of the population made up of children below working age is much higher in country Z. Recently however, birthrates have declined in country Z

and risen in country Y. Assuming that the countries remain identical in all other respects, would you expect that in 20 years the Lorenz curves for the two countries will be closer together or farther apart?

Transcribed Image Text:

100 80 E E 60 E 40 O 20 F 0 20 40 60 80 100 Cumulative Percentage of Population