a. Draw a Lorenz curve for an economy comprising of unemployed (with zero income), workers and employers that serves as a representation of South Africa b. Use this Lorenz curve to explain how growth that reduces unemployment affects income inequality. c. Use the Lorenz curve from (a) to illustrate and discuss how the implementation of a Basic Income Grant (a payment of a fixed amount of income to every person) financed through taxation may affect inequality of disposable income.
a. Draw a Lorenz curve for an economy comprising of unemployed (with zero income), workers and employers that serves as a representation of South Africa b. Use this Lorenz curve to explain how growth that reduces unemployment affects income inequality. c. Use the Lorenz curve from (a) to illustrate and discuss how the implementation of a Basic Income Grant (a payment of a fixed amount of income to every person) financed through taxation may affect inequality of disposable income.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Practice questions
a. Draw a Lorenz curve for an economy comprising of unemployed (with zero income), workers and
employers that serves as a representation of South Africa
b. Use this Lorenz curve to explain how growth that reduces unemployment affects income
inequality.
c. Use the Lorenz curve from (a) to illustrate and discuss how the implementation of a Basic Income
Grant (a payment of a fixed amount of income to every person) financed through taxation may
affect inequality of disposable income.
d. Discuss the possible implications (using Lorenz curve) of the Basic Income Grant on inequality of
market income(Consider how the grant with taxes may affect total income and incentives to work).
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