ECN102 FINAL EXAM QUESTIONS AND ANSWERS
Lorenz Curve - CORRECT ANSWER✅✅Graph showing cumulative % of income earned by cumulative %
of households.
Perfect Equality - CORRECT ANSWER✅✅45° line — each % of households earns the same % of income.
Actual Lorenz Curve - CORRECT ANSWER✅✅Bows below the line → more bow = more inequality.
Gini Coefficient - CORRECT ANSWER✅✅Area between equality line & Lorenz curve ÷ total area (0 =
equality, 1 = max inequality).
Criticisms of Lorenz Curve - CORRECT ANSWER✅✅Does not show causes of inequality.
Income Inequality - CORRECT ANSWER✅✅U.S. has higher inequality than most high‑income nations.
Income Distribution - CORRECT ANSWER✅✅Top 20% earn ~50% of income; bottom 20% earn ~3%.
Global Comparison of Inequality - CORRECT ANSWER✅✅Nordic countries = lowest inequality.
Determinants of Income Differences - CORRECT ANSWER✅✅Age‑Earning Cycle: Income rises with age
→ peaks → falls near retirement.
Compensating Wage Differentials - CORRECT ANSWER✅✅Dangerous/unpleasant jobs pay more.
Poverty Rate - CORRECT ANSWER✅✅% of population below official poverty line.
Poverty Line Basis - CORRECT ANSWER✅✅Cost of minimum food diet × 3.
Major Anti‑Poverty Programs - CORRECT ANSWER✅✅SNAP (food stamps)
Lorenz Curve - CORRECT ANSWER✅✅Graph showing cumulative % of income earned by cumulative %
of households.
Perfect Equality - CORRECT ANSWER✅✅45° line — each % of households earns the same % of income.
Actual Lorenz Curve - CORRECT ANSWER✅✅Bows below the line → more bow = more inequality.
Gini Coefficient - CORRECT ANSWER✅✅Area between equality line & Lorenz curve ÷ total area (0 =
equality, 1 = max inequality).
Criticisms of Lorenz Curve - CORRECT ANSWER✅✅Does not show causes of inequality.
Income Inequality - CORRECT ANSWER✅✅U.S. has higher inequality than most high‑income nations.
Income Distribution - CORRECT ANSWER✅✅Top 20% earn ~50% of income; bottom 20% earn ~3%.
Global Comparison of Inequality - CORRECT ANSWER✅✅Nordic countries = lowest inequality.
Determinants of Income Differences - CORRECT ANSWER✅✅Age‑Earning Cycle: Income rises with age
→ peaks → falls near retirement.
Compensating Wage Differentials - CORRECT ANSWER✅✅Dangerous/unpleasant jobs pay more.
Poverty Rate - CORRECT ANSWER✅✅% of population below official poverty line.
Poverty Line Basis - CORRECT ANSWER✅✅Cost of minimum food diet × 3.
Major Anti‑Poverty Programs - CORRECT ANSWER✅✅SNAP (food stamps)
