Please answer the questions with explanations. (Multiple Choice)

1.Which of the following is true of the U.S. poverty rate?

a. It fell in the 1960s.

b. There has been a clear upward trend since 1973.

c. It was lower in 2012 than in 1973.

d. It has remained unchanged since the mid 1970s.

e. It has been steadily decreasing since 1959.

2. In 2012, the poorest 20% of households received approximately what percent of total income?

a. 1% b. 3% c. 7% d. 10% e. 17%

3. If one person received all of the income in an economy, the Lorenz curve would

a. rise steadily until the middle of the graph, and then fall.

b. be upward-sloping.

c. be downward-sloping.

d. be vertical on the left side of the graph.

e. lie along the horizontal axis except at the far right side of the graph.

4.Programs designed to help only those with low incomes are called

a. welfare programs.

b. in-kind programs.

c. means-tested programs.

d. income maintenance programs.

e. social programs.

5.If a country has a perfectly equal distribution of income, its Gini coefficient equals

a. 0. b. 1. c. 10. d. 50. e. 100

6. Again consider the economy of Equalor described in Question 1, in which the total income is $2 million. (Open Ended)

a. Draw a correctly labeled graph showing the points on the Lorenz curve for the poorest 0%, 20%, 40%, 60%, 80%, and 100% of the population before the redistribution of income.

b. On the graph you have already drawn, repeat your answer to part a for the situation after the redistribution of income. Indicate the points that have changed with an "X".

c. What is the Gini coefficient after the redistribution of income?