Question
Question 3 [12 marks] a. Draw a Lorenz curve for an economy comprising of unemployed (with zero income), workers and employers that serves as a
Question 3 [12 marks] 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 [2 marks] b. Use this Lorenz curve to explain how growth that reduces unemployment affects income inequality. [3 marks] 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. [3 marks] d. Discuss the possible implications (using Lorenz curve) of the Basic Income Grant on inequality of market income [4 marks] [Consider how the grant with taxes may affect total income and incentives to work]
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