Consider a small economy with six individuals: one lender and five borrowers. Initially, the lender's income is $100, and each of the five borrowers has an income of $20. A new policy is then implemented that transfers $20 from the lender to the borrowers, with each borrower receiving an equal share of this transfer ($4 each). How does this policy affect the measure of income inequality in this economy?

Analysis of Income Distribution

Calculating Income Inequality

In a small economy composed of one lender and five identical borrowers, any economic change that results in a higher total income for the group of five borrowers will always lead to a decrease in the economy's overall Gini coefficient.

Consider a simplified economy with six individuals: one lender with an income of $100, and five identical borrowers who each have an income of $20. Which of the following independent events would cause the largest decrease in this economy's Gini coefficient, a measure of income inequality?

Evaluating a Claim on Economic Growth and Inequality

In a small economy with one lender and five identical borrowers, different economic conditions can lead to different distributions of income. Match each of the following income distributions to its corresponding Gini coefficient, a measure of inequality where 0 represents perfect equality and a higher value represents greater inequality.

Evaluating a Policy's Impact on Income Inequality

You are asked to calculate the Gini coefficient for a small economy of 'n' individuals using the pairwise income difference method. Arrange the following steps in the correct logical order to arrive at the final coefficient.

Comparing Economic Scenarios with the Gini Coefficient