Consider an Economy with a Particular Distribution of Income

Multiple Choice

Consider an economy with a particular distribution of income. Over the next 10 years, the income of all households increases by $20,000. How will the Gini coefficient change over those 10 years?

A) The Gini coefficient will increase.
B) The Gini coefficient will decrease.
C) The Gini coefficient will stay the same as all households received the same increase in income.
D) The Gini coefficient will become more negative.
E) It is impossible to determine how the Gini coefficient will change as it will depend on the original income distribution.