Q. A graph showing the degree of inequality in income and wealth in a given population or an economy – describes which of the following?

[A] Laffer Curve

[B] Lorenz Curve

[C] Phillips Curve

[D] Kuznets Curve

Answer: B
Notes:

A graph showing the degree of inequality in income and wealth in a given population or an economy. It is a rigorous way to measure income inequality.

  • In this method (for example), personal incomes in an economy are arranged in increasing order; the cumulative share of total income is then plotted against the cumulative share of the population.
  • The curve’s slope is thus proportional to per capita income at each point of the population distribution.
  • In the case of complete equality of income, the lorenz curve will be a straight line and with greater curvature the inequality rises proportionally–the Gini Coefficient measures this inequality.

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