Which of the following is measured by the Lorenz curve?

Question

Question

This question was previously asked in

UPPSC Civil Service 2018 Official Paper 1

Answer 1

The correct answer is Inequality of Income.

Key Points

Lorenz curve represents the distribution of income in an economy.
It is represented by a straight line that depicts the perfect distribution of income.
Lorenz curve is beneath that line which shows the estimated distribution of income.
The area between that straight line and the Lorenz curve is called the Gini coefficient, which represents the degree of income inequality.
The farther the curve, the higher the inequality.

Additional Information

The relation between Income and unemployment is given by the Phillips curve.
- It was developed by AW Phillips.
- It says that income and unemployment have an inverse relationship.
- Higher the income, lesser the unemployment.
- However, it has been disproven because of Stagflation in the 1970s.
Stagflation - It occurs when an economy is experiencing a high inflation rate but no rise in employment. It leads to the development of the Misery Index.