SSC Economics Sample Paper NCERT Sample Paper-3

  • question_answer
    Consider the following statements:
    1. The Lorenz curve is a graphical representation of relative poverty.
    2. The Lorenz curve is used to calculate the Gini coefficient which is numerical indictor of inequality. Which of these statements is/are correct?

    A)  Only 1 

    B)  Only 2

    C)  Both 1 and 2    

    D) neither 1 nor 2

    Correct Answer: C

    Solution :

    [c] A graphical representation of wealth distribution developed by American economist Max Lorenz in 1905. On the graph, a straight diagonal line represents perfect equality of wealth distribution; the Lorenz curve lies beneath it, showing the reality of wealth distribution. The difference between the straight line and the curved line is the amount of inequality of wealth distribution, a figure described by the Gini coefficient. The Lorenz curve can be used to show what percentage of a nation's residents possess what percentage of that nation's wealth. For example, it might show that the country's poorest 10% possess 2% of the country's wealth.

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