Consider the following statements related to measurement of income inequality : (I) The greater the…
Only Statement (I) is correct: a Lorenz curve bowed farther away from the line of equality indicates greater inequality. The Gini coefficient equals zero at perfect equality…
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Consider the following statements related to measurement of income inequality :
(I) The greater the curvature of Lorenz line, the greater is the relative degree of inequality.
(II) Gini coefficients are aggregate inequality measures and can vary anywhere from 0 (perfect inequality) to 1 (perfect equality).
Which of the following is correct ?
Answer and explanation
Correct answer A
Only Statement (I) is correct: a Lorenz curve bowed farther away from the line of equality indicates greater inequality. The Gini coefficient equals zero at perfect equality and approaches one at maximum inequality, so the endpoints in Statement (II) are reversed.
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Madhya Pradesh SET (MP SET)