ECONOMICS
INCOME DISTRIBUTION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Lorenz curve
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Gini Coefficient
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Negative income tax
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All of the above
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Detailed explanation-1: -The Gini coefficient is a measure of inequality of a distribution. It is defined as a ratio with values between 0 and 1: the numerator is the area between the Lorenz curve of the distribution and the uniform distribution line; the denominator is the area under the uniform distribution line.
Detailed explanation-2: -Gini index The index is computed as the ratio of the area between the two curves (Lorenz curve and 45-degree line) to the area beneath the 45-degree line. In the figure above, it is equal to A/(A+B). A higher Gini coefficient represents a more unequal distribution.
Detailed explanation-3: -The Gini coefficient is usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y-axis) that is cumulatively earned by the bottom x% of the population.