Question : The Gini coefficient is a measure of:
Option 1: Economic growth
Option 2: Inflation rate
Option 3: Income inequality
Option 4: Unemployment rate
Correct Answer: Income inequality
Solution : The correct answer is (c) income inequality.
The Gini coefficient is a statistical measure that quantifies the level of income or wealth inequality within a population. It is derived from the Lorenz curve, which depicts the distribution of income or wealth across different segments of the population.
The Gini coefficient ranges between 0 and 1, where 0 represents perfect equality (all individuals have an equal share of income or wealth) and 1 represents extreme inequality (one individual has all the income or wealth, while others have none). The coefficient measures the area between the Lorenz curve and the perfect equality line as a proportion of the entire area below the perfect equality line.
The Gini coefficient is widely used by economists, policymakers, and researchers to study income distribution, assess the impact of economic policies on inequality, and monitor changes in income or wealth disparities over time. It helps policymakers identify areas where interventions may be needed to address inequality and promote more equitable economic outcomes.
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