Question : The Lorenz curve is used to measure:
Option 1: Income inequality
Option 2: Economic growth
Option 3: Unemployment rate
Option 4: Inflation rate
Correct Answer:
Income inequality
Solution : The correct answer is (a) Income inequality.
The Lorenz curve is a graphical representation used to measure income inequality within a population. It provides a visual depiction of the distribution of income among individuals or households in a society.
The Lorenz curve is constructed by plotting the cumulative share of income received by a certain percentage of the population against the corresponding cumulative percentage of the population. The line of perfect equality represents a situation where income is equally distributed among all individuals. The further the Lorenz curve deviates from the line of perfect equality, the greater the income inequality.
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