Question

Consider the following statements:
1. Gini coefficient is commonly used to measure the inequality of wealth.
2. The Gini coefficient with a value of 1 expresses total equality and a value of 0 expresses maximum inequality.
Which of the statements given above is/are correct?

• A. Only 1
• B. Only 2
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is A Only 1

Gini coefficient is the area between the Lorenz curve (unequal distribution of wealth line) and the the perfectly equal distribution of wealth line. The greater the area, higher the Gini coefficient and greater the inequality. Gini coefficient of 0 represents total equality and 1 represents maximum inequality.