Question

Q. Regarding the Lorenz curve and Gini coefficient, consider the following statements:

Select the correct answer using the codes given below:

• A. 1 only
• B. 1 and 2 only
• C. 1 and 3 only
• D. All of the above

Answer 1

The correct option is B 1 and 2 only

Explanation:

Statement 1 is correct: There are two major methods of calculating income inequality- the Lorenz curve and the Gini Coefficient.

Statement 2 is correct: The Gini coefficient can vary from zero to one.

Statement 3 is incorrect: As a nation moves closer to a perfect equality in its income distribution, the Gini coefficient will approach zero and in the case of perfect inequality, it is 1.