Which of the following pairs is/ are correctly matched?
Theory | Description |
1. Phillips Curve | Inverse relationship between inflation and unemployment rate |
2. Engel Curve | Negative relationship between price and demand |
3. Lorenz Curve | Positive relationship between tax rate and tax revenue |
The Phillips curve is an economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.
The Engel curve, named after the German statistician Ernst Engel (1821-96), is a relation between the demand for a good and the income of its buyers, the former depending on the latter. It states that the lower a family’s income, the greater is the proportion of it spent on food. The negative relationship between price and demand is shown by the demand curve.
Hence second statement is wrong.
Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution.
Hence third statement is also wrong.