Economics • Economic BasicsEasy
What does the 'Lorenz Curve' graphically measure?
A. The relationship between inflation and unemployment
B. The cumulative share of income earned by cumulative percentages of the population✓ Correct Answer
C. The growth rate of an economy over various business cycles
D. The long-run aggregate supply curve under flexible wages
💡 Solution & Explanation
The Lorenz Curve provides a graphical depiction of income or wealth distribution, where the cumulative percentage of households is plotted against the cumulative share of income they receive. It helps derive the Gini coefficient to quantify economic inequality, unlike curves representing price inflation or business cycle fluctuations. Economic inequality indicators are increasingly relevant for socio-economic development questions.
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