Economics • Economic BasicsEasy
What is the primary economic consequence of a high Gini coefficient value close to one within a regional demographic distribution?
A. Extremely uniform distribution of disposable income
B. Severe inequality in income or wealth distribution✓ Correct Answer
C. High rate of total factor productivity growth
D. Complete absence of absolute poverty below the poverty line
💡 Solution & Explanation
A Gini coefficient near one indicates maximum inequality where a single individual possesses all income, whereas a value of zero represents absolute equality. The Lorenz curve graphically illustrates this distribution by plotting cumulative population percentages against cumulative income shares. Public welfare transfers and progressive taxation are standard fiscal instruments deployed to reduce high Gini coefficient values.
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