Question:
[Lorenz Curve Diagram] How is the Gini coefficient of the inequality of income distribution in this economy measured?
(1) (Area A + Area B) ÷ Area C
(2) Area B ÷ Area C
(3) Area A ÷ (Area A + Area B)
(4) Area B ÷ (Area B + Area C)
(5) Area C ÷ (Area A + Area B)
Correct Answer:
(4)
Answer Explanation:
The Gini coefficient is calculated as the ratio of the area between the 45-degree line of perfect equality and the Lorenz curve (Area B) divided by the total area under the line of perfect equality (Area B + Area C). Therefore, the formula is Area B / (Area B + Area C).
Topic: Inequality Year: 2017
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