The following are the important curves in economics:
- Lorenz Curve
- Gini Coefficient
- Kuznets Curves
- Phillips Curve
- Laffer Curve
Lorentz Curve
- Developed in 1906 by Max Lorentz
- It shows the graphical representation of income inequality
Gini Coefficient
- It shows the inequality in a single figure
- 0 means no inequality
- 1 means total inequality
Kuznets Curves
- It developed in 1950 by Simon Kuznets
- It shows the relationship between growth and inequality
- It also shows the relationship between development and environmental loss.
- Inverted "U" shaped
Phillips Curve
- Developed in 1958 by William Phillips
- There is an inverse relationship between unemployment and inflation
- High employment generated with the high inflation rate
- It is L-shaped.
Laffer Curve
- It shows the relation between tax rates and revenue collected by the government.
- Developed in 1974 by Arthur Laffer
- Inverted "U" shaped curve
Engel Curve:
- Demographic variable influences the expenditure
- Expenditure vs income
- Spending for certain goods varies with household income
Rahn Curve:
- Government spending vs Economic growth
Wage Curve
- The inverse relationship between Unemployment and Wage
The following questions were asked in UPSC and state PCS
1. Which of the following is measured by the Lorenz curve?( UP PCS 2018)
(a) Illiteracy
(b) Unemployment
(c) Population growth rate
(d) Inequality of Income
(b) Unemployment
(c) Population growth rate
(d) Inequality of Income
Answer. d
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