3.Growth and development

Question 1

What are the Lorenz Curve and the Gini coefficient used for?

Answer 1

The Lorenz Curve and the Gini coefficient are used to assess the degree of inequality in a distribution.

Question 2

How does the Lorenz curve visually represent a distribution?

Answer 2

The Lorenz curve represents a distribution by plotting the cumulative percentage of the population on the x-axis against the cumulative percentage of income or wealth they possess on the y-axis.

Question 3

What are the two measures used to assess the degree of inequality in a distribution?

Answer 3

The Lorenz curve and the Gini coefficient are two measures used to assess the degree of inequality in a distribution.

Question 4

What does the Lorenz curve represent?

Answer 4

The Lorenz curve is a graphical representation of the cumulative distribution of income or wealth.

Question 5

What does a point on the Lorenz curve (0,0) and (100%, 100%) indicate?

Answer 5

A point on the Lorenz curve (0,0) and (100%, 100%) indicates that the entire population and the total income or wealth are accounted for.

Question 6

How does the shape of the Lorenz curve indicate inequality?

Answer 6

The more bowed the curve is away from the 45-degree line, the more unequal the distribution of income or wealth is.

Question 7

How is the Lorenz curve constructed?

Answer 7

The Lorenz curve is constructed by plotting the cumulative percentage of the population on the x-axis against the cumulative percentage of income or wealth they possess on the y-axis.

Question 8

What does the 45-degree line represent in the Lorenz curve?

Answer 8

The 45-degree line represents perfect equality, where everyone has the same income or wealth.

Question 9

How is the Gini coefficient calculated?

Answer 9

The Gini coefficient is calculated as the ratio of the area between the Lorenz curve and the 45-degree line to the total area beneath the 45-degree line.

Question 10

What does a Gini coefficient of 0 represent?

Answer 10

A Gini coefficient of 0 represents perfect equality, where everyone has the same income or wealth.

Question 11

What does it mean if the Lorenz curve is bowed away from the 45-degree line?

Answer 11

If the Lorenz curve is bowed away from the 45-degree line, it means that the distribution of income or wealth is unequal.

Question 12

What is the Gini coefficient?

Answer 12

The Gini coefficient is a numerical measure of the degree of inequality in a distribution.

Question 13

What does a Gini coefficient of 1 represent?

Answer 13

A Gini coefficient of 1 represents perfect inequality, where one person has all the income or wealth.

Question 14

How is the degree of inequality related to the Gini coefficient?

Answer 14

The higher the Gini coefficient, the greater the degree of inequality in the distribution.

Question 15

How is the Gini coefficient calculated?

Answer 15

The Gini coefficient is calculated as the ratio of the area between the Lorenz curve and the 45-degree line to the total area beneath the 45-degree line.

Question 16

What is the range of the Gini coefficient?

Answer 16

The Gini coefficient ranges from 0 to 1, where 0 represents perfect equality and 1 represents perfect inequality.

Question 17

What level of inequality does a Gini coefficient of 0.40 indicate?

Answer 17

A Gini coefficient of 0.40 indicates moderately unequal distribution of income or wealth.

Question 18

What does a Gini coefficient of 0.60 indicate?

Answer 18

A Gini coefficient of 0.60 indicates a high level of inequality in the distribution of income or wealth.

Question 19

What does a Gini coefficient of 0 mean?

Answer 19

A Gini coefficient of 0 means that the distribution of income or wealth is perfectly equal, where everyone has the same income or wealth.

Question 20

What does a Gini coefficient of 1 mean?

Answer 20

A Gini coefficient of 1 means that the distribution of income or wealth is perfectly unequal, where one person has all the income or wealth.

Question 21

What is Atkinson’s Index used for?

Answer 21

Atkinson’s Index is used as an economic measure of income inequality to determine the extent to which a society’s income distribution deviates from perfect equality.

Question 22

Who developed Atkinson’s Index, and what does it take into account?

Answer 22

Atkinson’s Index was developed by economist Anthony B. Atkinson. It takes into account both the mean income and the degree of income inequality in a population.

Question 23

How does the Atkinson index measure income inequality?

Answer 23

The Atkinson index measures income inequality by calculating the proportion of total income that would need to be redistributed from high-income earners to low-income earners in order to achieve perfect equality.

Question 24

What is Atkinson’s index?

Answer 24

Atkinson’s index is an economic measure of income inequality developed by economist Anthony B. Atkinson.

Question 25

What does Atkinson’s index measure?

Answer 25

Atkinson’s index measures the degree of inequality in a society by calculating the proportion of total income that would need to be redistributed from high-income earners to low-income earners in order to achieve perfect equality.

Question 26

What is the range of Atkinson’s index?

Answer 26

Atkinson’s index ranges from 0 to 1, with 0 indicating perfect equality (i.e., everyone has the same income) and 1 indicating maximum inequality (i.e., one person has all the income).

Question 27

What values does the Atkinson index range between, and what do they represent?

Answer 27

The Atkinson index ranges between 0 and 1. A value of 0 indicates perfect equality, while a value of 1 indicates maximum inequality.

Question 28

What is the formula for Atkinson’s index?

Answer 28

The formula for Atkinson’s index is:

A = 1 - (1/n) * sum(i=1 to n){[(y(i)/m)^epsilon]}
where:

A = Atkinson index
n = number of people in the population
y(i) = income of the i-th person
m = mean income of the population
epsilon = a parameter that reflects the degree of inequality aversion (higher values of epsilon indicate greater aversion to inequality)

Question 29

What is the formula for Atkinson’s index?

Answer 29

The formula for Atkinson’s index is A = 1 - (1/n) * sum(i=1 to n){[(y(i)/m)^epsilon]}, where A represents the index, n is the number of people, y(i) is the income of the i-th person, m is the mean income, and epsilon reflects the degree of inequality aversion.

Question 30

What is the Palma ratio?

Answer 30

The Palma ratio is the sum of all income received by the 10% people with highest disposable income divided by the sum of all income earned by 40% of the most vulnerable households.

Question 31

What is the range of the Palma ratio?

Answer 31

The Palma ratio ranges from 0 to 1, with 0 indicating perfect equality (i.e., everyone has the same income) and 1 indicating maximum inequality (i.e., the top 10% of earners have all the income).

Question 32

What does the Palma Ratio measure?

Answer 32

The Palma Ratio measures the income disparity between the 10% of people with the highest disposable income and the 40% of the most vulnerable households.

Question 33

How is the Palma Ratio calculated?

Answer 33

The Palma Ratio is calculated by dividing the sum of income received by the top 10% with the highest disposable income by the sum of income earned by the bottom 40% of the most vulnerable households.

Question 34

How does the Palma Ratio address income inequality?

Answer 34

The Palma Ratio focuses on the income share of the highest income group compared to the income share of the most vulnerable households, offering insight into inequality levels.

Question 35

What is the difference between Atkinson’s index and the Palma ratio?

Answer 35

Atkinson’s index is a more general measure of inequality, while the Palma ratio is specifically designed to measure inequality between the rich and the poor.

Question 36

Which measure is better?

Answer 36

There is no one “better” measure of inequality. The best measure to use depends on the specific purpose of the analysis.

Question 37

How do Atkinson’s Index and the Palma Ratio differ in terms of their calculations?

Answer 37

Atkinson’s Index considers mean income and degree of inequality, while the Palma Ratio focuses on the income distribution between specific income groups.

Question 38

What do both the Atkinson index and the Palma Ratio contribute to analyzing?

Answer 38

Both the Atkinson index and the Palma Ratio contribute to analyzing income inequality within societies and populations, providing different perspectives on the distribution of income.

Question 39

How are Atkinson’s index and the Palma ratio used?

Answer 39

Atkinson’s index and the Palma ratio are used to compare income inequality across different populations or over time within a single population. They can also be used to track changes in income inequality over time.

Question 40

What are the limitations of Atkinson’s index and the Palma ratio?

Answer 40

Atkinson’s index and the Palma ratio are both imperfect measures of inequality. They are sensitive to the way that income is measured and they can be difficult to interpret.

Question 41

What is the World Inequality Report?

Answer 41

The World Inequality Report is a report that analyses the distribution of income and wealth in different countries and regions.

Question 42

What does the report show about income inequality?

Answer 42

The report shows that income inequality has increased significantly in many parts of the world in recent decades.

Question 43

What is the focus of the World Inequality Report?

Answer 43

The World Inequality Report analyzes the distribution of income and wealth across countries and regions, using data from various sources.

Question 44

How has income inequality changed in recent decades according to the report?

Answer 44

Income inequality has increased significantly in many parts of the world, with a small portion of the population holding a large share of total income.

Question 45

What are the main reasons for income inequality in India?

Answer 45

The main reasons for income inequality in India include jobless growth, lack of skill development, unemployment and underemployment, development of export-oriented industries, inadequate public infrastructure, agrarian economy, administrative bottleneck, corruption, and regressive taxation.

Question 46

What are the measures to reduce income inequality in India?

Answer 46

The measures to reduce income inequality in India include increasing government spending on public infrastructure, increasing employment opportunities, special focus on skill development, special focus on improving the standard of living, better opportunities for women participation in the workforce, and not just focusing on economic growth but on economic development.

Question 47

What percentage of global income growth was captured by the top 1% of earners between 1980 and 2016?

Answer 47

The top 1% of earners captured 27% of global income growth during that period.

Question 48

What regions exhibit the highest levels of income inequality, as highlighted by the report?

Answer 48

Sub-Saharan Africa and Latin America are regions with the highest levels of income inequality.

Question 49

What is the difference between economic growth and economic development?

Answer 49

Economic growth is the increase in the total value of final goods and services produced in an economy over a given period of time. Economic development refers to positive changes in the overall social, economic, and political indicators in the economy.

Question 50

What are the indicators of economic growth?

Answer 50

The indicators of economic growth include GDP, GNP, consumption, investment, etc.

Question 51

What are the indicators of economic development?

Answer 51

The indicators of economic development include the growth of human resources, a decrease in inequality, progressive changes of socio-economic parameters, and other structural changes that lead to improvement in the standard of living of the people.

Question 52

Is economic growth possible without economic development?

Answer 52

Yes, economic growth is possible without economic development. Economic growth is a rapid process and can happen even if there are no significant changes in the overall social, economic, and political indicators of an economy.

Question 53

According to the report, what policies could help reduce income inequality?

Answer 53

Policies like progressive taxation and increased public investment in education and healthcare could reduce income inequality and promote more inclusive economic growth.

Question 54

What does the Oxfam International Report reveal about wealth distribution in India?

Answer 54

The top 10% in India hold 77% of the national wealth, while 90% of the population possesses 23% of the wealth.

Question 55

What are some reasons behind income inequality in India?

Answer 55

Factors like jobless growth, lack of skill development, unemployment, inadequate public infrastructure, and corruption contribute to income inequality in India.

Question 56

What are some measures suggested to reduce inequality?

Answer 56

Measures include increasing government spending on infrastructure, creating more employment opportunities, focusing on skill development, improving the standard of living, enhancing women’s participation in the workforce, and emphasizing both economic growth and development.

Question 57

Is economic development possible without economic growth?

Answer 57

No, economic development is not possible without economic growth. Economic development is a slow and time-taking process that requires a certain level of economic growth in order to take place.

Question 58

What are the challenges to reducing income inequality in India?

Answer 58

The challenges to reducing income inequality in India include the large informal sector, the lack of political will, and the vested interests of the wealthy.

Question 59

How is economic growth defined?

Answer 59

Economic growth is the total value of final goods and services produced in an economy over a specific period, often measured by indicators like GDP, GNP, consumption, and investment.

Question 60

What distinguishes economic development from economic growth?

Answer 60

Economic development refers to positive changes in overall socio-economic, political indicators, human resources growth, decrease in inequality, and improvements in the standard of living. It represents qualitative change in the economy and is not possible without economic growth.