What happens to the Gini Coefficient as income distribution becomes more unequal?
Correct Answer: It approaches 1 (or 100)
Subject: economics
- It approaches 0
- It approaches 1 (or 100)
- It becomes negative
- It remains at 0.5
Explanation: • <b>Key Fact</b>
Gini Coefficient ranges from 0 (perfect equality) to 1 (perfect inequality).
• <b>Supporting Detail</b>
The more bowed the Lorenz Curve, the greater the inequality, making the coefficient closer to 1.
• <b>Related Concept</b>
A Gini of 100 (in percentage terms) means one person holds all the wealth.
• <b>Why wrong options are wrong</b>
0 is perfect equality. It cannot be negative.
• <b>Exam Trick</b>
High Gini = High Inequality.
• <b>Additional Info</b>
Calculated as Area A divided by Area (A+B) on the Lorenz curve graph.