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Consider the following statements regarding Gini Coefficient. 1. Gini Coefficient only looks at the distribution of incomes or wealth among a nation's residents. 2. Gini Coefficient ranges from 0 to 1, with 0 representing perfect inequality and 1 representing perfect equality. Which of the above statements is/are correct?

Consider the following statements regarding Gini Coefficient. 1. Gini Coefficient only looks at the distribution of incomes or wealth among a nation's residents. 2. Gini Coefficient ranges from 0 to 1, with 0 representing perfect inequality and 1 representing perfect equality. Which of the above statements is/are correct? Correct Answer 1 only

The correct answer is Option 1, i.e 1 only.

  • Gini coefficient is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents and is the most commonly used measurement of inequality. Hence, Option 1 is correct.
  • The Gini coefficient does not depend on either high income or low income. It also does not look at absolute incomes.
  • A Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has the same income.)
  • A Gini coefficient of one (or 100%) expresses maximal inequality among values (e.g., for a large number of people, where only one person has all the income or consumption, and all others have none, the Gini coefficient will be very nearly one). Hence, Option 2 is NOT correct.

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