Q3 (IAS/1994) Economy › Growth, Development, Poverty & Employment › Income distribution and inequality Answer Verified

To know whether the rich are getting richer and the poor getting poorer, it is necessary to compare

the wholesale price index over different periods of time for different regions

the distribution of income of an identical set of income recipients in different periods of time

the distribution of income of different sets of income recipients at a point of time

the availability of foodgrains among two sets of people, one rich and the other poor, over different periods of time

Result

Your answer: — · Correct: B

Explanation

To establish whether the rich are getting richer and the poor getting poorer requires tracking income distribution of the same individuals or households over time (a longitudinal/panel comparison), so that changes in relative shares and mobility can be observed. Income inequality is commonly summarized by measures like the Gini coefficient that quantify the distribution of income, and its movements over time indicate whether inequality is rising or falling [1]. Graphical tools like the Lorenz curve represent cumulative population and income shares and are used to compare distributions across periods for the same population [2]. Cross-sectional comparisons at a single point cannot reveal dynamics of the same persons; wholesale price indices or foodgrain availability are not direct measures of individual income distribution dynamics [3].

Sources

[1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 1. Lorenz Curve and Gini Coefficient > p. 281
[2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 3: Poverty, Inequality and Unemployment > 2. Lorenz Curve > p. 45
[3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > Impact of reforms on the disparity between rich and poor (long term) > p. 218

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To know whether the rich are getting richer and the poor getting poorer, it is necessary to compare

Explanation

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