{"id":6845,"date":"2020-03-04T16:04:50","date_gmt":"2020-03-04T10:34:50","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=6845"},"modified":"2025-07-15T16:48:04","modified_gmt":"2025-07-15T11:18:04","slug":"important-economic-curves","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/important-economic-curves\/","title":{"rendered":"ECONOMIC CURVES RELEVANT FOR UPSC"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_68 ez-toc-wrap-center counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >What's Inside this Blog!<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/triumphias.com\/blog\/important-economic-curves\/#ECONOMIC_CURVES_RELEVANT_FOR_UPSC\" title=\"ECONOMIC CURVES RELEVANT FOR UPSC\">ECONOMIC CURVES RELEVANT FOR UPSC<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/triumphias.com\/blog\/important-economic-curves\/#Relevance_Prelims_Economy\" title=\"Relevance: Prelims: Economy\">Relevance: Prelims: Economy<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"ECONOMIC_CURVES_RELEVANT_FOR_UPSC\"><\/span>ECONOMIC CURVES RELEVANT FOR UPSC<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<h2 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Relevance_Prelims_Economy\"><\/span><span style=\"color: #0000ff;\"><strong>Relevance: Prelims: Economy<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3>\u25ba<span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>BEVERIDGE CURVE<\/strong><\/em><\/span><\/h3>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/beveridge-curve-e1403644165289.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6846\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/beveridge-curve-e1403644165289.gif\" alt=\"\" width=\"620\" height=\"424\" \/><\/a><\/p>\n<p>It is a graphical representation of the relationship between unemployment\u00a0 (on\u00a0 the\u00a0 horizontal axis)\u00a0 and\u00a0 job\u00a0 vacancy rate (on the vertical axis).<\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>ENGEL CURVE<\/strong><\/em><\/span><\/h3>\n<p>It\u00a0 displays\u00a0 how\u00a0 household expenditure\u00a0 on\u00a0 a\u00a0 particular good or service \u00a0varies with change in household income.<\/p>\n<p>Eg. As income of a household increases its expenditure of food as a percentage declines. However, its expenditure on status goods increases.<\/p>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/engel.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6847\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/engel.jpg\" alt=\"\" width=\"512\" height=\"267\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/engel.jpg 512w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/engel-150x78.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/engel-300x156.jpg 300w\" sizes=\"auto, (max-width: 512px) 100vw, 512px\" \/><\/a><\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>KUZNETS CURVE<\/strong><\/em><\/span><\/h3>\n<p>It shows the relationship between economic \u00a0growth \u00a0and inequality. It is inverted U shaped meaning that as initially economic growth leads to greater inequality, followed later by the reduction of inequality.<\/p>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznet.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6848\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznet.jpg\" alt=\"\" width=\"638\" height=\"479\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznet.jpg 638w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznet-150x113.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznet-300x225.jpg 300w\" sizes=\"auto, (max-width: 638px) 100vw, 638px\" \/><\/a><\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>LAFFER CURVE<\/strong><\/em><\/span><\/h3>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/laffer_curve_1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6849\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/laffer_curve_1.jpg\" alt=\"\" width=\"703\" height=\"409\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/laffer_curve_1.jpg 703w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/laffer_curve_1-150x87.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/laffer_curve_1-300x175.jpg 300w\" sizes=\"auto, (max-width: 703px) 100vw, 703px\" \/><\/a><\/p>\n<p>The Laffer Curve is a theory that states lower tax rates boost economic growth. It underpins supply-side economics, Reaganomics, and the Tea Party\u2019s economic policies. Economist Arthur Laffer developed it in 1979.<\/p>\n<p>The Laffer Curve describes how changes in tax rates affect government revenues in two ways. One is immediate, which Laffer describes as &#8220;arithmetic.&#8221; Every dollar in tax cuts translates directly to one less dollar in government revenue.<\/p>\n<p>The other effect is longer-term, which Laffer describes as the &#8220;economic&#8221; effect. It works in the opposite direction. Lower tax rates put money into the hands of taxpayers, who then spend it. It creates more business activity to meet consumer demand. For this, companies hire more workers, who then spend their additional income. This boost to economic growth generates a larger tax base. It eventually replaces any revenue lost from the tax cut.<\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>PHILLIPS CURVE<\/strong><\/em><\/span><\/h3>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/phillip.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6850\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/phillip.jpg\" alt=\"\" width=\"530\" height=\"398\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/phillip.jpg 530w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/phillip-150x113.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/phillip-300x225.jpg 300w\" sizes=\"auto, (max-width: 530px) 100vw, 530px\" \/><\/a><\/p>\n<p>The Phillips curve is an economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment.<\/p>\n<p><strong>KEY TAKEAWAYS<\/strong><\/p>\n<ul>\n<li>The Phillips curve states that inflation and unemployment have an inverse relationship. Higher inflation is associated with lower unemployment and vice versa.<\/li>\n<li>The Phillips curve was a concept used to guide macroeconomic policy in the 20th century, but was called into question by the stagflation of the 1970&#8217;s.<\/li>\n<li>Understanding the Phillips curve in light of consumer and worker expectations, shows that the relationship between inflation and unemployment may not hold in the long run, or even potentially in the short run.<\/li>\n<\/ul>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>RAHN CURVE<\/strong><\/em><\/span><\/h3>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Rahn_Curve.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6851\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Rahn_Curve.jpg\" alt=\"\" width=\"488\" height=\"279\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Rahn_Curve.jpg 488w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Rahn_Curve-150x86.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Rahn_Curve-300x172.jpg 300w\" sizes=\"auto, (max-width: 488px) 100vw, 488px\" \/><\/a><\/p>\n<p>It \u00a0displays the \u00a0relationship between g overnment spending (on the horizontal) and GDP growth rate (on the vertical) of an economy. It is an inverted U shaped, thus displaying there is a level \u00a0of \u00a0government \u00a0spending \u00a0at \u00a0whiich \u00a0economic \u00a0growth theoretically maximises.<\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>ENVIRONMENTAL KUZNET&#8217;S CURVE<\/strong><\/em><\/span><\/h3>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznetscurve.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6852\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznetscurve.png\" alt=\"\" width=\"461\" height=\"261\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznetscurve.png 461w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznetscurve-150x85.png 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/kuznetscurve-300x170.png 300w\" sizes=\"auto, (max-width: 461px) 100vw, 461px\" \/><\/a><\/p>\n<p>Shows the relationship between economic \u00a0progress \u00a0and environmental\u00a0 degradation through time as an economy progresses. As countries develop initiallly, pollution increases, but later, with further development pollution begins to come down. Thus, it is an inverted U-shaped curve.<\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>LORENZ CURVE<\/strong><\/em><\/span><\/h3>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Lorenz-curve.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6853\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Lorenz-curve.png\" alt=\"\" width=\"625\" height=\"375\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Lorenz-curve.png 625w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Lorenz-curve-150x90.png 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/Lorenz-curve-300x180.png 300w\" sizes=\"auto, (max-width: 625px) 100vw, 625px\" \/><\/a><\/p>\n<p>The Lorenz curve is a graphical representation of income inequality or wealth inequality developed by American economist Max Lorenz in 1905. The graph plots percentiles of the population on the horizontal axis according to income or wealth. It plots cumulative income or wealth on the vertical axis, so that an x-value of 45 and a y-value of 14.2 would mean that the bottom 45% of the population controls 14.2% of the total income or wealth.<\/p>\n<h3><strong>\u25ba<\/strong><span style=\"text-decoration: underline; color: #ff0000;\"><em><strong>GINI COEFFICIENT<\/strong><\/em><\/span><\/h3>\n<p>The Gini index or Gini coefficient is a statistical measure of distribution developed by the Italian statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population. The coefficient ranges from 0 (or 0%) to 1 (or 100%), with 0 representing perfect equality and 1 representing perfect inequality. Values over 1 are theoretically possible due to negative income or wealth.<\/p>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-6854\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini.jpg\" alt=\"\" width=\"960\" height=\"720\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini.jpg 960w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini-150x113.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini-300x225.jpg 300w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini-768x576.jpg 768w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/03\/gini-880x660.jpg 880w\" sizes=\"auto, (max-width: 960px) 100vw, 960px\" \/><\/a><\/p>\n<p><span style=\"color: #0000ff;\"><strong>For more such notes, Articles, News &amp; Views Join our Telegram Channel.<\/strong><\/span><a title=\"Telegram Link\" href=\"https:\/\/t.me\/triumphias\" target=\"_blank\"><span style=\"color: #ff0000;\"><strong>https:\/\/t.me\/triumphias<\/strong><\/span><\/a><\/p>\n<p><span style=\"color: #0000ff;\"><strong>Click the link below to see the details about the UPSC \u2013Civils courses offered by Triumph IAS.<\/strong> <\/span><span style=\"color: #ff0000;\"><strong><a style=\"color: #ff0000;\" title=\"Courses available\" href=\"https:\/\/triumphias.com\/pages-all-courses.php\">https:\/\/triumphias.com\/pages-all-courses.php<\/a><\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>ECONOMIC CURVES RELEVANT FOR UPSC Relevance: Prelims: Economy \u25baBEVERIDGE CURVE It is a graphical representation of the relationship between unemployment\u00a0<\/p>\n","protected":false},"author":1,"featured_media":6714,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[42,43,230,224],"tags":[392],"class_list":["post-6845","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","category-quick-revision-prelims-economy","category-quick-revision-prelims","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6845","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=6845"}],"version-history":[{"count":5,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6845\/revisions"}],"predecessor-version":[{"id":31651,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6845\/revisions\/31651"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/6714"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=6845"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=6845"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=6845"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}