Economy Curves- Very Important
- Philips curve shows the tradeoff between unemployment and inflation. It indicates that to reduce unemployment, an economy has to adjust with higher level of inflation.
- Kuznet curve explain the relationship between growth and equality. During the initial stages of development inequality increases with economic growth.
- Laffer curve shows the relationship between tax revenue and tax rate. Its message is that if the tax is fixed at an optimum (reasonably low levels), tax revenue will be maximum.
- Lorenze curve indicate inequality in an economy.
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