Match the following economic curves with their correct descriptions:

Curves	Descriptions
Phillips Curve	Depicts the trade-off between inflation and unemployment
Laffer Curve	Shows the relationship between tax rates and government revenue.
Kuznets Curve	Represents income distribution within an economy.
Lorenz Curve	Illustrates the relationship between economic growth and income inequality.

How many of the above pairs is/are correctly matched?

The correct answer is option 2

Key Points

• Phillips Curve → (Correctly matched: Depicts the trade-off between inflation and unemployment) 
  • The Phillips Curve suggests that as inflation rises, unemployment falls, and vice versa.
  • In the long run, this relationship may break down due to adaptive expectations.
• Laffer Curve (Correctly matched: Shows the relationship between tax rates and government revenue) 
  • The Laffer Curve suggests that as tax rates increase, government revenue initially rises but then falls beyond a certain point because high taxes discourage economic activity.
• Kuznets Curve (Incorrectly matched: Should show the relationship between economic growth and income inequality, not income distribution) 
  • The Kuznets Curve suggests that as an economy grows, inequality first increases and then decreases (forming an inverted U-shape).
• Lorenz Curve → (Incorrectly matched: Should represent income distribution, not economic growth and inequality)
  • The Lorenz Curve represents income distribution in an economy.
  • It shows the cumulative share of income earned by different percentiles of the population, illustrating income inequality.