Income and Wealth Inequality
58 questions· page 1 of 6
Why is it more difficult to quantify the wealth of an individual rather than their income?
Options
A A skilled artist may keep a painting in stock whose value increases after their death.
B Individuals can choose to spend all available income, leaving wealth unchanged.
C Not every form of individual wealth can be traded for money in a market.
D Wealth is a stock which cannot be broken down into an individual's different assets.
The table shows the Gini coefficient for income in three countries.
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Costa Rica | 0.479 | 0.478 | 0.497 |
| New Zealand | 0.330 | 0.326 | 0.320 |
| Sweden | 0.275 | 0.280 | 0.278 |
What can be concluded from this data?
Options
A All three countries have seen an overall improvement in income equality.
B Costa Rica has the highest level of consumer income of all three countries.
C New Zealand's income inequality worsened between 2018 and 2020.
D Sweden's economy has the highest income equality of all three countries.
Which combination of fiscal policy measures will reduce both the inflation rate and income inequality?
Options
| direct taxes | indirect taxes | subsidies on food and public transport | |
|---|---|---|---|
| A | decrease | decrease | increase |
| B | decrease | increase | increase |
| C | increase | decrease | increase |
| D | increase | increase | decrease |
What is an example of wealth?
Options
A interest received
B profits
C property
D incomes
What is an example of a transfer payment?
Options
A a household moving savings from one bank account to another
B a monthly repayment on a loan used to buy a new cooker
C the amount paid to transport goods from one city to another
D grants paid to students by the government
What would not be included in the calculation of an individual’s wealth?
Options
A the house owned by the individual
B the savings in the individual’s bank account
C the stocks and shares owned by the individual
D the wages earned by the individual
A government decides to increase indirect taxes, abolish the agricultural subsidy and lower the income level at which tax becomes payable.
What would be the most likely consequence of these changes?
Options
A a decrease in cost-push inflation
B an increase in income inequality
C an increase in the balance of payments deficit
D an increase in the budget deficit
A country with a market economy changes to a mixed economy.
When is this change likely to achieve the largest improvement in resource allocation?
Options
| number of demerit goods in the country | Gini coefficient value for the country | |
|---|---|---|
| A | many | 0.4 |
| B | many | 0.7 |
| C | few | 0.4 |
| D | few | 0.7 |
What would be included in a measure of wealth?
Options
A annual income
B benefits and pensions
C interest earned on savings
D savings held in bank accounts
The income Gini coefficient of a country changes from 0.29 to 0.33 over time.
What might explain this change?
Options
A an increase in food and energy subsidies
B an increase in structural unemployment
C an increase in the national minimum wage
D an increase in the top rate of income tax