Topic 3.4: Economics of Inequality and Poverty Questions

Transfer payments are a tool for reducing inequality because they:

Transfer payments are a tool for reducing inequality because they:

Minimum wage legislation aims to reduce poverty by:

Minimum wage legislation aims to reduce poverty by:

Progressive taxation helps reduce income inequality because:

The Gini coefficient is a measure of:

The Gini coefficient is a measure of:

The Lorenz curve is used to:

Progressive taxation helps reduce income inequality because:

The Lorenz curve is used to:

A country's Gini coefficient decreases from 0.55 to 0.40. This indicates that:

The difference between absolute poverty and relative poverty is that:

A potential consequence of high income inequality in a society is:

Explain two economic consequences of poverty.

A country's Gini coefficient decreases from 0.55 to 0.40. This indicates that:

A potential consequence of high income inequality in a society is:

The difference between absolute poverty and relative poverty is that:

Country X has a Lorenz curve such that area A (between line of equality and Lorenz curve) = 0.18, and the total area under the line of equality = 0.50.\n(a) Calculate the Gini coefficient.\n(b) If Country Y has a Gini of 0.45, which country has greater inequality?\n(c) State one limitation of using the Gini coefficient to compare these countries.

Explain two policies a government could use to reduce income inequality.

Explain two causes of income inequality within a country.