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Income Distribution and Inequality

Description: This quiz covers various aspects related to Income Distribution and Inequality.
Number of Questions: 15
Created by:
Tags: economics welfare economics income distribution inequality
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Which of the following is a common measure of income inequality?

  1. Gini coefficient

  2. Lorenz curve

  3. Kuznets ratio

  4. All of the above


Correct Option: D
Explanation:

The Gini coefficient, Lorenz curve, and Kuznets ratio are all commonly used measures of income inequality.

What is the relationship between economic growth and income inequality?

  1. Economic growth always leads to increased income inequality.

  2. Economic growth always leads to decreased income inequality.

  3. The relationship between economic growth and income inequality is complex and can vary depending on the specific context.

  4. None of the above.


Correct Option: C
Explanation:

The relationship between economic growth and income inequality is complex and can vary depending on factors such as the type of economic growth, the distribution of the benefits of growth, and government policies.

Which of the following factors can contribute to income inequality?

  1. Differences in education and skills

  2. Differences in access to capital and resources

  3. Discrimination

  4. All of the above


Correct Option: D
Explanation:

Differences in education and skills, differences in access to capital and resources, and discrimination can all contribute to income inequality.

What is the concept of relative deprivation related to income inequality?

  1. The feeling of being worse off compared to others in society.

  2. The feeling of being better off compared to others in society.

  3. The feeling of being equal to others in society.

  4. None of the above.


Correct Option: A
Explanation:

Relative deprivation is the feeling of being worse off compared to others in society, even if one's absolute income or wealth is increasing.

Which of the following is a potential consequence of income inequality?

  1. Social unrest and instability

  2. Reduced economic growth

  3. Increased crime and violence

  4. All of the above


Correct Option: D
Explanation:

Income inequality can lead to social unrest and instability, reduced economic growth, and increased crime and violence.

What is the concept of the Kuznets curve related to income inequality?

  1. It suggests that income inequality initially increases as a country develops, but then decreases as the country reaches a certain level of development.

  2. It suggests that income inequality initially decreases as a country develops, but then increases as the country reaches a certain level of development.

  3. It suggests that income inequality remains constant as a country develops.

  4. None of the above.


Correct Option: A
Explanation:

The Kuznets curve suggests that income inequality initially increases as a country develops, but then decreases as the country reaches a certain level of development.

Which of the following is a potential policy measure to address income inequality?

  1. Progressive taxation

  2. Social safety nets

  3. Investment in education and skills development

  4. All of the above


Correct Option: D
Explanation:

Progressive taxation, social safety nets, and investment in education and skills development are all potential policy measures to address income inequality.

What is the concept of the 'Great Gatsby Curve' related to income inequality?

  1. It suggests that there is a positive correlation between income inequality and social mobility.

  2. It suggests that there is a negative correlation between income inequality and social mobility.

  3. It suggests that there is no correlation between income inequality and social mobility.

  4. None of the above.


Correct Option: B
Explanation:

The Great Gatsby Curve suggests that there is a negative correlation between income inequality and social mobility, meaning that higher levels of income inequality are associated with lower levels of social mobility.

Which of the following is a potential consequence of income inequality on economic growth?

  1. Reduced economic growth due to lower aggregate demand.

  2. Reduced economic growth due to lower investment.

  3. Reduced economic growth due to lower innovation.

  4. All of the above


Correct Option: D
Explanation:

Income inequality can lead to reduced economic growth due to lower aggregate demand, lower investment, and lower innovation.

What is the concept of the 'Robin Hood effect' related to income inequality?

  1. It suggests that income inequality can be reduced through government policies that redistribute income from the rich to the poor.

  2. It suggests that income inequality can be reduced through government policies that redistribute income from the poor to the rich.

  3. It suggests that income inequality cannot be reduced through government policies.

  4. None of the above.


Correct Option: A
Explanation:

The Robin Hood effect suggests that income inequality can be reduced through government policies that redistribute income from the rich to the poor.

Which of the following is a potential consequence of income inequality on health outcomes?

  1. Higher rates of chronic diseases among the poor.

  2. Higher rates of infant mortality among the poor.

  3. Lower life expectancy among the poor.

  4. All of the above


Correct Option: D
Explanation:

Income inequality can lead to higher rates of chronic diseases, higher rates of infant mortality, and lower life expectancy among the poor.

What is the concept of the 'Laffer Curve' related to income inequality?

  1. It suggests that there is an optimal level of taxation that maximizes government revenue.

  2. It suggests that there is an optimal level of taxation that minimizes government revenue.

  3. It suggests that there is no optimal level of taxation.

  4. None of the above.


Correct Option: A
Explanation:

The Laffer Curve suggests that there is an optimal level of taxation that maximizes government revenue.

Which of the following is a potential consequence of income inequality on political participation?

  1. Lower voter turnout among the poor.

  2. Lower levels of political engagement among the poor.

  3. Lower levels of trust in government among the poor.

  4. All of the above


Correct Option: D
Explanation:

Income inequality can lead to lower voter turnout, lower levels of political engagement, and lower levels of trust in government among the poor.

What is the concept of the 'Pareto Principle' related to income inequality?

  1. It suggests that 20% of the population earns 80% of the income.

  2. It suggests that 80% of the population earns 20% of the income.

  3. It suggests that there is no relationship between income and population distribution.

  4. None of the above.


Correct Option: A
Explanation:

The Pareto Principle suggests that 20% of the population earns 80% of the income.

Which of the following is a potential consequence of income inequality on crime rates?

  1. Higher crime rates in areas with higher income inequality.

  2. Higher crime rates in areas with lower income inequality.

  3. No relationship between income inequality and crime rates.

  4. None of the above.


Correct Option: A
Explanation:

Income inequality can lead to higher crime rates in areas with higher income inequality.

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