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Causes of Economic Inequality

Description: This quiz is designed to test your knowledge about the causes of economic inequality. It covers various factors that contribute to the unequal distribution of income and wealth in societies.
Number of Questions: 15
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Tags: economic inequality income distribution wealth distribution social factors economic factors policy factors
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Which of the following is NOT a commonly cited cause of economic inequality?

  1. Differences in education and skills

  2. Discrimination based on race, gender, or ethnicity

  3. Progressive taxation

  4. Inheritance and wealth accumulation

Show answer
Correct Option: C
Explanation:

Progressive taxation is a policy that aims to reduce economic inequality by taxing higher incomes at a higher rate. It is not a cause of economic inequality, but rather a potential solution to address it.

The concept of 'occupational segregation' refers to:

  1. The concentration of certain occupations within specific demographic groups

  2. The separation of different occupations into distinct social classes

  3. The division of labor based on skill and expertise

  4. The clustering of jobs in particular geographic areas

Show answer
Correct Option: A
Explanation:

Occupational segregation refers to the phenomenon where certain occupations are disproportionately held by members of particular demographic groups, such as women, minorities, or immigrants.

According to the 'Kuznets curve', what is the relationship between economic growth and income inequality?

  1. Income inequality initially increases with economic growth, but eventually declines

  2. Income inequality remains constant regardless of economic growth

  3. Income inequality decreases with economic growth

  4. Income inequality increases with economic growth and never declines

Show answer
Correct Option: A
Explanation:

The Kuznets curve suggests that income inequality tends to rise in the early stages of economic growth, but as economies mature, inequality eventually starts to decline.

Which of the following is NOT a potential consequence of economic inequality?

  1. Increased social mobility

  2. Lower levels of social cohesion

  3. Reduced economic growth

  4. Increased political instability

Show answer
Correct Option: A
Explanation:

Economic inequality can lead to lower levels of social mobility, as individuals from disadvantaged backgrounds may face barriers to upward economic movement.

The concept of 'intergenerational income elasticity' refers to:

  1. The extent to which a child's income is correlated with their parents' income

  2. The degree to which income inequality persists across generations

  3. The relationship between income inequality and economic growth

  4. The impact of education on income inequality

Show answer
Correct Option: A
Explanation:

Intergenerational income elasticity measures the extent to which a child's income is influenced by the income of their parents, providing insights into the persistence of economic inequality across generations.

Which of the following is NOT a potential policy intervention to address economic inequality?

  1. Progressive taxation

  2. Minimum wage laws

  3. Inheritance tax

  4. School vouchers

Show answer
Correct Option: D
Explanation:

School vouchers are not typically considered a policy intervention to address economic inequality, as they primarily aim to improve educational opportunities rather than directly addressing income distribution.

The concept of 'meritocracy' refers to:

  1. A system where individuals are rewarded based on their skills and talents

  2. A society where economic success is determined by social class or connections

  3. A political system where power is concentrated in the hands of a small elite

  4. A system where economic outcomes are determined by luck or chance

Show answer
Correct Option: A
Explanation:

Meritocracy is a system where individuals are rewarded based on their skills, talents, and achievements, rather than factors such as social class or connections.

Which of the following is NOT a potential cause of the gender pay gap?

  1. Occupational segregation

  2. Discrimination in hiring and promotion

  3. Differences in education and skills

  4. Equal pay laws

Show answer
Correct Option: D
Explanation:

Equal pay laws are not a cause of the gender pay gap, but rather a policy intervention aimed at reducing it by mandating equal pay for equal work.

The concept of 'human capital' refers to:

  1. The skills, knowledge, and abilities that contribute to an individual's productivity

  2. The physical assets and resources owned by an individual

  3. The financial wealth accumulated by an individual

  4. The social connections and networks that an individual possesses

Show answer
Correct Option: A
Explanation:

Human capital refers to the skills, knowledge, and abilities that an individual possesses, which contribute to their productivity and earning potential.

Which of the following is NOT a potential consequence of technological change on economic inequality?

  1. Increased demand for skilled labor

  2. Job polarization

  3. Reduced income inequality

  4. Increased automation

Show answer
Correct Option: C
Explanation:

Technological change can lead to increased income inequality due to job polarization, where high-skill jobs become more in demand while low-skill jobs decline.

The concept of 'social mobility' refers to:

  1. The movement of individuals between different social classes or economic strata

  2. The ability of individuals to move freely between different occupations

  3. The extent to which individuals are able to achieve their full potential

  4. The degree to which individuals are able to influence political and economic decisions

Show answer
Correct Option: A
Explanation:

Social mobility refers to the movement of individuals between different social classes or economic strata, either upward or downward.

Which of the following is NOT a potential cause of the racial wealth gap?

  1. Historical discrimination in housing and lending

  2. Differences in education and skills

  3. Occupational segregation

  4. Affirmative action policies

Show answer
Correct Option: D
Explanation:

Affirmative action policies are not a cause of the racial wealth gap, but rather a policy intervention aimed at reducing it by promoting equal opportunities for historically marginalized groups.

The concept of 'economic rent' refers to:

  1. Income earned from the ownership of scarce resources

  2. Income earned from labor or entrepreneurial effort

  3. Income earned from government subsidies or transfers

  4. Income earned from financial investments

Show answer
Correct Option: A
Explanation:

Economic rent refers to income earned from the ownership of scarce resources, such as land, natural resources, or intellectual property, which is not directly related to labor or entrepreneurial effort.

Which of the following is NOT a potential consequence of economic inequality on economic growth?

  1. Reduced social cohesion

  2. Increased political instability

  3. Lower levels of human capital accumulation

  4. Increased economic efficiency

Show answer
Correct Option: D
Explanation:

Economic inequality can lead to reduced economic efficiency due to factors such as social unrest, political instability, and lower levels of human capital accumulation.

The concept of 'Pareto efficiency' refers to:

  1. A state where it is impossible to make one individual better off without making another individual worse off

  2. A state where all resources are allocated optimally

  3. A state where all individuals have equal incomes

  4. A state where economic growth is maximized

Show answer
Correct Option: A
Explanation:

Pareto efficiency refers to a state where it is impossible to make one individual better off without making another individual worse off, representing an optimal allocation of resources.

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