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The Role of Inequality in Economic Development

Description: This quiz will test your understanding of the role of inequality in economic development, including its causes, consequences, and policy implications.
Number of Questions: 15
Created by:
Tags: economics development economics inequality
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Which of the following is NOT a common cause of inequality in developing countries?

  1. Unequal access to education and healthcare

  2. Discrimination based on gender, race, or ethnicity

  3. High levels of corruption

  4. Rapid economic growth

Show answer
Correct Option: D
Explanation:

Rapid economic growth can actually help to reduce inequality by creating new opportunities for people to improve their lives.

Which of the following is NOT a common consequence of inequality in developing countries?

  1. Increased poverty and social unrest

  2. Lower levels of economic growth

  3. Improved health and education outcomes

  4. Increased political instability

Show answer
Correct Option: C
Explanation:

Inequality can lead to worse health and education outcomes for the poor, as they may not have access to the same resources as the wealthy.

Which of the following is NOT a policy that can be used to reduce inequality in developing countries?

  1. Investing in education and healthcare

  2. Promoting equal access to land and credit

  3. Raising taxes on the wealthy

  4. Reducing government spending

Show answer
Correct Option: D
Explanation:

Reducing government spending can actually worsen inequality by reducing the availability of public services that benefit the poor.

The Kuznets curve is a graphical representation of the relationship between:

  1. Income inequality and economic growth

  2. Poverty and economic growth

  3. Unemployment and economic growth

  4. Inflation and economic growth

Show answer
Correct Option: A
Explanation:

The Kuznets curve shows that income inequality typically increases in the early stages of economic growth, but then begins to decline as the economy matures.

According to the World Bank, what percentage of the world's population lives in extreme poverty?

  1. 10%

  2. 15%

  3. 20%

  4. 25%

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Correct Option: A
Explanation:

According to the World Bank, 10% of the world's population lives in extreme poverty, defined as living on less than $1.90 per day.

Which of the following countries has the highest level of income inequality?

  1. United States

  2. China

  3. India

  4. Brazil

Show answer
Correct Option: A
Explanation:

The United States has the highest level of income inequality among developed countries, with the top 1% of earners taking home more than 20% of the country's income.

Which of the following countries has the lowest level of income inequality?

  1. Sweden

  2. Denmark

  3. Norway

  4. Finland

Show answer
Correct Option: A
Explanation:

Sweden has the lowest level of income inequality among developed countries, with the top 1% of earners taking home less than 10% of the country's income.

What is the Gini coefficient?

  1. A measure of income inequality

  2. A measure of poverty

  3. A measure of unemployment

  4. A measure of inflation

Show answer
Correct Option: A
Explanation:

The Gini coefficient is a measure of income inequality that ranges from 0 to 1, with 0 representing perfect equality and 1 representing perfect inequality.

What is the Atkinson index?

  1. A measure of income inequality

  2. A measure of poverty

  3. A measure of unemployment

  4. A measure of inflation

Show answer
Correct Option: A
Explanation:

The Atkinson index is a measure of income inequality that is more sensitive to changes in the incomes of the poorest people in society.

What is the Theil index?

  1. A measure of income inequality

  2. A measure of poverty

  3. A measure of unemployment

  4. A measure of inflation

Show answer
Correct Option: A
Explanation:

The Theil index is a measure of income inequality that is based on the concept of entropy.

What is the Palma ratio?

  1. A measure of income inequality

  2. A measure of poverty

  3. A measure of unemployment

  4. A measure of inflation

Show answer
Correct Option: A
Explanation:

The Palma ratio is a measure of income inequality that is calculated by dividing the income of the top 10% of earners by the income of the bottom 40% of earners.

What is the Kuznets hypothesis?

  1. The hypothesis that income inequality increases in the early stages of economic growth, but then begins to decline as the economy matures

  2. The hypothesis that poverty increases in the early stages of economic growth, but then begins to decline as the economy matures

  3. The hypothesis that unemployment increases in the early stages of economic growth, but then begins to decline as the economy matures

  4. The hypothesis that inflation increases in the early stages of economic growth, but then begins to decline as the economy matures

Show answer
Correct Option: A
Explanation:

The Kuznets hypothesis is based on the idea that income inequality is a necessary evil in the early stages of economic growth, as it provides incentives for people to work hard and invest in their businesses.

What is the Great Gatsby curve?

  1. A graphical representation of the relationship between income inequality and social mobility

  2. A graphical representation of the relationship between poverty and social mobility

  3. A graphical representation of the relationship between unemployment and social mobility

  4. A graphical representation of the relationship between inflation and social mobility

Show answer
Correct Option: A
Explanation:

The Great Gatsby curve shows that income inequality is negatively correlated with social mobility, meaning that people born into poor families are less likely to move up the economic ladder in countries with high levels of income inequality.

What is the Piketty hypothesis?

  1. The hypothesis that wealth inequality increases over time in capitalist economies

  2. The hypothesis that poverty increases over time in capitalist economies

  3. The hypothesis that unemployment increases over time in capitalist economies

  4. The hypothesis that inflation increases over time in capitalist economies

Show answer
Correct Option: A
Explanation:

The Piketty hypothesis is based on the idea that the rate of return on capital is greater than the rate of economic growth, which means that the wealthy will get richer over time, even if the economy is growing.

What is the World Inequality Report?

  1. A report that tracks global trends in income and wealth inequality

  2. A report that tracks global trends in poverty and social mobility

  3. A report that tracks global trends in unemployment and inflation

  4. A report that tracks global trends in economic growth and development

Show answer
Correct Option: A
Explanation:

The World Inequality Report is an annual report that provides data on income and wealth inequality in over 100 countries.

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