The Distribution of Income and Wealth: Poverty and Inequality | AQA A-Level Economics (7136)
The Distribution of Income and Wealth: Poverty and Inequality
- 128 questions
- 8 subtopics
- Paper 1: Markets and market failure, and available on Paper 3
- Paper 1 and Paper 3
The distribution of income and wealth is examined on Papers 1 and 3.
It measures inequality, sets out the arguments for and against reducing it, and works through the policies used to alleviate poverty.
Sample questions from The Distribution of Income and Wealth: Poverty and Inequality
Answer each one closed book first, then open the answer.
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Income, wealth and the causes of their distribution
How do wage and salary differentials influence the distribution of income?
Show the answer
Differences in wages and salaries between workers create variations in income levels, contributing to income inequality. -
Equality, equity, the Lorenz curve and the Gini coefficient
What is the Gini coefficient and how is it derived?
Show the answer
The Gini coefficient is a numerical measure of inequality calculated as the ratio of the area between the Lorenz curve and the line of equality to the total area under the line of equality. -
The arguments about inequality
What potential efficiency losses could result from a more equal distribution?
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Reduced incentives to work, save, invest, and innovate may lead to lower productivity and economic efficiency. -
The problem of poverty
Explain how low wages can cause poverty even when a person is employed.
Show the answer
Earnings may be insufficient to cover basic living costs despite being in employment, leaving workers unable to afford necessities. -
Progressive taxation and transfer payments
Give an example of how progressive taxation is structured in practice.
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Income tax with multiple bands, where each successive band of income is taxed at a higher rate. -
Means-tested benefits, universal benefits and the poverty trap
What is a criticism of universal benefits in terms of targeting efficiency?
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They may benefit those who do not need support, making them less cost-effective at targeting the poorest. -
Wealth taxes and state provision
What is a potential drawback of capital gains tax on economic activity?
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It may discourage investment and entrepreneurship by reducing the returns from successful ventures. -
Evaluating redistribution
How might redistribution from rich to poor affect total consumption in the economy?
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It may increase total consumption because money is transferred to those with a higher marginal propensity to consume.
The 8 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Income, wealth and the causes of their distribution | What income and wealth are, and what makes their distribution unequal. | 11 |
| Equality, equity, the Lorenz curve and the Gini coefficient | The difference between equality and equity, and reading a Lorenz curve and a Gini coefficient. | 22 |
| The arguments about inequality | Social cohesion and aggregate demand against incentives, saving and enterprise. | 22 |
| The problem of poverty | Absolute and relative poverty, its causes, and its effects on health, productivity and the public finances. | 20 |
| Progressive taxation and transfer payments | How a progressive tax works, and the transfer payments that redistribute income. | 8 |
| Means-tested benefits, universal benefits and the poverty trap | The trade-off between targeting and administration, and how high effective marginal rates trap claimants. | 12 |
| Wealth taxes and state provision | Inheritance tax, capital gains tax, and how free public services redistribute real income. | 12 |
| Evaluating redistribution | Incentive effects, opportunity cost, the replacement ratio, and the moral and political positions behind the debate. | 21 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
AQA A-Level Economics Active Recall Guide
Every topic, not just this one. 2,344 questions with their answers.