Inequality and Re-Distribution | Edexcel A-Level Economics B (9EB0)

Inequality and Re-Distribution

82 questions
5 subtopics
Theme 3: the global economy
Paper 2 and Paper 3

Inequality and Re-Distribution is examined in Paper 2, Competing in the global economy, and in Paper 3, The economic environment and business.

It covers absolute and relative poverty and how they are measured, measuring inequality: the Lorenz curve and the Gini coefficient, reducing poverty: growth, development and international aid, the impact of inequality on individuals, firms and the economy and re-distribution of income and wealth through taxation and services.

Sample questions from Inequality and Re-Distribution

Answer each one closed book first, then open the answer.

Absolute and relative poverty and how they are measured

State the usual national definition of a household in relative low income.

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A household whose equivalised disposable income is below 60% of the contemporary median household income.
Absolute and relative poverty and how they are measured

Give two reasons an income-only measure understates poverty.

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It ignores access to public services, housing quality and health, and it takes no account of wealth, debt or the different costs households face in different regions.
Measuring inequality: the Lorenz curve and the Gini coefficient

Define the Gini coefficient.

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The Gini coefficient is the area between the line of equality and the Lorenz curve divided by the whole area beneath the line of equality.
Measuring inequality: the Lorenz curve and the Gini coefficient

What is the quintile share ratio?

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It is the total income of the richest 20% of households divided by the total income of the poorest 20%.
Reducing poverty: growth, development and international aid

Give two supply-side policies that raise the long-run incomes of the poorest households.

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Investment in primary education and basic healthcare, and infrastructure such as roads, electricity and clean water that raises the productivity of poor households.
Reducing poverty: growth, development and international aid

What advantage do NGOs have over government-to-government aid programmes?

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They work directly with communities on a small scale, so projects can be targeted and monitored even where state administration is weak or corrupt.
The impact of inequality on individuals, firms and the economy

Why can paying above the market wage raise a firm's profit?

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Better-paid workers tend to be more motivated, healthier and more likely to stay, so productivity rises and recruitment and training costs fall by more than the wage bill increases.
The impact of inequality on individuals, firms and the economy

What is the argument that some inequality benefits an economy?

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Differentials reward effort, skill acquisition and enterprise, and the prospect of higher returns encourages risk-taking and innovation.

The 5 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
Absolute and relative poverty and how they are measured	Absolute and relative poverty, how relative poverty behaves when incomes change, the national relative low income threshold and equivalised income, absolute low income in the UK, the international extreme poverty line and purchasing power parity, the Multidimensional Poverty Index and Human Development Index, calculating a poverty threshold, survey understatement, and persistent poverty.	16
Measuring inequality: the Lorenz curve and the Gini coefficient	The Lorenz curve and the line of equality, reading and plotting cumulative shares, the Gini coefficient, its range and calculating it, interpreting a rising coefficient, disposable against original income, identical coefficients with different distributions, the quintile share ratio and calculating it, wealth against income, and a higher personal allowance.	16
Reducing poverty: growth, development and international aid	Economic growth against development, how growth reduces poverty and why it may not, inclusive growth, the trickle-down hypothesis and its criticism, supply-side policies for the poorest, microfinance, the poverty cycle, bilateral and multilateral aid, tied and untied aid and criticisms of aid, NGOs, debt relief, export market access, direct policies, and conditional cash transfers.	17
The impact of inequality on individuals, firms and the economy	The effects of inequality on the poorest, relative deprivation and social mobility, low pay and productivity, efficiency wages and staff turnover, income distribution and a firm's market, redistribution and aggregate demand through the marginal propensity to consume and calculating it, the costs of inequality and the argument that some benefits an economy, growth, public finances, and instability.	15
Re-distribution of income and wealth through taxation and services	Income and wealth and why wealth is less equal, house prices, progressive and regressive taxes and identifying them, marginal tax rates, the poverty and unemployment traps and calculating what a worker keeps, benefit tapers, the Laffer curve, wealth taxes and their difficulties, services in kind, arguments against redistribution, and universal against means-tested benefits.	18

Inequality and Re-Distribution is 82 of the 2,933 questions in the guide.Get the guide, £8

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.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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.
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.