Income and Wealth Inequality Quiz

What is the difference between income and wealth?

• Income and wealth are both stock concepts

• Income is a flow concept, wealth is a stock concept

• Income is a stock concept, wealth is a flow concept

• Income and wealth are both flow concepts

What does the Gini coefficient measure?

• The extent of inequality in the distribution of income

• The extent of inequality in the distribution of wealth

• The total area under the diagonal line

• The ratio of the area between the diagonal line and the Lorenz curve

What is the purpose of progressive income tax?

• To take the same amount from everyone

• To take a higher proportion of income from low earners

• To take less from a person as their income rises

• To take more from a person as their income rises

How does a government intervene in the market through transfer payments?

• By increasing taxes on firms

• By paying firms a subsidy to reduce their costs

• By reducing the supply of goods and services

• By increasing the price of goods and services

What is the purpose of inheritance and capital taxes?

• To encourage people to save more

• To achieve a more equitable distribution of wealth

• To reduce government revenue

• To discourage investment

What is the Lorenz curve used to represent?

• The total area under the diagonal line

• The extent of inequality in the distribution of income

• The extent of inequality in the distribution of wealth

• The ratio of the area between the diagonal line and the Lorenz curve

What is the purpose of minimum wage rates?

• To reduce the supply of labor

• To reduce the income of low earners

• To increase unemployment

• To ensure workers are paid a fair wage

How does the government provide essential goods and services?

• By reducing the quality of essential goods and services

• By privatizing industries

• By establishing the direct provision of goods and services

• By increasing taxes on essential goods

What does the Gini coefficient measure?

• The ratio of the area between the diagonal line and the Lorenz curve

• The extent of inequality in the distribution of wealth

• The extent of inequality in the distribution of income

• The total area under the diagonal line

How does a government intervention in the market through a subsidy affect producers?

• It decreases their costs

• It increases their costs

• It has no impact on their costs

• It depends on the elasticity of supply