The diagram shows the Lorenz curves of Country A and B. Which of the following is correct?

Country A has a more equal distribution of income.

Which of the following statements is INCORRECT?

Equity is achieved when everyone has the same amount of income.

Which of the following is correct about corporate income taxes?

Higher tax rates leads to disincentive effects for firms.

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3.4 Economics of inequality and poverty (includes HL only calculation)

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Answers

1
Income and wealth inequality may lead to...
Higher living standards for the whole country in general.
Social and political tensions
incentives for people to work harder.
Higher government revenue.
2
Which of the following is NOT an indicator to measure poverty?
Gini coefficient
Minimum income standards
International poverty lines
Multidimensional poverty standards
3
Which of the following worsens income inequality?
Increasing minimum wage.
Higher investments on primary education.
Lower transfer payments.
Stricter anti-discrimination laws.
4
The following table shows the tax rates of a personal income tax. It shows a...
Proportional tax system.
Progressive tax system.
Indirect tax system.
Regressive tax system.
5
(HL only) An individual earns $50,000 per year and pays an income tax of $3,000. Calculate the average tax rate.
8%
10%
4%
6%
6
Which of the following is NOT a cause of economic inequality?
Unequal opportunities for education and healthcare.
Progressive tax systems.
Globalization and technological change.
Trade liberalization
7
(HL only) An individual earns $30,000 per year. Calculate the total amount of tax paid by the individual.
$10000
$6000
$4500
$9000
8
The diagram shows the Lorenz curves of Country A and B. Which of the following is correct?
The Gini coefficient of country A is larger.
Country A has a more equal distribution of income.
Country B has a more equal distribution of income.
The richest 60% of people in country A contributes 40% of national income.
9
Which of the following statements is INCORRECT?
The Gini coefficient is always between 0-1.
Equity is achieved when everyone has the same amount of income.
People of lower income are more likely to incur debts.
Economic inequality means unequal distribution of income or wealth.
10
Which of the following is correct about corporate income taxes?
Higher tax rates leads to disincentive effects for firms.
Higher tax rates make income distribution less equal.
They are imposed on the annual revenues earned by private firms.
Higher tax rates encourage firms to invest in the long term.

3.4 Economics of inequality and poverty (includes HL only calculation) Flashcards | StudBud