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Economics of Inequality and Poverty · Paper 1 — Free Economics SL Practice Questions
1FoundationSAQ-SCauses and consequences of income inequality4 marksPaper 1~6 min
Country X has a Gini coefficient of , while Country Y has a Gini coefficient of . Both countries have similar average income levels.
(a)
Define the term "income inequality". [2 marks]
(b)
Explain one economic cause of the higher income inequality in Country Y compared to Country X. [2 marks]
Solutions
2MasterySAQ-SCauses and consequences of income inequality4 marksPaper 1~6 min
A developed economy introduces a policy that significantly increases the proportion of workers earning the minimum wage.
(a)
Draw a fully labelled Lorenz curve for the economy before the policy. [1 mark]
(b)
Using your , explain how the policy affects the position of the Lorenz curve and the Gini coefficient. [2 marks]
(c)
Evaluate the extent to which this policy will reduce income inequality in the economy. [1 mark]
Solutions
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