Lesson 4.1.7.1

4.1.7.1 The distribution of income and wealth Quiz: AQA Economics, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.1.7.1, The distribution of income and wealth: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. In economic analysis, what type of variable is income?

    • A capital reserve
    • A flow concept
    • A stock concept
    • A fixed asset

  2. What angle from the origin represents the line of perfect equality on a Lorenz curve?

    • 45 degrees
    • 0 degrees
    • 90 degrees
    • 180 degrees

  3. What does a Gini coefficient value of 0 represent?

    • Perfect equality
    • Perfect inequality
    • Relative poverty
    • Absolute poverty

  4. Which concept refers to fairness in income distribution, involving a normative value judgement?

    • Equity
    • Efficiency
    • Parity
    • Equality

  5. Which factor is most likely to widen the distribution of earned income between households?

    • Universal state pensions
    • Differing skill levels
    • Equal wage rates
    • Progressive taxation

  6. A household has £10,000 savings, £200,000 property, and £40,000 annual income. What is its total wealth?

    • £40,000
    • £210,000
    • £250,000
    • £200,000

  7. If a country's Gini coefficient falls from 0.42 to 0.35, what has happened to income distribution?

    • Greater equality
    • Greater inequality
    • Higher poverty rate
    • Lower national income

  8. What happens to income inequality when a Lorenz curve moves closer to the 45-degree line?

    • It becomes absolute
    • It decreases
    • It remains unchanged
    • It increases

  9. What key economic concept explains why redistributing income to lower-income households increases aggregate demand?

    • Increased savings ratio
    • Greater wealth accumulation
    • Higher propensity to consume
    • Lower marginal tax rate

  10. What is a major economic cost of using high progressive tax rates to redistribute income?

    • Lower poverty rates
    • Increased worker mobility
    • Reduced work incentives
    • Higher aggregate demand

  11. What is plotted on the horizontal axis of a Lorenz curve?

    • Cumulative income percentage
    • Tax rate percentage
    • Gini coefficient value
    • Cumulative population percentage

  12. What does a Gini coefficient value of 1 represent?

    • Perfect inequality
    • Perfect equality
    • Relative equality
    • Absolute poverty

  13. Why is deciding whether an income distribution is equitable considered a normative issue?

    • Requires value judgements
    • Uses objective data
    • Is scientifically measured
    • Ignores statistical facts

  14. What market failure arises in merit good markets due to extreme income inequality?

    • Complete market non-existence
    • Excessive firm monopoly power
    • Underconsumption by low earners
    • Overproduction of public goods

  15. Which government policy directly targets the distribution of wealth rather than income?

    • Value added tax
    • National insurance
    • Income tax
    • Inheritance tax

  16. What is a major economic risk of pursuing complete income equality?

    • Increased market failure
    • Reduced work incentives
    • Higher relative poverty
    • Higher demand deficit

  17. If Country A's Lorenz curve is further from the line of equality than Country B's, Country A has:

    • Lower income inequality
    • Higher median income
    • Greater absolute poverty
    • Greater income inequality

  18. If the richest 20% receive 50% of income and the poorest 20% receive 5%, what is the ratio?

    • 5 to 1
    • 2 to 1
    • 10 to 1
    • 20 to 1

  19. Why is wealth usually distributed more unequally than income in the UK economy?

    • Accumulates over time
    • Flows faster
    • Earns higher interest
    • Taxed less heavily

  20. Which of the following directly influences the distribution of wealth in an economy?

    • Unemployment benefit levels
    • Asset price changes
    • Income tax thresholds
    • Minimum wage rate

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