Equity in the Distribution of Income: five questions to try now
Real questions, the answer key from the mark scheme, and the explanation that goes with it. No account needed to answer them.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 1
When will a society have achieved an equitable distribution of income?
Answer: D.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 2
To indicate the changing income distribution, the Kuznets curve plots gross domestic product per capita against an economic variable X. What is variable X?
Answer: B.
The Kuznets curve is a hypothesis developed by economist Simon Kuznets that suggests that as an economy develops, income inequality first increases and then decreases. The curve typically shows GDP per capita on the y-axis and a measure of income inequality on the x-axis.
Therefore, in this context, variable X on the Kuznets curve would represent the level of income inequality. This variable is crucial in understanding how income distribution changes as an economy progresses and whether there is a point where income inequality starts to decrease.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 3
A country with a constant population experiences a 5% increase in its nominal GDP during a year.
In which situation will average living standards be most likely to have increased during the year?
Answer: B.
Nominal GDP rose 5%, but part of any nominal increase is just higher prices rather than more goods. With inflation at 3%, real GDP has grown by roughly 5% – 3% = 2%. The population is constant, so real output per head has risen by about 2% too, and average living standards have most likely improved. Real growth per head is what living standards depend on.
Why the other options are wrong:
- A, no increase in unemployment, tells us nothing about whether output per head has risen in real terms. Employment could be steady while inflation absorbed the entire 5%.
- C, no increase in real national income, is decisive in the opposite direction. If real income is unchanged, the whole 5% was inflation, and living standards have not improved at all.
- D, no redistribution of income, concerns how income is shared, not how much there is. An unchanged distribution of an unchanged real income leaves living standards where they were.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 4
Which policy is likely to be the least effective means of producing a more equal distribution of income amongst households?
Answer: A.
Cross-board concept practice · originally a CIE 9708 question, used here because the concept is the same. It is not IB Economics past-paper material.
Question 5
Which tax would help a government achieve a more equal distribution of income after tax?
Answer: D.
What this practice covers
These questions are drawn from past Cambridge papers, mapped across to this topic because the concept is the same. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
What examiners see students get wrong here
These are the errors that cost marks on equity in the distribution of income, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Treating equity and equality as synonyms.
- Confusing income (a flow) with wealth (a stock).
- Saying a higher Gini means less inequality, it means more.
- Confusing absolute with relative poverty, or claiming growth eliminates relative poverty.
- Confusing progressive with proportional taxation. Progressive means the average rate rises with income.
- Judging whether a tax is regressive by the amount paid rather than the share of income.
- Reading a Lorenz point as a share of the population rather than a cumulative income share.
- Listing policies without weighing them against the efficiency trade-off.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Equity in the Distribution of Income revision notes.