OxfordAQA International A Level Economics
OxfordAQA International A Level Economics 3.3.5 Poverty and Inequality Exam Questions
Free OxfordAQA International A Level Economics revision for 3.3.5 Poverty and Inequality: what you need to know, common mistakes and exam-style questions with answers. Covers distribution of income and wealth, lorenz curve, gini coefficient, absolute and relative poverty, causes of inequality and government redistribution policies.
Practise 3.3.5 Poverty and Inequality with past papers
Once you have learnt this topic, find the 3.3.5 Poverty and Inequality questions in real OxfordAQA International A Level Economics past papers and mark them with the mark scheme. Doing lots of real questions is the quickest way to learn how examiners ask about each idea.
About OxfordAQA International A Level Economics 3.3.5 Poverty and Inequality
Poverty and inequality completes Unit 3 of the OxfordAQA International A2 Economics course. You study the difference between income and wealth, how their distribution is measured with the Lorenz curve and Gini coefficient, the difference between absolute and relative poverty, and the causes of inequality, including labour market factors from 3.3.4. You then evaluate government policies to alleviate poverty and influence the distribution of income and wealth, such as progressive taxation, transfer payments, minimum wages and spending on education and healthcare. Examiners often ask you to interpret Lorenz curve or Gini data and to evaluate whether redistribution conflicts with efficiency and incentives.
What you need to know
- Income and wealth Income is a flow of money received over a period, such as wages and interest; wealth is a stock of assets, such as property and shares. Wealth is usually more unequally distributed than income.
- Measuring inequality The Lorenz curve plots the cumulative share of income against the cumulative share of population. The further it is from the line of equality, the greater the inequality. The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality).
- Absolute and relative poverty Absolute poverty is not having enough income to meet basic needs; relative poverty is having income well below the average in a society, often defined as below a proportion of median income.
- Causes Causes include differences in skills and education, unemployment, wage differentials, inherited wealth, discrimination, the structure of the tax and benefit system and changes such as technological change.
- Government policies Policies include progressive income taxes, wealth and inheritance taxes, means-tested and universal benefits, minimum wages and state provision of education and healthcare. Each involves trade-offs between equity and incentives.
- Equity and efficiency Some inequality can provide incentives to work and invest, but high inequality can reduce social mobility and growth. Value judgements decide what level is fair.
Common mistakes in 3.3.5 Poverty and Inequality
- Using income and wealth as if they are the same. Income is a flow; wealth is a stock.
- Reading a higher Gini coefficient as more equality. A higher value means greater inequality.
- Treating relative poverty as falling automatically when average incomes rise. It depends on the gap to the median.
- Assuming higher taxes on the rich always reduce poverty. Revenue must be spent in ways that reach poor households, and incentives may change.
- Making unsupported value judgements. State clearly that fairness is normative and support arguments with economic reasoning.
Try three 3.3.5 Poverty and Inequality exam-style questions
1. Explain the difference between absolute poverty and relative poverty. (4 marks)
Show the mark scheme answer
Absolute poverty means income is too low to meet basic needs such as food, shelter and clothing; it is a fixed standard; relative poverty means income is significantly below the average in that society, e.g. below 60% of median income; it changes as average living standards change.
2. Country A has a Gini coefficient of 0.28 and Country B has 0.52. What does this suggest? (2 marks)
Show the mark scheme answer
Income is distributed less equally in Country B than in Country A; B's Lorenz curve would lie further from the line of equality.
3. Evaluate the use of progressive income taxation to reduce inequality. (15 marks)
Show the mark scheme answer
A strong answer would explain how progressive taxes take a higher proportion of income from higher earners and can fund transfers and public services; then evaluate possible disincentives to work or invest, tax avoidance and migration of high earners, the limited effect on wealth inequality, and the importance of how the revenue is spent; and judge whether combining it with other policies would be more effective.
3.3.5 Poverty and Inequality FAQs
What does OxfordAQA International A Level Economics 3.3.5 Poverty and Inequality cover?
It covers the distribution of income and wealth, the Lorenz curve and Gini coefficient, absolute and relative poverty, the causes of inequality and government policies to reduce poverty.
Which unit is 3.3.5 Poverty and Inequality examined in?
It is examined in Unit 3 (EC03), The economics of business behaviour and the distribution of income, an A2 unit with multiple choice, short answer, data response and essay sections.
How do I interpret a Lorenz curve question?
Compare how far each curve sits from the 45 degree line of equality and link it to the Gini coefficient. Use the data to state what share of income a given proportion of the population receives.
