DP Economics Questionbank

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Calculate the percentage of income received by the highest 20 % in Country X. Enter your answer in Table 2.

Outline why Country X has a higher Gini coefficient, using the data in Table 2.

On the following axes, plot the Lorenz curve for Country Y.

Outline why the Gini coefficient must have a value between 0 and 1 (or between 0 and 100).

Angola and Namibia have different Gini coefficient values. Using a Lorenz curve diagram, explain what this means (Figure 1).

Using the data in Figure 1, comment on the degree of income inequality in the United States (US), Sweden and Brazil.

Using your answer to part (f), sketch and label a Lorenz curve for Brazil and for Sweden in the following box.

Draw and label the Lorenz curve diagram for Country A on Figure 5.

Using a Lorenz curve diagram, explain the possible impact on the distribution of income in the Philippines when “the income tax for the highest income earners has been raised from 30 % to 35 %” (paragraph [4]).

Explain how the Lorenz curve and the Gini coefficient are used to measure differences in income inequality between countries.

Using a Lorenz curve diagram, explain the likely impact on income distribution of “plans to encourage investment in rural areas”  (paragraph [5]).

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Define the term absolute poverty indicated in bold in the text (paragraph [2]).

Define the term relative poverty indicated in bold in the text (paragraph [2]).

Define the term absolute poverty indicated in bold in the text (paragraph [2]).

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Fernando earns $35 000 in 2015. Calculate his average rate of tax.

Maki, who earns $70 000 in 2015, pays an average rate of tax of 27.14 %. Using the figures provided in Table 1, outline why her average tax rate is higher than that of Fernando.

Outline one potential advantage and one potential disadvantage of a progressive tax system.

Fernando receives a pay rise in 2016. His total income rises to $43 000. Calculate the percentage of his additional income which must be paid as tax.

Country Z implements a 10 % sales tax in 2016. Explain why an indirect tax is unlikely to be used as a mechanism to promote equity.

Evaluate the view that the best way to reduce income inequality in a country is by using progressive taxation.

Calculate the average tax rate for an individual who earns $64 000 per year.

Fred is a low-wage worker in Fairland. As a result of the minimum wage his income will increase from $15 000 per year to $19 000 per year.

Calculate how much additional income tax Fred will need to pay.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Country X raises the level of transfer payments. Explain two reasons why this policy could help to break the poverty cycle.

Explain how government spending might promote greater equity in an economy.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Discuss the view that the best way to achieve greater equity in the distribution of income in a country is to use a progressive tax system.

Evaluate the view that government policies to promote greater equity will always have a negative effect on efficiency.

Discuss the view that taxation is the most effective means of achieving equity in the distribution of income.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.