DP Economics Questionbank

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]).

Using a Lorenz curve diagram, explain what is meant by an “increase in income inequality from 2015 to 2019” (paragraph [6]).

Using a Lorenz curve, explain how a progressive tax system could change Vanuatu’s income distribution (paragraph [7]).

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]).

Define the term human capital indicated in bold in the text (paragraph [7]).

Define the term human capital indicated in bold in the text (paragraph [5]).

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.

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

Evaluate the view that progressive income tax is the best way to increase equity in an economy.

Using Table 4, identify the marginal tax rate for Rufus.

Using Table 4, calculate the average tax rate for Sammy.

Calculate the amount of VAT which was paid on the purchase of this equipment.

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the government of Burundi to reduce income inequality in Burundi.

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

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

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.

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the government of Burundi to reduce income inequality in Burundi.