Lesson M2.7.1

M2.7.1 Income, wealth, poverty and the Lorenz curve and Gini coefficient Quiz: OCR Economics, Unit 7

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson M2.7.1, Income, wealth, poverty and the Lorenz curve and Gini coefficient: 20 multiple choice questions for the OCR Economics (H460), Unit 7: Economic policy objectives, written with Revision Ninja.

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The 20 questions

  1. Is income classified as a flow or stock concept in economics?

    • Fixed asset
    • Capital sum
    • Stock concept
    • Flow concept

  2. Which economic term describes a stock of assets owned by a household?

    • Revenue
    • Profit
    • Wealth
    • Income

  3. What type of poverty occurs when an individual lacks basic necessities for survival?

    • Relative poverty
    • Cyclical poverty
    • Absolute poverty
    • Subjective poverty

  4. In the UK, relative poverty is usually defined as income below what percentage of median income?

    • 70%
    • 50%
    • 60%
    • 40%

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

    • Tax rate
    • Cumulative income
    • Gini index
    • Cumulative population

  6. What does the 45-degree line represent on a Lorenz curve diagram?

    • Perfect inequality
    • Perfect equality
    • Median income
    • Poverty threshold

  7. What is the maximum possible value of the Gini coefficient?

    • 100
    • 10
    • 1
    • 0

  8. How is the Gini coefficient calculated using areas A and B on a Lorenz diagram?

    • A * B
    • B / A
    • (A + B) / A
    • A / (A + B)

  9. What happens to the Lorenz curve when income distribution becomes more equal?

    • Shifts downwards
    • Becomes vertical
    • Shifts upwards
    • Remains unchanged

  10. Which tax policy would cause the Gini coefficient of a nation to decrease?

    • Indirect tax
    • Regressive tax
    • Progressive tax
    • Flat rate tax

  11. What is the primary difference between original income and final income?

    • Interest payments
    • Capital gains
    • Inflation rates
    • Government intervention

  12. What process adjusts household income to reflect differences in household size and composition?

    • Amortisation
    • Equivalisation
    • Indexation
    • Normalisation

  13. Which tax imposes a higher relative financial burden on low-income earners?

    • Progressive tax
    • Regressive tax
    • Proportional tax
    • Direct tax

  14. If Area A is 0.15 and Area B is 0.35, what is the Gini coefficient?

    • 0.15
    • 0.7
    • 0.43
    • 0.3

  15. What type of state payment is given without any corresponding output or service provided?

    • Transfer payment
    • Public good
    • Factor payment
    • Capital expenditure

  16. Which factor directly increases wealth inequality independently of current earned income?

    • Inheritance
    • Universal benefits
    • Minimum wage
    • Progressive taxation

  17. What does a Gini coefficient of zero indicate about a nation's income distribution?

    • High poverty rate
    • Complete inequality
    • Complete equality
    • Maximum efficiency

  18. Which curve illustrates the degree of inequality in a country's income distribution?

    • Kuznets curve
    • Lorenz curve
    • Phillips curve
    • Laffer curve

  19. What economic principle suggests a potential trade-off when using high tax rates to reduce inequality?

    • Absolute advantage
    • Economic efficiency
    • Comparative advantage
    • Fiscal dominance

  20. What term describes income remaining after direct taxes are deducted and cash benefits added?

    • Gross income
    • Market income
    • Final income
    • Disposable income

All OCR Economics quizzes