Lesson M2.7.2

M2.7.2 Causes and consequences of poverty and inequality Quiz: OCR Economics, Unit 7

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson M2.7.2, Causes and consequences of poverty and inequality: 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. What does a Gini coefficient of 0 represent in an economy?

    • High poverty rate
    • Zero national income
    • Complete inequality
    • Complete equality

  2. In a Lorenz curve diagram, how is the Gini coefficient calculated?

    • Area A / (A + B)
    • Area B / Area A
    • Area A / Area B
    • (A + B) / Area A

  3. What type of tax takes a higher percentage of income as income rises?

    • Indirect tax
    • Progressive tax
    • Proportional tax
    • Regressive tax

  4. Which type of tax places a greater relative burden on low-income households?

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

  5. If a person pays £3,000 tax on an income of £30,000, what is their average tax rate?

    • 30%
    • 10%
    • 15%
    • 3%

  6. What term describes the tax rate paid on the next pound of income earned?

    • Proportional tax rate
    • Average tax rate
    • Effective tax rate
    • Marginal tax rate

  7. What variables does the Laffer curve depict the relationship between?

    • Inflation and unemployment
    • Tax rates and revenue
    • Wage rates and employment
    • Income and consumption

  8. Which trade-off is shown by the short-run Phillips curve?

    • Growth and inflation
    • Exports and imports
    • Inflation and unemployment
    • Taxation and revenue

  9. What shape is the long-run Phillips curve in macroeconomic theory?

    • Upward-sloping
    • Vertical
    • Downward-sloping
    • Horizontal

  10. What does the 'N' in the NAIRU macroeconomic concept stand for?

    • National
    • Net
    • Nominal
    • Non-accelerating

  11. Which fiscal policy mechanism automatically reduces economic fluctuations without direct government intervention?

    • Quantitative easing
    • Supply-side reforms
    • Automatic stabilisers
    • Discretionary fiscal policy

  12. What effect occurs when higher government borrowing leads to lower private sector investment?

    • Multiplier effect
    • Financial crowding out
    • Accelerator effect
    • Liquidity trap

  13. What type of budget deficit persists even when the economy operates at full capacity?

    • Cyclical deficit
    • Budget surplus
    • Structural deficit
    • Trade deficit

  14. What central bank policy involves directly purchasing government bonds to inject liquidity?

    • Fiscal expansion
    • Quantitative easing
    • Deregulation
    • Privatisation

  15. What is the primary short-run aim of cutting central bank interest rates?

    • Increase tax revenue
    • Stimulate aggregate demand
    • Reduce national debt
    • Lower money supply

  16. Which policy measure aims to increase long-run aggregate supply through market competition?

    • Interest rate hikes
    • Increased welfare payments
    • Higher tariffs
    • Deregulation

  17. Which supply-side reform reduces trade union power to make wages more flexible?

    • Fiscal contraction
    • Labour market reform
    • Monetary easing
    • Protectionism

  18. Rapid economic growth caused by high aggregate demand usually leads to which policy conflict?

    • Demand-pull inflation
    • Structural unemployment
    • Budget surplus
    • Deflation

  19. What event causes the short-run Phillips curve to shift upwards?

    • Higher expected inflation
    • Lower import prices
    • Tax rate cuts
    • Lower money supply

  20. In Keynesian aggregate supply analysis, what is the shape of the aggregate supply curve at low output?

    • Vertical
    • Horizontal
    • Upward-sloping
    • Downward-sloping

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