3.7.3 Government policies to alleviate poverty and to influence the distribution of income and wealth

• What does the Lorenz Curve plot on its axes?

  Population vs income/wealth
• What does a higher Gini Coefficient indicate?

  Greater income inequality
• What is a major source of income inequality related to wages?

  Wage disparities
• Inheritance and wealth play a role in intergenerational transfer of assets
• Technological change can exacerbate income inequality by favoring high-skilled workers.


  True
• What is the purpose of progressive taxation in reducing poverty?

  Wealth redistribution
• Order the following policies based on their primary effect on poverty reduction:

  1️⃣ Welfare Programs

  2️⃣ Minimum Wage Laws

  3️⃣ Progressive Taxation
• What does the Gini Coefficient measure when it is closer to 0?

  Greater income equality
• The Lorenz Curve is a graphical representation of income or wealth distribution
• The Gini Coefficient is calculated from the area between the Lorenz Curve and the 45-degree line


  True
• Match the concept with its description:

  Lorenz Curve ↔️ Graphical representation of income distribution

  Gini Coefficient ↔️ Numerical measure of income inequality

  45-degree line ↔️ Represents perfect equality
• Inheritance and wealth are key sources of income inequality.
• How does technological change affect income inequality?

  Favors high-skilled jobs
• Steps in calculating the Gini Coefficient from the Lorenz Curve

  1️⃣ Plot the Lorenz Curve

  2️⃣ Calculate the area between the Lorenz Curve and the 45-degree line

  3️⃣ Divide the area by the total area under the 45-degree line
• How does progressive taxation reduce income inequality?

  Redistributes wealth
• Minimum wage laws ensure workers receive a basic standard of living.


  True
• The Gini Coefficient ranges from 0 (perfect equality) to 1 (perfect inequality).
• Differences in wages between high-skilled and low-skilled workers contribute to income inequality.

  True
• What is intergenerational transfer of wealth and assets called?

  Inheritance
• Technological change, such as automation, favors high-skilled jobs, which can increase income inequality.

  True
• What is one type of government policy aimed at alleviating poverty?

  Progressive Taxation
• Education and training programs can reduce long-term poverty by improving skills and employability.


  True
• What is a potential weakness of welfare programs in addressing income inequality?

  May create dependency
• The Gini Coefficient ranges from 0 to 1, with 0 indicating perfect equality.


  True
• The Gini Coefficient is calculated from the area between the Lorenz Curve and the 45-degree line
• Unequal access to education contributes to income inequality.


  True
• How does discrimination contribute to income inequality?

  Unfair treatment
• Match the source of income inequality with its description:

  Globalization ↔️ Increased competition from low-wage countries

  Discrimination ↔️ Unfair treatment based on factors like gender or race

  Inheritance and Wealth ↔️ Intergenerational transfer of wealth and assets

  Unequal Access to Education ↔️ Lack of educational opportunities for certain groups
• Minimum wage laws ensure workers receive a basic standard of living.


  True
• Progressive taxation reduces inequality by taxing higher income earners more
• What is the Lorenz Curve used to represent?

  Income/wealth distribution
• What does a Lorenz Curve closer to the 45-degree line indicate?

  More equal distribution
• Differences in wages are a key source of income inequality.
• What is unequal access to education considered a source of income inequality?

  Lack of opportunities
• Discrimination based on gender, race, or social status contributes to income inequality.


  True
• Globalization can increase income inequality due to competition from low-wage countries.
• Match the policy with its impact on income distribution:

  Progressive Taxation ↔️ Reduces inequality by taxing higher incomes

  Welfare Programs ↔️ Lifts families out of poverty

  Minimum Wage Laws ↔️ Ensures basic standard of living
• Welfare programs provide direct financial support to those in need.
• What does a higher Gini Coefficient indicate about income inequality?

  Greater inequality
• Some key sources of income inequality include differences in wages