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QLDEconomicsQuick questions
Unit 4: Contemporary macroeconomics
Quick questions on Income distribution and equity in Australia (QCE Economics Unit 4)
15short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is income vs wealth?Show answer
Income is a flow concept: payments received over a period (wages, profits, dividends, transfers).
What is the Lorenz curve?Show answer
The Lorenz curve plots cumulative income (or wealth) share against cumulative population share, ranked from lowest to highest.
What is the Gini coefficient?Show answer
The Gini coefficient is the area between the Lorenz curve and the line of equality, divided by the total area below the line of equality.
What is income inequality in Australia?Show answer
ABS Survey of Income and Housing data (indicative, equivalised disposable household income):
What is wealth inequality?Show answer
The top 1 percent of households hold around 17 percent of wealth (Productivity Commission). Housing is the largest single source of wealth inequality.
What is sources of inequality?Show answer
1. Employment status. Households with no employed adult have median income around 40 percent of average. 2. Hours worked. Part-time and casual employment, especially among women.
What is the Australian tax and transfer system?Show answer
Australia's tax-transfer system is among the most redistributive in the OECD:
What is trends?Show answer
Australian income inequality has been relatively stable over the past two decades (Gini 0.32-0.34). However:
What is impact of inequality on AD?Show answer
Inequality reduces aggregate demand growth. Lower-income households have a higher marginal propensity to consume. Redistribution upward reduces total consumption.
What is impact on social cohesion?Show answer
High inequality is associated with:
What is impact on intergenerational equity?Show answer
The 2023 Productivity Commission Wealth of Generations report documents:
What is impact on macroeconomic objectives?Show answer
Growth. High inequality may reduce long-run growth through lower social mobility and lower demand growth.
What is progressive income tax?Show answer
Rates from 0 to 47 percent (including Medicare levy).
What is means-tested transfers?Show answer
- Age Pension (~$30,000 per year for a single). - JobSeeker. - Disability Support Pension.
What is free or subsidised services?Show answer
- Medicare (universal). - PBS (subsidised medicines). - Public schools and TAFE.