Which one of the following can be concluded from the data in Table 1 regarding the distribution of income between the top and bottom quintile of households?
| Income of top quintile (£) | Income of bottom quintile (£) | Ratio of top to bottom quintile | ||
|---|---|---|---|---|
| Original income | 120,000 | 10,000 | 12.0 | |
| plus cash benefits | 2,000 | 8,000 | 0.3 | |
| Gross income | 122,000 | 18,000 | 6.8 | |
| less direct taxes | 32,000 | 2,000 | 16.0 | |
| Disposable income | 90,000 | 16,000 | 5.6 | |
| less indirect taxes | 8,000 | 4,000 | 2.0 | |
| Post-tax income | 82,000 | 12,000 | 6.8 |
Direct taxes were more effective than cash benefits in reducing the income gap between the top and bottom quintiles.
Cash benefits made the distribution of income more unequal.
Indirect taxes made the distribution of income more unequal.
Direct taxes had no effect on the distribution of income.
76 exam-style questions on AQA A Level Economics 1.7 The distribution of income and wealth: poverty and inequality (A-level only), covering 1.7.1 The distribution of income and wealth, 1.7.2 The problem of poverty, and 1.7.3 Government policies to alleviate poverty and to influence the distribution of income and wealth. Each one has a worked solution and a mark scheme showing where the marks go.