Measuring Income Inequality within an Economic System

The video tutorial explores how to measure income inequality within an economic system, focusing on the UK. It introduces the Lorenz curve as a graphical representation of income distribution and the Gini index as a statistical measure of inequality. The tutorial explains how to construct and interpret these tools, highlighting their use in comparing income distribution across different countries and over time.

What is the main focus of the introduction regarding income inequality?

• The role of government policies in reducing inequality

• The widening income gap in the UK and tools to measure it

• The impact of income inequality on economic growth

• The historical context of income inequality

What does the Lorenz curve represent?

• The total wealth of a country

• The economic growth rate of a country

• The average income of the richest 10%

• The distribution of income within a population

How is the Lorenz curve plotted?

• Using cumulative percentages of population and income

• Using the GDP growth rate

• Using the average income of each decile

• Using the total income of the richest 1%

What does a straight line on the Lorenz curve indicate?

• Rapid economic growth

• Perfect equality

• Perfect inequality

• High unemployment

In the practical example, what does a steeper jump in the Lorenz curve indicate?

• A decrease in inequality

• An increase in inequality

• A decrease in population

• A stable economic system

What is the Gini index used for?

• Determining the unemployment rate

• Measuring income inequality

• Measuring economic growth

• Calculating the average income

How is the Gini index calculated?

• By measuring the GDP growth rate

• By comparing the Lorenz curve to the line of equality

• By analyzing the unemployment rate

• By dividing the total income by the population

What does a Gini index of 0 indicate?

• Perfect equality

• High economic growth

• Low unemployment

• Total inequality

What trend is observed in the UK's Gini index over time?

• Significant increase

• No significant changes

• Significant decrease

• Fluctuations with economic cycles

What is suggested as a valuable use of the Gini index?

• Determining the unemployment rate

• Calculating the average income

• Comparing inequality across different countries

• Predicting future economic growth