A Level Economics AQA Practice Exam

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How is the Gini Coefficient used in economics?

To measure inflation levels in an economy
To assess income inequality within a population
To determine employment rates
To evaluate economic growth

The correct answer is: To assess income inequality within a population

The Gini Coefficient is indeed used in economics to assess income inequality within a population. It is a statistical measure that ranges from 0 to 1, where 0 represents perfect equality (everyone has the same income) and 1 represents perfect inequality (one person has all the income while everyone else has none). By assessing how income is distributed among individuals or households, the Gini Coefficient provides insights into the economic disparity within a society. This measure helps economists and policymakers understand the economic conditions of a country, influence social policies, and guide resource distribution strategies to address disparities. Its focus on inequality distinguishes it from other economic metrics, ensuring it specifically highlights disparities rather than general economic trends like inflation, employment rates, or overall growth.