A Level Economics AQA Practice Exam

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What does a Gini Coefficient of zero indicate?

  1. Complete income inequality

  2. Complete income equality

  3. A balanced income distribution

  4. A high level of poverty

The correct answer is: Complete income equality

A Gini Coefficient of zero signifies complete income equality within a population. This means that everyone has the same income, resulting in a perfectly equal distribution of wealth. The Gini Coefficient is a measure of income inequality where zero represents perfect equality and one represents perfect inequality, meaning that one individual holds all the income while others have none. In practical terms, when the Gini Coefficient is at zero, it indicates that there is no disparity in earnings among individuals or households in the society being analyzed. This concept is central to understanding income distribution and economic equity, emphasizing that lower values on the Gini scale correlate with more equitable income distribution.

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