A Level Economics AQA Practice Exam

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What does income inequality refer to?

  1. The unequal distribution of assets in society

  2. The unequal distribution of wealth across households

  3. The unequal distribution of household income among individuals

  4. The equal distribution of income among all societal roles

The correct answer is: The unequal distribution of household income among individuals

Income inequality specifically refers to the disparities in the distribution of household income among individuals. This concept focuses on how varying levels of income are allocated among different members of society, highlighting the differences in earnings that lead to unequal economic standings. In contrast, the other options address related but distinct concepts. The distribution of assets in society relates more to wealth inequality, which encompasses things like property, savings, and investments, rather than just income. The unequal distribution of wealth across households also underscores the aspect of wealth rather than income specifically. Lastly, the equal distribution of income among all societal roles is not a reflection of income inequality, as this idea implies there is no inequality at all, which directly contradicts the definition of income inequality.

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