A Level Economics AQA Practice Exam

Which of the following is not a consequence of income inequality?

1. Decreased social mobility

2. Increased economic growth

3. Higher crime rates

4. Wider disparity in access to education

The correct answer is: Increased economic growth

Income inequality can have a variety of consequences, but increased economic growth is typically not considered one of them. In fact, while there may be instances where inequality and growth coexist in the short term, the long-term effects of high levels of income inequality often stifle overall economic growth. This occurs because when wealth is concentrated in the hands of a few, the majority of the population may struggle with lower incomes, which limits their purchasing power. Consequently, consumer demand may diminish, leading to restricted economic activity. Moreover, high income inequality can lead to a lack of investment in public goods, such as education and healthcare, which are essential for fostering a productive workforce. This disparity can create a cycle where those in lower income brackets have limited access to opportunities that could enable them to improve their economic position, ultimately hampering economic growth. In contrast, the other options highlight consequences that are frequently associated with significant income inequality. For instance, decreased social mobility indicates that those from lower-income backgrounds have reduced chances of improving their socioeconomic status, while higher crime rates are often reported in contexts where a sharp income divide exists. Similarly, access to education becomes markedly unequal where wealth disparities are pronounced, as individuals from lower-income households may struggle to afford quality education or related resources.