Numbers
AQA A-Level Economics 7136
Economic Methodology and the Economic Problem
Individual Economic Decision Making
Price Determination in a Competitive Market
Topic overviewDemand, the demand curve, income and wealthSubstitutes, complements and consumer preferencesPrice elasticity of demand and total revenueThe determinants of price elasticity of demandIncome and cross elasticity of demandThe determinants of supplyPrice elasticity of supplyEquilibrium, disequilibrium and how a market clearsShifts in demand and supply, and the price mechanismThe interrelationship between markets
Production, Costs and Revenue
Perfect Competition, Imperfectly Competitive Markets and Monopoly
Topic overviewThe characteristics of the four market structuresPrice takers, price makers and non-price competitionCompetitive marketsThe objectives of firmsProfit maximisation and the divorce of ownership from controlProfit maximisation and the shutdown conditionPrice taking, entry and exit, and long-run equilibriumEfficiency in perfect competition and its assumptionsMonopolistic competition in the short runMonopolistic competition in the long runThe characteristics of oligopoly and barriers to entryThe kinked demand curve and price rigidityCollusion, cartels and price leadershipNon-price competition in oligopolyThe advantages and disadvantages of oligopolyMonopoly power and barriers to entryThe monopoly diagram and supernormal profitThe costs and benefits of monopolyPrice discriminationThe dynamics of competitionCreative destruction and the competitive market processContestable and non-contestable marketsStatic and dynamic efficiencyMarket structure and resource allocationConsumer and producer surplus
The Labour Market
The Distribution of Income and Wealth: Poverty and Inequality
Topic overviewIncome, wealth and the causes of their distributionEquality, equity, the Lorenz curve and the Gini coefficientThe arguments about inequalityThe problem of povertyProgressive taxation and transfer paymentsMeans-tested benefits, universal benefits and the poverty trapWealth taxes and state provisionEvaluating redistribution
The Market Mechanism, Market Failure and Government Intervention
Topic overviewHow markets and prices allocate resourcesThe meaning of market failurePublic goods, private goods and quasi-public goodsPositive and negative externalitiesMerit and demerit goodsMarket imperfectionsAn inequitable distribution of income and wealthIndirect taxes and subsidiesPrice controls, state provision and regulationPollution permits and the extension of property rightsEvaluating intervention and the mixed economyGovernment failureCompetition policyPublic ownership, privatisation, regulation and deregulation
The Measurement of Macroeconomic Performance
How the Macroeconomy Works
Topic overviewThe circular flow of incomeThe aggregate demand and aggregate supply curvesWhat shifts short-run and long-run aggregate supplyMacroeconomic equilibrium and economic shocksConsumption and investmentGovernment spending and net exportsThe accelerator, saving and investmentAggregate demand and the level of economic activityThe determinants of aggregate supply
Economic Performance
Topic overviewShort-run and long-run economic growthThe economic cycle and output gapsDemand-side and supply-side shocksMeasuring unemployment and the types of unemploymentThe determinants of employment and policies to reduce unemploymentInflation and deflationThe quantity theory of moneyConsequences of inflation and deflationThe balance of payments on current accountOutput gaps and the growth-inflation conflictReconciling policy objectives in the AD/AS model
Financial Markets and Monetary Policy
Topic overviewThe characteristics and functions of moneyFinancial markets and their roleDebt, equity and bond yieldsCommercial banks, investment banks and the balance sheetLiquidity, profitability, security and credit creationThe instruments and institutions of monetary policyHow bank rate changes affect the economyWhat the MPC considers, and the exchange rate channelThe functions of a central bankThe bank rate and the MPC's decisionsExchange rate movements and the macroeconomyThe monetary policy transmission mechanismQuantitative easing and unconventional policyThe regulators and the risks banks faceLiquidity ratios, capital ratios and systemic risk
Fiscal Policy and Supply-Side Policies
Topic overviewFiscal policy and aggregate demandTypes of taxThe budget balance and the national debtThe purposes of public expenditure and taxationThe principles of taxationBudget deficits, surpluses and their effectsThe national debt and fiscal rulesSupply-side policies and how they workMarket-based and interventionist supply-side policies
The International Economy
Topic overviewThe causes and characteristics of globalisationThe impact of globalisation on developed and developing economiesMultinational corporationsComparative and absolute advantageThe effects of trade and changing trade patternsTariffs, quotas and the tariff diagramArguments for and against protectionismTrading blocs and the World Trade OrganisationThe components of the balance of paymentsCauses of current account imbalances and investment flowsCorrecting imbalances and their consequencesHow exchange rates are determined in a floating systemGovernment intervention and fixed exchange ratesFloating rates and currency unionsGrowth, development and less-developed economiesMeasuring development: the HDI and other indicatorsInvestment and education as drivers of developmentCorruption, governance and institutional barriersInfrastructure, human capital and property rightsMarket-based and interventionist development strategiesAid and trade as development strategiesGrowth, globalisation and inequality
The Distribution of Income and Wealth: Poverty and Inequality
- 8 subtopics
- 23 things to know
- Papers 1 and 3
What The Distribution of Income and Wealth: Poverty and Inequality covers
The distribution of income and wealth is examined on Papers 1 and 3. It measures inequality, sets out the arguments for and against reducing it, and works through the policies used to alleviate poverty.
Where it is assessed
Papers 1 and 3
Markets and market failure, then the synoptic paper.
Check the AQA specification ↗The 8 subtopics
Each one has its own page.
- Income, wealth and the causes of their distributionWhat income and wealth are, and what makes their distribution unequal.Open →
- Equality, equity, the Lorenz curve and the Gini coefficientThe difference between equality and equity, and reading a Lorenz curve and a Gini coefficient.Open →
- The arguments about inequalitySocial cohesion and aggregate demand against incentives, saving and enterprise.Open →
- The problem of povertyAbsolute and relative poverty, its causes, and its effects on health, productivity and the public finances.Open →
- Progressive taxation and transfer paymentsHow a progressive tax works, and the transfer payments that redistribute income.Open →
- Means-tested benefits, universal benefits and the poverty trapThe trade-off between targeting and administration, and how high effective marginal rates trap claimants.Open →
- Wealth taxes and state provisionInheritance tax, capital gains tax, and how free public services redistribute real income.Open →
- Evaluating redistributionIncentive effects, opportunity cost, the replacement ratio, and the moral and political positions behind the debate.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Numbers
What does a higher Gini coefficient show, and what is said for greater equality?
Process
How does access to education affect wealth, and how do equality and equity differ?
Evaluation
What does a Lorenz curve plot, how is its shape read, and how do transfers change the distribution?
Key term
What is the case against greater equality?
Key term
How might greater inequality provide stronger incentives for enterprise?
Key term
In the United Kingdom, is income or wealth distributed more unequally?
Evaluation
What is the relationship between excessive inequality and market failure?
Evaluation
What are intergenerational cycles of poverty, and what does poverty cost the state?
Numbers
What causes a household to fall into poverty?
Process
How does poverty affect demand, health and productivity?
Evaluation
What social problems can result from poverty?
Evaluation
How do means-tested and universal benefits differ?
Numbers
When is inheritance tax applied, how might it be avoided, and what is the national living wage for?
Evaluation
What are inheritance tax and capital gains tax for, and what do they risk?
Numbers
What do redistribution policies cost, and how might they improve efficiency?
Evaluation
How does redistribution affect total consumption, and what is the replacement ratio?
Numbers
What do Gini coefficients of 0 and 1 represent, and what does a higher coefficient indicate?
Key term
How are free public services such as the NHS funded?
Key term
What does the egalitarian moral perspective on redistribution emphasise?
Key term
What does the free-market political perspective emphasise regarding redistribution?
Evaluation
Why is it important to consider both short-run costs and long-run benefits when evaluating redistribution policies?
Key term
What is a progressive tax, and what are transfer payments?
Take The Distribution of Income and Wealth: Poverty and Inequality further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Income vs Wealth
Income: a flow of earnings received over time. Wealth: a stock of assets owned at a point in time.
Absolute poverty vs Relative poverty
Absolute poverty: resources below a fixed minimum living standard. Relative poverty: resources far below the normal standard in society.
Progressive tax vs Regressive tax
Progressive tax: average burden rises as earnings increase. Regressive tax: average burden falls as earnings increase.
Questions from this topic
Each one with the model answer underneath.
- 1
Define income in economic terms.
Model answer
Income is a flow of money received over a period of time, such as wages, salaries, rent, interest, and profits.
- 2
Define wealth in economic terms.
Model answer
Wealth is a stock of assets owned at a point in time, including property, shares, savings, and other valuable possessions.
- 3
What is the key conceptual difference between income and wealth?
Model answer
Income is a flow concept measured over time, whereas wealth is a stock concept measured at a single point in time.
- 4
How do wage and salary differentials influence the distribution of income?
Model answer
Differences in wages and salaries between workers create variations in income levels, contributing to income inequality.
- 5
How does ownership of assets affect the distribution of income?
Model answer
Those who own assets receive income from them (such as rent, dividends, or interest), increasing their total income relative to those without assets.
- 6
How do government transfers and benefits influence income distribution?
Model answer
Government transfers and benefits provide income to lower-income households, reducing income inequality by supplementing their earnings.
What is inside Levo
Six ways to work the same material.
The Distribution of Income and Wealth: Poverty and Inequality revision questions
- What does The Distribution of Income and Wealth: Poverty and Inequality cover in AQA A-Level Economics?
- 8 subtopics: income, wealth and the causes of their distribution, equality, equity, the lorenz curve and the gini coefficient, the arguments about inequality, the problem of poverty, progressive taxation and transfer payments, means-tested benefits, universal benefits and the poverty trap, wealth taxes and state provision and evaluating redistribution. Each one has its own page with questions and model answers.
- How is The Distribution of Income and Wealth: Poverty and Inequality organised?
- By the AQA 7136 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in The Distribution of Income and Wealth: Poverty and Inequality, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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