The Market’s Inability to Achieve Equity (DP IB Economics: HL)

Exam Questions

14 mins7 questions
12 marks

Text A, Paragraph 1:
Many global economists have raised concerns about income inequality as one of the major challenges facing developing and developed nations alike. Policymakers continue to debate the potential long-term effects of this issue, particularly in societies where economic growth is a priority. Various government initiatives are being proposed to address this growing concern, yet there remains little consensus on the most effective way to tackle the issue.

Define the term income inequality as indicated in bold (Text A, paragraph 1).

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22 marks

Text B, Paragraph 2:
Several financial reports have highlighted the importance of wealth accumulation for those interested in securing a financially stable future. This trend has been particularly noticeable among certain income brackets, where investments and savings have led to increased financial security. For others, however, the opportunity to accumulate wealth seems more distant, with discussions focused on how this might affect future economic mobility.

Define the term wealth accumulation as indicated in bold in (Text B, paragraph 2).

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32 marks

Text C, Paragraph 1
Several modern economies, such as those in the United States and parts of Asia, have embraced capitalism as the foundation of their economic policies. This system has been praised for its ability to drive innovation and growth but has also been critiqued for its potential to create economic disparity. Business leaders argue that this structure is vital for maintaining a competitive marketplace, while others call for a re-evaluation of its broader impacts on society.


Define the term capitalism as indicated in bold (Text C, paragraph 1).

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42 marks

Text E, Paragraph 1:
Many nations have adopted progressive taxation systems, aiming to address economic imbalances. There are ongoing debates regarding the effectiveness of such policies, especially in terms of generating revenue for government-funded social programs. Some argue that these systems help to distribute the tax burden more fairly, while others believe they can negatively affect economic incentives.

Define the term progressive taxation as indicated in bold in (Text E, paragraph 1).

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52 marks

Text F, Paragraph 1:
Across several generations, the role of inheritance in shaping economic outcomes has become a topic of significant interest. Families with substantial resources are often able to pass down assets, while others may struggle to provide the same advantages for their descendants. These patterns have prompted policy discussions on how to create a more balanced economic environment in the future.

Outline one way inheritance contributes to inequality, as found in (Text F, paragraph 1).

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62 marks

Text G, Paragraph 2
The relationship between education and economic opportunity has been explored in many global studies. Governments and educational institutions often promote access to education as a way to address inequality, particularly in communities that have historically faced economic barriers. Efforts to improve education systems have become central to discussions about long-term strategies for reducing economic disparities.

Outline how education reduces inequality, as found in (Text G, paragraph 2).

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72 marks

Text B, Paragraph 3
The process of wealth accumulation has been a major topic of interest in recent economic studies. While some individuals and households have been able to increase their financial holdings through investments, others remain excluded from opportunities to grow their wealth. This has raised concerns about long-term economic mobility and the persistence of inequality across generations.

Outline how wealth accumulation contributes to inequality, as found in (Text B, paragraph 3).

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