15) Income Distrubution

Question 0

What does wealth mean

Answer 0

⚫️A stock of assets
➡️for example
➡️a persons wealth may consist of the value of their
➡️home
➡️car
➡️shares
➡️savings accounts

Question 1

What does income mean

Answer 1

⚫️it comes in two main sources for individuals:
➡️earned income
➡️from employments

➡️unearned income
➡️from dividends
➡️interest received on shares and savings

Question 2

What does income inequality mean

Answer 2

⚫️measures of the gap between the incomes of various groups within the economy

➡️the wage difference between these two
➡️tends to widen in periods of economic growth
➡️can be altered by changes to taxes and benefits

Question 3

How does the tax and benefit system reduce income inequality

Answer 3

⚫️cash benefits play the largest part in reducing income inequality
➡️e.g income support, child benefit, and other benefits
➡️go towards households with lower incomes

⚫️cash benefit makes up
➡️60% of gross income for the poorest fifth if households
➡️36% for the next group
➡️2% for the top fifth of households

⚫️tax system works by
➡️taking more income from the highest earners
➡️redistributing it as benefits to those on the lowest income