2.12 Markets inability to achieve equity

Question 1

income inequality

Answer 1

the uneven distribution of income in a population where large amounts of income are concentrated amongst a small group of people

Question 2

Equity

Answer 2

the concept of fairness or evenness and is considered an economic objective.

Question 3

income

Answer 3

The value received as a return on the exchange of the factors of production (labour, land, capital and entrepeneurship)

Question 4

wealth

Answer 4

Assets accumulated from which an income can be derived

Question 5

Kuznets curve

Answer 5

hypothesizes that industrializing nations experience a rise and subsequent decline in income inequality. The rise in inequality occurs after rural labor migrates to urban areas and becomes socially mobile

Question 6

reasons for high inequality

Answer 6

• Lower income households only have their labour power to exchange for wages, high income households tend to accumulate more wealth and capital that can be exchanged for rent, interest and profit.
• the number of workers will always be larger than the number of business owners/ owners of land and capital causing income to concentrate amongst fewer people
• generational wealth impacts equality of opportunity

Question 7

income inequality between countries

Answer 7

• historical reasons
• over dependence on primary sector with little value added leads to net losses in the foreign sector, inhibiting growth and development