2.4 Economics of inequality and poverty Flashcards
What is the difference between equality and equity
equality = fairness equality = everybody recieves the same
Why does disparity occur
income of households standard of education healthcare and nutrition child labour Discrimination resource ownership
What is the difference between relative and absolute poverty
Absolute poverty - no access to basic resources around 1.2 billion people world wide
relative poverty - less than 50% of median income, cannot buy everything they want
Ways of measuring inequality
Lorenz curve and Gini coefficient
how to measure the Gini index coefficient
area of a/ area of a + area of b
1 = perfect inequality 0 = perfect equality
What are different types of taxes
direct taxes indirect taxes proporitonate taxes regressive taxes Progressive taxes
What is a direct tax
a tax on income
What is an indirect tax
a tax on expenditure
What is a progressive tax
higher income earners pay a higher proportion in taxes
What is a regressive tax
lower income earners pay a higher proportion in taxes Indirect taxes are regressive
What are proportionate taxes
As income rises, earners pay a proportionately higher rate of tax
Ways to distribute income other than by taxes
transfer payments
minimum wages
improve opportunities for the disadvantages
government spending on essential goods and services
however
they produce extra costs for firms
higher taxes
government spending
Ways to distribute income other than by taxes
transfer payments
minimum wages
improve opportunities for the disadvantages
government spending on essential goods and services
however
they produce extra costs for firms
higher taxes
government spending
What is economic growth
an increase in real GDP over time
What are positive consequences of economic growth
better living standards
higher government revenue
