2.7 income distribution and welfare

Question 1

Define income

Answer 1

the flow of wages, salaries and earnings from other sources in the period

Question 2

Define wealth

Answer 2

the stock of accumulated assets

Question 3

How does the govt aim to reduce income distribution imbalance

Answer 3

using taxation and govt spending

Question 4

Define absolute poverty

Answer 4

when incomes earned by a household are below a certain threshold (often $2/day)

Question 5

Define relative poverty

Answer 5

When incomes earned by a household are below a given average

Question 6

Define gini coefficient

Answer 6

a measure of the degree of inequality in society