3.3 Addressing income and wealth inequality

Question 1

Define the term “Wealth”

Answer 1

A stock of assets that has been built up overtime

Question 2

Define the term “Gini coefficient”

Answer 2

A numerical measure of income inequality

Question 3

What are 3 economic reasons for inequality of income and wealth?

Answer 3

Answers may include :

1. A lack of formal employment opportunities
2. Poor vocational training, which means local industries cannot obtain the labor required to maintain a viable operation in national and international markets.
3. A lack of investment in the education and health sectors, which holds back the human capital required for economic growth
4. Poor infrastructure such as roads, railways, power and water supplies.
5. A low rate of savings, which holds back private and public sector investment.
6. The inability of many people to obtain credit to fund small businesses and improved personal education.

Question 4

Define the term “Informal economy”

Answer 4

The part of the economy that is not regulated, protected, or taxed by the government.

Question 5

Define the term “Minimum wage”

Answer 5

The least amount an employer can legally pay one of their workers.

Question 6

Define the term “Transfer payment”

Answer 6

A payment made by the government to certain members of the community who may be unable to work or are in need of assistance.

Question 7

Define the term “Progressive tax”

Answer 7

A situation where the tax rate increases at a higher rate than the increase in income

Question 8

Define the term “Inheritance tax”

Answer 8

A progressive tax on an inheritance or a gift.

Question 9

Define the term “Capital tax”

Answer 9

A progressive tax paid annually on the difference between the buying and selling price of an asset.