3.3 Fair distribution of income Flashcards
• explain what is meant by the distribution of income, including different types of income and the difference between income and wealth • calculate income and wealth • evaluate the causes of differences in the distribution of income and wealth and the consequences for an economy
What does the term ‘distribution of income’ mean?
How incomes are shared out between individuals and households.
What does the term ‘incomes’ mean?
The reward for the service provided by a factor of production, including labour over time.
What are the different examples of income?
- Wages
- Rent
- Interest
- Profit
- State benefits
What does the term ‘wealth’ mean?
The market value of all assets owned by a person, group or country at a specific point in time. Wealth is a stock of assets, e.g. money houses and land, whereas income is a flow overtime.
What does the term ‘gross income’ mean?
Income received before any taxes are taken or benefits given.
What does the term ‘net income’ mean?
Income available after the effects of direct taxes and benefits, often called disposable income.
Why is income unevenly distributed in the UK?
- Income-earning assets are distributed unevenly
- Differences in wages
- Reliance on benefits
- Age
- Gender
What does the term ‘distribution of wealth’ mean?
How wealth is shared out between individuals and households.
Why is wealth unevenly distributed in the UK?
- Inheritance
- Savings
- Purchase of property
- Enterprise
Consequences of differences in income and wealth for an economy?
- Poverty and deprivation
- Poor housing
- Poor health
- Inequality of opportunity
