4.2.2

Question 1

what is the gini coefficent?

Answer 1

a measure of income inequality
* between 0-1 , where 0= perfect and equal, 1= only one person has all th emoney

used to compare caross countries and regions

Question 2

what is the difference between wealth and income inequality?

Answer 2

• income inequality: difference in income between people in a society
• wealth inequality: difference in total assets (such as stocks, property and savings) between people

wealth inequality> income inequality

Question 3

what are the two measures of income inequality?

Answer 3

• lorenz curve
• Gini Coefficent

Question 4

what is the lorenz curve?

draw

Answer 4

graphical representation of the distribution of income or wealth in a society.
The further away the Lorenz curve is from line of equality, the higher the Gini coefficient

Question 5

what are the main causes of income inequality in the UK?

Answer 5

• widening gap between high paid and low paid jobs
• regressive taxes
• welfare benefit system has become less generous over time
• unaffordable housing to buy and rent

wealth inequality contributes to income inequality

Question 6

why is there a widening gap between high and low paid jobs?

Answer 6

• bonus culture prevalent in financial & business services
• decline in trade union density
• decline in full time employment in manufacturing
• sharp rise in executive pay relative to median incomes

Question 7

what is a regressive type of tax?

Answer 7

indirect taxes such as VAT

Question 8

What are some subsidies designed to lower inequality?

Answer 8

• increase in minimum wage
• rise in welfare benefit
• subsidies on energy bills, childcare
• rent controls to make housing affordable
• progressive taxes

Question 9

how does capitalism affect welath inequality?

Answer 9

those who are successful in a capitalist system can accumulate alot of wealth, while others struggle to make ends meet

Question 10

how does capitalism affect income inequality?

Answer 10

in capitalist system, individuals are compensated based on value they bring. this means high skilled workers can demand higher wages , whereas low skilled have low wages

Question 11

how does globalisation lead to income and wealth inequlaity between countries?

Answer 11

• skilled and educated workers in industries connected to the global economy may benefit more whereas low skilled workers in declcing secctors recieve less income
• those with resources and access to global markets accumulate wealth more quickly
• tax avoidance means wealthy individuals can exploit globalisation by avoiding taxes and shifting assets further contributing to wealth inequality
• in a global competitve enviroment (China), some countries lower labour standards to attract FDI and remian competitive leading to worsening working conditions

Question 12

draw the kuznet’s curve

Answer 12

income inequality
1. agicultural society- income inequlaity tends to be low coz most people have similar occupations
2. industrilaisation, income inequality high as wage disparity between low skilled and high skilled workers
3. through taxes and redistribution more even distribution of income