Ch. 13 - Inequality Flashcards
What is income?
The money you recieve in a period of time, such as a year
What is wealth?
All the assets - including savings, cars, a home - that you currently have
What is permanent income?
Your average lifetime income
What is intergenerational mobility?
The extent to which the economic status of children is independent of the economic status of their parents
What is the poverty line?
An income level, below which a family is defined to be in poverty
How does the federal government set the poverty line?
Using the market basket measure, which calculates the cost of a basket of goods considered necessary to maintain a basic standard of living for a family (2 parents, 2 kids)
What is the poverty rate?
The percentage of people whose family income is below the poverty line
What is absolute poverty?
The measure of the adequacy of resources relative to an absolute standard of living
What is relative poverty?
A measure that compares poverty relative to the material living standards of your contemporary society
What is a social safety net?
The cash assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution
What is social insurance?
Government-provided insurance against bad outcomes, such as unemployment, illness, disability, or outliving your savings
What is a progressive tax?
A tax where those with more income tend to pay a higher share of their income in taxes
What does means-tested mean?
Eligibility is based on income & someties wealth
What are income taxes?
Taxes collected on all income, regardless of its source
What is a regressive tax?
A tax where those with less income tend to pay a higher share of their income on a tax
What is utility?
Your level of well-being
What is marginal utility?
The additional utility you get from one more dollar
What is diminishing marginal utility?
Each additional dollar yields a smaller boost to your utility- less marginal utility - than the previous dollar
What is utilitarianism?
The political philosophy that government should try to maximize total utility in society
What is the effective marginal tax rate?
The amount of each extra dollar you earn that you lose to higher tax rate and lower government benefits
