chapter 14 Flashcards
1
Q
functional distribution of income
A
- distribution of national income among major factors of production: labour, capital, land
2
Q
size distribution of income
A
distribution of income among individuals, without regards to source of income
3
Q
lorenz curve
A
- graph showing extent of inequality of income distribution - size of area between lorenz curve and diagonal is measure of inequality
4
Q
complete inequality
A
- lorenz curve would coincide with diagonal line
5
Q
gini coefficient
A
- the ratio of the area between the line of perfect equality and the line of perfect inequality
- the higher the coefficient, the more unequal the distribution is
6
Q
trends in income distribution
A
- since 1980s, have seen an increase in income inequality
- top earners have earned more
7
Q
why should we care about rising income inequality
A
- raises a moral question about fairness
- inequality is hurting the economy
8
Q
causes of rising inequality
A
- skill based technological change
- globalization
- other: decline of labour unions, contract work, executive compensation, superstar theory, piketty argument
9
Q
what can governments do
A
- increase taxes on high income individuals
- provide services for children from different backgrounds so they have more equal access