Chapter 29

Question 1

What is income

Answer 1

The flow of earnings (from wages salaries and other sources) over a period of time

Question 2

What is wealth

Answer 2

The stock of accumulated assets (e.g. property and land)

Question 3

Is the distribution of wealth and income equally dsitributed

Answer 3

Income and wealth are not equally distributed (shared out amongst the population)

Question 4

Why do some families always have a wealth

Answer 4

Due to money passing down through the generations such as property and cash

Question 5

What is absolute poverty

Answer 5

When a household can not afford basic necessities for survival. The world bank measures it on those living on less than $1.25 per day

Question 6

What is relative poverty

Answer 6

When someone’s income is below 60% of the median adjusted income in an economy.

Question 7

What is inequality (economics)

Answer 7

An unequal distribution of income and /or wealth in an economy

Question 8

What is and what can the lorenz curve show

Answer 8

Can be used to measure the distribution of income or wealth, shows the spread of income in countries

Question 9

What is the gini coefficient

Answer 9

can be used to measure inequality

Question 10

Decile

Answer 10

When the population is divided into tenths (10%)

Question 11

Quartile

Answer 11

When the population is divided into quarters (25%)

Question 12

What is equality

Answer 12

refers to the equal distribution of wealth and income in society, so that everyone has the same income (wealth)

Question 13

What is the headcount ratio

Answer 13

a measure of the percentage of a country’s population living below a poverty line.

Question 14

What is the international poverty line

Answer 14

an agreed measure that defines the absolute poverty line based on international prices, set at PPP$1.90 in October 2015.

Question 15

What is persistent poverty

Answer 15

where a household is currently in relative income poverty and has also been in this state in at least 2 of the preceding 3 years.

Question 16

What are causes of income and wealth inequality within and between countries

Answer 16

• Inequality in wages
  
  • Welfare payments and taxes
  • Unemployment
  • Changes to the UK tax system
  • Inequality between countries

Question 17

Why achieving a more even distribution of income is important to macroeconomic objectives

Answer 17

High levels of poverty through the unequal distribution of income may result in lower levels of health within the population.
Encourage a cohesive society

Question 18

Causes of inequality on wages or employment

Answer 18

Education
Part-time jobs (underemployed)
Structural unemployment (inequality between those in tech and steel sectors and pay)
Unemployment
Levels of education (degree, gcses etc)
Gender and racial inequality
other inequalities such as disabilities

Question 19

How do welfare payments cause inequality/poverty

Answer 19

State pensions and welfare payments tend to increase less than wages even though they are index linked to inflation. This over time increases inequality and the number of people in relative poverty

Question 20

How does taxes cause inequality/poverty

Answer 20

Somes taxes can be regressive where those on lower incomes bear the burden more

Question 21

How does disease and malnutrition and other health problems cause inequality/poverty

Answer 21

People with health problems often have to take time off work which means they loss income and this increases inequality and pushes them towards poverty

Question 22

How does corruption and political oppression causes inequality/poverty

Answer 22

This is because leaders can embezzle wealth and not give back to the population

Question 23

How does natural disasters cause inequality/poverty

Answer 23

destroy peoples wealth and jobs

Question 24

Why is there is inequality between countries

Answer 24

• In some countries, social groups are excluded or marginalised based on gender, ethnicity etc which reduces the ability to earn
• Some countries are held back by wars, droughts, famines and natural disasters which push and keep a population In poverty,
• Exploitation of the poor through colonial rule, this held them back and stopped them from developing as quickly.

Question 25

Impact of economic change and development on inequality

Answer 25

Kuznets hypothesis is that as society moves more from agriculture to industry, it develops, and inequality in society increases as the wages of industrial workers rise faster than those of farmers. He argued that inequality i poor countries is just a transitional phase and inequality reduces once nations become economically developed

Question 26

Impact of inequality

Answer 26

Monopolies can exploit the power on consumers with higher powers
Inequality motivates workers tp work harder to get what other people have.
Die to inheritance wealth is passed down through generations wealth is often concentrated in few families. though government can increase inheritance tax to redistribute this wealth. Can demotivate people too.

Question 27

Impact of poverty

Answer 27

Health: Lower life expectancy, malnutrition - they are more vulnerable to infection and disease
Society: poor housing, increased crime and mental health issues. possible social unrest
Poor sanitation: can afford basic levels of sanitation and no clean water which can kill people as they are more likely to get ill and diseases
Education: Less likely to education as they can’t afford to live and educate, they need to earn money to survive
Economy: Harder to get jobs and hinders an economy’s productive potential