Chapter 7 : The distribution of income wealth : poverty and inequality Flashcards
What is income ?
Income is a flow of money.
Ex. wage
What is wealth ?
Wealth is your stock of assets.
Ex. house or car
What is FTSE100 ?
FTSE100 stands for the financial times stock exchange 100 index. It tracks the performance of the largest 100 UK companies as measured by the value of their shares.
What is active income ?
Active income is income earned from something you are doing currently that allows you to receive income.
Ex. job
What is passive income ?
Passive income is income earned from something your aren’t actively taking part in but you still receive income from.
Ex. AirBnb and dividends from stocks and shares
What is a statistic that illustration an unequal distribution of income ?
The median CEO workers earns 113 times the full time median worker salary.
What is the word for someone who has a lot of wealth ?
Oligarch
What is a society where wealth is concentrated in the hands of small group of people called ?
Oligarchy
What is the difference between salary and wages ?
A salary is paid monthly and unchanging and not linked to working hourly or overtime. Whereas wages are paid weekly and calculated according to an hourly rate. It can also vary with overtime working.
What is a quintile ?
A quintile is an example of a of a quantile that has been divided into 5 equal size groups.
What is a quantile ?
A quantile is a set of data divided into sub groups.
What is a decile ?
A decile is a quantile divided into 10 equal groups.
What is a percentile ?
A percentile is a quantile divided into 100 equal groups.
What is a vigntile ?
A vigntile is a quantile divided into 20 equal groups.
What is equity ?
Equity is when everyone is treated fairly.
What is equality ?
Equality is when everyone is treated the exact same - everyone receives the same exact income.
What is horizontal equity ?
It is when households with the same circumstances pay the same income tax and are eligible for the same welfare benefits.
What is vertical equity ?
Vertical equity justifies taking money from the rich and giving it to the poor on the grounds that the poor need it and the rich don’t.
What are transfer payments ?
Transfer payments are a payment of money for which goods or services are not received in exchange.
What is the Lorenz Curve ?
The lorenz curve is used to measure inequality and the extent to which the distribution of income is equal or unequal.
What is the Gini Coefficient ?
The Gini coefficient measures the extent to which the distribution of income or wealth among individuals or households.
What is the trickle down theory ?
Trickle down theory is that decreasing the rich people’s taxes will lead to economic growth.
What is universal credit?
A single monthly payment to people who are out of work or on a low income.
What is tax credits?
A payment to people working on a low income that would top up their weekly/monthly income. Replaced by universal credit.
What is the two child benefit cap?
This is a policy introduced in 2017 that limits the amount of universal credit for families within less than two children.
What is the winter fuel allowance?
Anyone who qualifies for the state pension received an annual payment of up to £300 to help with energy bills.
What are the main causes of poverty and explain them?
- Energy prices skyrocketing
- Food/petrol prices rising
- Taxes up and wages stagnant
- 2 child benefit cap
- Ageing population
- Unemployment
- Disabilites
- Low wages
What are the main effects of poverty and explain them.
- Educational deprivation
- Health deprivation
- Effect on communities
What is fiscal drag?
Freezing tax thresholds increases people’s taxable income without tax rates increasing so more taxpayers are dragged into paying tax or into paying tax at a higher rate.
What determines the size of fiscal drag?
- The rise of average earnings
- The rate of inflation
- Setting thresholds
What is the earnings trap?
The earnings trap is when low waged individuals are in relative poverty. It affects people in employment on low rates of pay.
What is the unemployment trap?
It affects people who are unemployed as well as the poor. Those who are unemployed choose unemployment because they decide they are better off out of work and living on benefits.
