Chapter 9 Flashcards
What is income?
Payments to households in the forms of wages, rent, interest and profit
What is income distribution?
Allocation of returns (Rent, wages and salaries, interest, profit) from the four factors of production (land, labor, capital, enterprise) among the population of the country.
What is income inequality?
The degree to which income is unevenly distributed among people in the economy.
What is interest?
The price paid for the use of capital.
What is profit?
The price paid for the use of capital, usually expressed as an annual percentage of the value of the capital.
What is rent?
Payments in return for the use of land or other natural resources used in the production process.
What are salaries?
Payments to higher level employees and professionals, calculated on an annual basis, not usually related to production achieved or hours worked.
What are transfer payments?
Payments received by individuals and families from the federal government in the form of cash social service benefits, such as pensions, unemployment benefits and family allowances.
What are wages?
Payments to employees as a return for the provision of labor or human effort to the production process (usually calculated on the basis of actual production or hours worked)
What is wealth?
Total assets owned by an individual or income unit, and the nation at any one time; includes physical assets such as real estate and consumer durables (car, boat, jewelry) as well as financial assets (shares, bonds, debentures)
What are equivalence scales?
Scales that indicate the income levels needed by different types of family units to attain the same, or equivalent, standard of living.
What is the Gini coefficient?
A numerical measure of the degree of inequality involved in any income distribution of a country, based on the areas under the Lorenz curve.
What is the Henderson poverty line?
The minimum desirable level of household income established by Professor Henderson in the commission of inquiry into poverty in 1975; these minimum levels are revised to accommodate changing economic conditions.
What is the Lorenz curve?
A graphical representation of the inequality of a nation’s income distribution.
What is poverty?
The situation of peoples whose resources are so limited as to exclude them from the minimum acceptable way of life in the country in which they live.
What is mobility of labor?
Ease with which the labor force can be transferred from one occupation to another or from one geographic region to another.
What is the secondary labor market.
Part of the labor market that has frequent unemployment, casual employment, low and declining real wages, no career path and unskilled workers with minimal education qualifications.
What is the primary labor market?
Part of the labor market that has little likelihood of unemployment, defined career paths, high and rising real wages, and skilled and well-educated workers.
What is relative poverty?
The situation of people whose income and lifestyle have fallen below, by more than a certain degree, the average income and lifestyle enjoyed by the rest of society.
What is underemployment?
When workers in a labor force are employes at less than full-time or regular jobs or in work that is inadequate with respect to their training or economic needs.
What is unemployment?
The state of being out of work or not having paid employment.
What is absolute poverty?
The situation of people whose deprivation is extreme because they do not have access to the basic necessities of food, clothing and shelter.
What is a Egalitarian society?
A society that believes in treating people equally through giving people equal rights and opportunities.
What is a merit good?
A good or service that is not produced in sufficient quantities by markets because individuals do not value them highly enough to pay for them; a private good with positive externalities.
What is the progressive taxation system?
Tax system in which the percentage of tax payable increases as income rises (As opposed to proportional taxation, where the percentage remains constant, and regressive taxation, where it decreases)
What is redistribution of income and wealth?
Transfer of money and assets from one group in the economy to another.
What is taxation?
A method of financing government activities, which involves compulsory payments to the government by individuals, companies or other organizations, usually based on income earned and goods.
