Development Flashcards

Question

What does a gini coefficient of 0 mean

Answer 1

income/wealth shared equally

Answer 2

flow of money going to factors of production e.g. wages, rent, interest, profits

Answer 3

flow of money from the factors of production e.g. wages, rent, interest, profits

Answer 4

value of a stock of assests e.g. ownership of property, shares

Answer 5

physical, pension, housing, financial

Answer 6

60% of median income

Answer 7

by the share of national income going to different groups

Answer 8

distribution of income/wealth

Answer 9

can not compare a wide range of countries

Answer 10

not great at analysing extremities of inequality

Answer 11

Negatively effects them

Answer 12

living on less than $1.90 a day

Answer 13

lack of food, lack of sanitation facilities, lack of shelter, education and information

Answer 14

struggle to reach minimum accepted standard of living, no luxuries, refers to conditions which are suitabe to the society they live in

Answer 15

vulnerability to natural disasters, national debt, war & political instibility, history, discrimination and social inequality

Answer 16

inequality, inheritance, higher levels of structural and long-term unemployment, regressive taxes, falling relative value of state benefits

Answer 17

both shift left

Answer 18

encourages ambition if most talented earn more, lead to trickle down effect

Answer 19

richest gain an increase in wealth, they will spend proportion of this extra welth causing an increase in demand for goods and services, causing higher employment and rise in wages. Higher wages may also cause a multiplier effect

Answer 20

progressive taxation policies, means-tested benefits system, improve labour mobility, more government spending on merit goods

Answer 21

relationship between unemployment and inflation

Answer 22

natural rate of unemployment, which is the fixed long term rate, changes in employment revert back to NRU.

Answer 23

Individuals usually tend to view their income and wealth in nominal terms. causes a diagonal move on Phillip's curve.

Answer 24

if inflation increases n the past year, people will expect a higher rate of inflation in the next year, causes phillips curve to shift right. Higher expectations, worse trade off between inflation and unemployment

Answer 25

made from frictional and structural unemployment

Answer 26

supply side policies

Answer 27

it is a stock, can be inherited/built up over time.

Answer 28

progressive taxation systems that are used to pay for generous benefit systems helps ensure there is little absolute poverty

Answer 29

absolute poverty is often caused by the nature of developing and emerging countries. (e.g. limited access to key resources, government failure or factors unique to a country). Relative poverty could be from inequality/government failure

Answer 30

High income inequality will create more households in relative poverty.

Answer 31

Social problems e.g. crime. The country not producing at its full potential (PPF diagram), this is because those in poverty are less likely to prioritise education and be more concerned with short-term objectives like earning a basic income. Could be exacberated by a 'brain drain' from the country as many of the brightest/fittest members of the community look to emigrate.

Answer 32

High levels of poverty may make it more difficult for a country to effect FDI because foreign MNCs may not feel that the labour force are capable of meeting their requirements.

Answer 33

the more flexible the labour market (easier to hire and fire), the greater income inequalities tend to be. Countries with strong trade union presence are often more equal as unions fight for a smaller pay gap.

Answer 34

the more emphasis there is on progressive taxation, the less the inequalities. Countries with more proportional or regressive systems tend to have higher inequalities

Answer 35

countries like the UK and the Scandinavian countries have strong welfare states and wide access to free (at the point of use) health and education systems. In countries like the USA, these systems are not as robust so there may be more inequality

Answer 36

Wealthier households can invest their wealth in more profitable ways (e.g. shares/pension schemes/property for renting out- therefore earning more income, often at the expense of less wealthy households.

Answer 37

income inequality, government failure, cultural factors - e.g. in the UK, the class system meaning that ownership of large amounts of land and property is in relatively few hands.

Answer 38

i) social problems- e.g. crime, structural unemployment, uneven standard of infrastructure/housing/opportunities etc. ii) economic problems- can lead to low worker morale, less incentive to work (rewards are seen to go elsewhere); low productivity; therefore, lower economic growth, less government revenue etc. In short, inequalities can be self-perpetuating.

Answer 39

size of the inequalities, comparisons with similar, opportunity cost of reducing inequalities (Laffer Curve?); economic position (being relatively poor in the UK may be better off than somebody in the top quintile of a developing country.

Answer 40

Keynesians believe there are sticky prices/sticky wages, suggesting that prices/wages get stuck at a certain low level and increases in AD won't then increase price level.

Answer 41

Believe that economies are totally flexible. SRAS is upward sloping and LRAS is vertical. (no sticky prices/wages) so believe there is NRU.

Answer 42

SRPC is the same trade-off as traditional Phillip's curve but neo classical economists believe there is no point in doing this as unemployment will return back to NAIRU in the long run and price level has just increased in the long-run.

Answer 43

non accelerating inflationary rate of unemployment. NAIRU=NRU

Answer 44

there is no relationship between unemployment and inflation rate

Answer 45

In the short run the government believe they can gain popularity by reducing unemployment below NRU. Unemployment shifts left but wages increase because of the temporary increase in demand for labour. As wages rise more workers join the labour force, not realizing that the increase in wages is actually illusion (money illusion). Higher wages create higher prices, when workers realise they are no better off they may again leave the workforce. Also, at higher wage levels companies see less benefit to hiring workers. Both of these factors mean unemployment increases and SEPC shifts right.

Answer 46

A PPF and SRAS/LRAS diagram showing a positive output gap

Answer 47

Movement along SRPC - changes in AD. Movement to a new SRPC - changes in SRAS Movement of LRPC is same as movement of LRAS

Answer 48

Depends on the economic school. Keynesians believe that cyclical unemployment can be permanently reduced/eliminated by policies. This would permanently reduces unemployment rates, albeit with some inflation. Neo-classical economists believe any reduction in unemployment will only be temporary. In the long-run, unemployment will always revert back to NRU. There is no point trying to reduce unemployment as prices are only pushed up. Ultimately, depends upon if you believe in sticky wages/prices, if you do tackle unemployment rates.