Distribution of Income and Wealth, Poverty and Inequality

Question 1

Wealth

Answer 1

Stock of assets

Question 2

Income

Answer 2

Money received from salary or scheme

Question 3

Lorenz Curve

Answer 3

Measures the wealth and income distribution within a country

Question 4

Gini Coefficient (with equation)

Answer 4

Numerical value of the wealth and income inequality

A = Area between line of perfect equality and Lorenz curve
B = Area between Lorenz curve and X-Axis
Gini = A / A + B

Question 5

Equality

Answer 5

Refers to equal distribution (in this case wealth and income) within society

Question 6

Equity

Answer 6

Refers to a fair distribution (in this case wealth and income) within society, can be subjective

Question 7

Causes of income and wealth inequality within and between countries

Answer 7

Inequality of wages

Welfare Payments and Taxes

Unemployment

Question 8

Kuznets Hypothesis - Inequality (Kuznets Curve)

Answer 8

As society moves from agriculture to industry, inequality within society rises as wages of industrial workers will rise faster than farmers.

Kuznets Curve - Represents a bell curve with Rising Inequality on Y-Axis and Rising Incomes on X-Axis

Question 9

Relative Poverty

Answer 9

Type of poverty which is measured by comparison to average in the country, individuals who have income below 60% of median incomes

Question 10

Absolute Poverty

Answer 10

Severe deprivation of basic human needs

Question 11

Poverty Trap

Answer 11

A rise in income can lead to a decrease in eligibility for benefits so can lead individuals into poverty