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Economics G11 > Economic Growth: Wealth Creation and Distribution > Flashcards

Economic Growth: Wealth Creation and Distribution Flashcards

1
Q

What is Wealth

A

All the accumulated physical and financial assets which enable people and businesses to earn an income. It is related to the monetary value of what you own at a particular point in time

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2
Q

Physical Wealth

A

Tangible or real assets
Clothes, furniture, houses etc

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3
Q

Financial Wealth

A

Intangible or monetary assets
Cash, bank deposits, investment

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4
Q

What 3 groups own wealth

A

Individuals
Businesses
State

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5
Q

What is income

A

The remuneration earned by the factors of production for participating in economic activities

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6
Q

What is Wealth

A

The stock of both real and monetary assets that have been accumulated over time

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7
Q

What are the 4 forms that income can take

A

Wages from an employer
Interest from investments
Profit from a successful business
Rent from land and natural resources

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8
Q

What are the 2 characteristics of wealth

A

Wealth is anything that enables people to yield an income
Although we measure wealth in terms of money, money in itself is not wealth

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9
Q

What are the 4 sources of wealth

A

Savings
Luck
Inheritance
Income

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10
Q

What are savings

A

Income that is not spent

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11
Q

What is the savings equation

A

Savings (S) = Income (Y) - Consumption expenditure (C)

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12
Q

When do savings become wealth

A

When the money is invested

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13
Q

Why do people save

A

To accumulate wealth

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14
Q

What are the 3 reasons for unequal distribution of INCOME

A

Unequal ownership of wealth
Differences in skills and qualifications
Discrimination

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15
Q

What is meant by unequal ownership of wealth as a reason

A

Wealth generates income in the form of profits. A difference in wealth causes differences in income

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16
Q

What is meant by differences in skills and qualifications as a reason

A

Those with advanced skills and qualifications earn higher income

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17
Q

What is meant by discrimination as a reason

A

Exists where income of some groups is adversely affected in terms of employment, pay and promotion opportunities

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18
Q

What are the 3 reasons for unequal WEALTH distribution

A

Inequality of income
Inheritance
The Market system

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19
Q

What is meant by inequality of income as a reason

A

During Apartheid, people of colour were subjected to inferior education and professions
This resulted in no or minimal savings, thus no wealth creation

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20
Q

What is meant by inheritance as a reason

A

Inheritance of wealth is only possible if people have a general right to own property.
People of colour were denied the right to own property and lost the little wealth they had

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21
Q

What is meant by The Market System as a reason

A

The market system rewards successful people
The system uses wealth to create more wealth and thus creates inequality

22
Q

Look at Page 54 and 55 for Lorenz curve and Gini Co-efficient

A

.

23
Q

What are the 5 International Redistribution Methods

A

Taxes
Cash (Social) grants
Natural (Free) benefits
Labour market policy
Macro-economic policy

24
Q

What is meant by taxes as a redistribution method

A

High-income earners and wealthy people are taxed in order to provide benefits and benefits in kind to low-income earners and poor people.

25
Q

What are the most important cash (social) grants

A

Old-age pensions
Disability grants
Child support grants
Unemployment insurance

26
Q

What is meant by Natural (Free) benefits as a redistribution method

A

Poor households receive free health care, education, school meals, municipal services and infrastructure
Limited quantities of free electricity and water are also provided

27
Q

What is meant by labour market policy as a redistribution method

A

Minimum wages, antidiscrimination acts and training subsidies reduce income inequality

28
Q

What is meant by macroeconomic policy as a redistribution method and give 2 examples

A

These policies influence the distribution of income and wealth.
Expanded Public Works Programme creates employment which benefits low-income households
Regional development policies, such as SDI aim to reduce geographical inequalities of income and wealth

29
Q

What are the 3 affirmative redistribution methods in South Africa

A

Broad Based Black Economic Empowerment
Land restitution and land redistribution
Property subsidies

30
Q

What does BBBEE do

A

Provides a legal basis for transformation of SA economy so that the number of people that own, manage and control the economy can increase significantly and income inequalities will decrease

31
Q

What is land restitution and land redistribution

A

Purpose of land restitution is to return land to those who lost it as a result of racial discrimination.
Land redistribution focuses on land for residential and productive use

32
Q

What are property subsidies

A

Used to help beneficiaries acquire ownership of fixed residential property

33
Q

What does economic growth mean

A

An increase in the production of goods and services in a country over a year

34
Q

What is real GDP

A

GDP after the increases in the general price level have been taken into account

35
Q

What is the importance of economic growth

A

It is one of the five major objectives of the macro-economic policy. The significance lies in its contribution to the general prosperity of the comunity

36
Q

What is the aim of national accounts

A

To provide a systematic and comprehensive record of national economic activities

37
Q

What is the SNA

A

System of National Accounts
Internationally agreed standard set of recommendations on how to compile measures of economic activity

38
Q

Why is GDP important

A

It gives information about the size of the economy and how an economy is performing

39
Q

What does GDP not tell us

A

It is not a measure of the overall standard of living or well-being of a country

40
Q

Read page 57

A

.

41
Q

What are the 5 methods of economic growth

A

Increase in productivity
Availability and utilisation of production factors
Technological change
Effective government policies and administration
Investment

42
Q

What is the definition of productivity

A

The relationship between real output and one unit of factor input

43
Q

What are the 5 signals for productivity increases

A

Output increases while input remains the same
Output increases while input declines
Output increases faster than input
Output remains constant while input declines
Output declines at a slower rate than input

44
Q

What is the availability and utilisation of production factors as a method of economic growth

A

Economic growth occurs when the ratio of the working population to the total population increases

45
Q

What are effective policies

A

Policies that ensure pre-set objectives are met

46
Q

What is efficient administration

A

Policies are executed in a manner that minimises time wastage, inconvenience and costs

47
Q

What is investment as a method for economic growth

A

An increase in capital per worker will generally increase output

48
Q

What are the 3 constraints on economic growth

A

Low levels of savings and investments
Insufficient qualified labour
HIV / AIDS

49
Q

What are 2 factors that influence standard of living

A

Size of the population
Per capita income

50
Q

What is meant by the size of the population as an influence in standard of living

A

If population grows at a higher rate than GDP, everybody may be worse off despite increases in goods and services produced

51
Q

What is meant by per capita income as an influence in standard of living

A

Real GDP / population number
Gives us standard of living - the quantity of goods and services consumed by each individual

52
Q
A

Economics G11 (12 decks)

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