economic growth: wealth creation process and patterns of distribution

Question 1

what is the definition of wealth?

Answer 1

all the accumulated physical and financial assets which enable people and businesses to earn an income

Question 2

physical wealth

Answer 2

tangible/real assets

Question 3

financial wealth

Answer 3

intangible or monetary assets

Question 4

what are the three groups that own wealth

Answer 4

households
businesses
state

Question 5

income

Answer 5

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

Question 6

income can take the form of :

Answer 6

wages
interest
profit
rent

Question 7

wealth

Answer 7

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

Question 8

4 sources of wealth

Answer 8

savings
luck
inheritance
income

Question 9

savings equation

Answer 9

savings(s) = Income(Y) - Consumption expenditure(C)

Question 10

3 reasons for unequal distribution of income

Answer 10

Unequal ownership of wealth

difference in skills and qualifications

discrimination

Question 11

3 significant reasons for wealth distribution (inequalities)

Answer 11

inequalities of income
inheritance
the market system

Question 12

what does the market system do to distribute wealth?

Answer 12

rewards successful people

Question 13

Two methods to measure the extent of income inequality

Answer 13

lorenz curve
gini coefficient

Question 14

what does gini coefficient measure

Answer 14

the exact degree of inequality

Question 15

The greater the distance between lines of equal distribution and the lorenz curve means…

Answer 15

the greater the degree of inequality

Question 16

5 methods of economic growth

Answer 16

-Increase in productivity
-availability and utilisation of production factors
- technological change
- effective government policies and admin
- investment

Question 17

productivity

Answer 17

the relationship between real output and one unit of factor input

Question 18

5 ways in which productivity increases are signalled

Answer 18

1. Output increases while input remains the same
2. Output increases while input declines
3. Output increases faster than input
4. Output remains constant while input declines
5. Output declines at a slower rate than input

Question 19

In terms of the labour force, when does economic growth occur

Answer 19

when the ratio of the working population to the total population increases

Question 20

technology

Answer 20

any instrument or technique, or method used that extends human ability

Question 21

what does efficient admin mean

Answer 21

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

Question 22

nepotism

Answer 22

favouring family and friends

Question 23

corruption

Answer 23

using public office for personal gain

Question 24

what does a country’s production depend on

Answer 24

capital stock

Question 25

How much percentage of GDP is savings

Answer 25

15%

Question 26

what constraint does school education have on the economy