Equity And Redistribution Of Wealth Flashcards

1
Q

Q: What is equity in the context of income or wealth distribution?

A

A: Equity refers to the fair distribution of income or wealth and includes two aspects: horizontal equity (equal treatment for people with the same circumstances) and vertical equity (fair tax distribution between the rich and poor).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Q: What is horizontal equity?

A

A: Horizontal equity means that consumers and others with the same circumstances should pay the same level of taxation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Q: What is vertical equity?

A

A: Vertical equity means that taxes should be fairly apportioned between the rich and the poor in society.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Q: What is efficiency in economics?

A

A: Efficiency is the optimal use of scarce resources to produce the maximum output at the lowest possible cost, producing goods and services most wanted by consumers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Q: Why might there be a trade-off between efficiency and equity in policy design?

A

A: A policy promoting allocative efficiency may not protect the poor adequately, and measures like taxes on cigarettes or congestion charges can disproportionately affect low-income groups.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Q: What is absolute poverty?

A

A: Absolute poverty is a condition where household income is insufficient to afford basic necessities of life, such as food, shelter, and clothing, and the criteria for this do not change with economic growth.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Q: What is relative poverty?

A

A: Relative poverty occurs when households receive 50% less income than the average median income, and the criteria for this change with economic growth.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Q: What is the poverty trap?

A

A: The poverty trap occurs when an individual or family is better off on means-tested benefits than working.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Q: What are means-tested benefits?

A

A: Means-tested benefits are only paid to those on low incomes and are targeted to those most in need, such as income support and unemployment benefits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Q: What are the disadvantages of means-tested benefits?

A

A: Means-tested benefits can create a disincentive to work, leading to a poverty trap.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Q: What are universal benefits?

A

A: Universal benefits are paid out to everyone in certain categories, often age-related, regardless of their income or wealth, such as state pensions and child benefits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Q: What are the advantages and disadvantages of universal benefits?

A

A: Universal benefits may overcome issues of means-tested benefits but can result in money being paid to those who do not need it.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Q: What is Universal Basic Income (UBI)?

A

A: Universal Basic Income is an unconditional cash payment made at regular intervals to all citizens, regardless of their earning or employment status.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Q: What is a negative income tax?

A

A: A negative income tax is a system where the government pays money to those earning below an agreed annual benefit limit, resulting in a net benefit for lower earners and a tax payment for higher earners.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Q: How does a negative income tax work?

A

A: With a flat rate of taxation and a fixed annual benefit, those who pay less tax than the benefit amount receive the difference from the government, while higher earners pay the positive difference as direct tax.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Q: How does a negative income tax work?

A

A: With a flat rate of taxation and a fixed annual benefit, those who pay less tax than the benefit amount receive the difference from the government, while higher earners pay the positive difference as direct tax.