Income and wealth

Question 1

lorenz curve

Answer 1

the lorenz curve is a way of showing distribution of income and wealth within an economy. it shows the cumulative share of income from different sections of the population. the A that’s part of the curve is a sag. we want it to be smaller because that is our inequality gap.

Question 2

what goes on the y axis on the lorenz curve

Answer 2

Cumulative share of income %

Question 3

what goes on the x axis on the lorenz curve

Answer 3

% households by income distribution

Question 4

gini coefficinet formula

Answer 4

Area A / Area A + Area B

Question 4

policies to reduce inequalities

Answer 4

Benefits - Huge opportunity costs
Progressive taxation, the higher you earn, the more tax you pay, it has to be fair, transparent and easy to collect the tax, also spent well.
Increasing tax rates for those on the higher band - but this goes against the laffer curve
Spend on education - huge opportunity costs

Question 5

inequality due to Capitalism is Bad because…..

Answer 5

• Capitalism leads to monopoly power, they can exploit there customers with higher prices and exploit their worker with lower wages
• Inheritance is passed down generations’, which means wealth is often concentrated in a few families

Question 6

inequality due to Capitalism is Good because…..

Answer 6

• It provides incentive to work harder and earn
• encourages enterprise, new businesses and opportunities
• work instead of claiming benefits from tax payers
• What do the rich do with the money? they spend and invest, creating more opportunities that require employment.