Inequality

Question 1

Wealth inequality (2)

Answer 1

Wealth = Stock of assets
Inequality = Uneven distribution

Question 2

Income inequality (2j

Answer 2

Money received on a regular basis
Unevenly distributed

Question 3

Lorenz curve what (3+)

Answer 3

Shows distribution of income / wealth in a country
Used to:
Compare country overtime
Compare countries

Question 4

What is perfect line of equality (3)

Answer 4

50% households earn 50% of income = example
45° angle
No income inequality

Question 5

Lorenz curve - what does hanging curve represent

Answer 5

The further the curve “hangs below” the perfect line of equality, the greater the level of inequality

Question 6

What is Gini coefficient

Answer 6

Gives a numerical value for inequality and is derived from the Lorenz curve

Question 7

Gini coefficient number (4)

Answer 7

Between 0-1
0 = perfect equality = on the lien
1 = perfect inequality
A = between Perefct equality and curve
B = between curve and corner of diagram

Question 8

Examples of Gini coefficients = application (3)

Answer 8

UK = 0.3 (2022) + 0.3 (2016)
Norway = 0.22 (2020) + 0.24 (2016) = lowest = 56% tax rate so reinvests in services
Russia = 0.64 (2020) + 0.4 (2016) = highest

Question 9

Causes of income and wealth inequality - wages (4)

Answer 9

Zero hour contracts = underemployment + limits earnings
Lack of education = low skilled work pays less
Discrimination = even with equal pay laws
Crowded into proffesssion = women = nurses

Question 10

Causes of income + wealth inequality - Welfare payments and taxes (3)

Answer 10

Doesn’t rise at dame level as wages
Inflation therefore leads to y inequality
Benefits have been capped/cut

Question 11

What does gov do to ‘improve’ inequality (3)

Answer 11

January = reduced national insurance tax
Incomes increase but tax bands have stayed the same = pay more tax
Gov being sneaky

Question 12

Causes of income and wealth inequality - unemployment

Answer 12

Left to rely on state benefits

Question 13

Cause of income + wealth inequality - changes to tax system (4)

Answer 13

Over the last 2-3 decades the UK has switched towards indirect taxes = tend to be more regressive
The top income tax rate fell from 83% in 1979 to 40% 1988 (still there now)
Now there is an income tax rate of 45% on incomes above £150000
The basic income tax rate fell from 33% to 20%, which helps workers keep more income
However, the benefits of this disproportionately favour the richest households = increase income inequality

Question 14

Recent tax falling

Answer 14

Inheritance tax

Question 15

Cause of wealth + income inequality - inequalities between countries (4+)

Answer 15

Discrimination = women can’t go to school or be employed
Held back by wars, droughts, famines and earthquakes
Application = Africa = population issues are complicating efforts to reduce poverty and eliminate hunger
Their population of 1.1 billion is expected to double by 2050

Question 16

What is Kuznetsk theory (4+)

Answer 16

As society moves from agriculture to industry it develops
Inequality within society increases since the wages of industrial workers rises faster than farmers
Wealth is then redistributed through government transfers and education
Essentially argues that inequality in poor countries is just a transitional phase and once nations become economically developed - inequality reduces

Question 17

What does Thomas piketty argue against Kuznets (2)

Answer 17

In 2014 argued that the capitalist free market system inevitably leads to continued inequality
The rich get richer + poor poorer = inequality increases

Question 18

What is capitalism

Answer 18

There is minimal government intervention and resources are distributed according to the market

Question 19

Capitalism creates inequality (3+)

Answer 19

Monopolies = charge higher prices + lower wages = exploit
Higher wage reflects higher productivity in capitalist society = inequality
Inheritance

Question 20

Capitalism improve equality (2)

Answer 20

Increase competition = increase efficiency
Work incentive = profit = create jobs and employment

Question 21

Gov intervention support equality (3)

Answer 21

Inheritance tax
Public education
Regulation = stop monopolies exploiting

Question 22

What is trickle down economics (2)

Answer 22

Capitalism should create trickle down economics
Profit should ‘trickle down’ = investment = spend more in economy etc

Question 23

Why does trickle down economics not always work (3j

Answer 23

Only so much you can buy
People may hold in stocks and shares
Top 10% of people earn 90% of income wealth around the world

Question 24

What is diminishing marginal utility (well-being)

Answer 24

Well-being rises with income but each extra dollar of income increases well-being less than the previous dollar

Question 25

What is equality of outcome

Answer 25

To have income completely redistributed evenly

Question 26

What is equality of opportunity (2)

Answer 26

Long term policy
Investment in services (education) to give people similar opportunities

Question 27

Do your parents determine your wealth (2)

Answer 27

Studies show half the economic advantage someone’s parents have or don’t have is passed down
Known as intergenerational mobility

Question 28

Useful statistics - income + race

Answer 28

White (US) = 8X income of a black person and 5x income of Hispanic person

Question 29

Useful statistics - inheritance + race (2)

Answer 29

1 in 3 (US) white people have an inheritance
1 in 10 (US) blacks people have one