Innequality

Question 1

Income and wealth

Answer 1

Income- a flow of money to a FOP usually labour

Wealth- a stock of valuable assets such as property or shares

Question 2

Factors leading to an unequal distribution of INCOME

Answer 2

Differences in skills,qualification and work experience

Differences in wealth

Impact of the state

Question 3

Factors leading to an unequal distribution of WEALTH

Answer 3

Differences in income

Inheritance

Marriage

Property

Question 4

Equality v equity

Answer 4

Equality- income and wealth that are shared out equally between all members of society

Equity- the notion of fairness

Question 5

Costs of inequality

Answer 5

Social tensions

The creation of an underclass

Question 6

Possible benefits

Answer 6

Inventive effects- people want to be successful like the people at the top

Trickle down

Question 7

Poverty

Answer 7

Relative poverty- when some people in society are worse off than others and is often described as earning under 60% of a countries median income

Absolute poverty- when some people can’t afford the basic necessities to sustain life e.g. Food,shelter and warmth

Question 8

Causes of poverty

Answer 8

Relatively low wages

Unemployment

Regressive taxation

Old age

Imperfect information- some people are unaware of their ability to claim welfare benefits

Question 9

Effects of poverty

Answer 9

Greater demands on the welfare system

Poor educational attainment

Poor health

Question 10

Policies to alleviate poverty and reduce inequality

Answer 10

Progressive taxes

National minimum wage

Welfare benefits

Educational training reducing unemployment

Promoting trickle down

Question 11

Economic consequences of policies to alleviate poverty

Answer 11

Progressive taxes- disincentives to work In higher paid jobs- voluntary unemployment- lower growth- lower tax revenue-and may cause a “brain drain” and force labour highly skilled abroad

National min wage- too high can cause unemployment

Welfare benefits- creates disincentives to work,opportunity cost

Education and training - takes a long time to see the benefits,courses can be expensive and if no job vacancies then there will be no jobs for the tristes labour

Reducing unemployment- time lags and demand pull inflation

Promoting trickle down- doesn’t really work- high paid low propensity to spend and they can hire tax accountants to find loopholes to minimise taxes paid

Question 12

Lorenz curve

Answer 12

The further the line is away from the curve the more inequality exists

Question 13

Gini coefficient

Answer 13

A/(A+B)

The higher the number the more inequality exists

Perfect equality gives a gini coefficient of 0

Perfectly inequality gives a gini coefficient of 1