Lesson 20 - Income and wealth

Question 1

Give the definition of income

Answer 1

Income is a flow of money going to factors of production

Question 2

Give the four examples of income

Answer 2

.Wages and Salaries from Jobs
.Rental income from property
.Interest from savings
.Profits flowing to shareholders

Question 3

Define original income

Answer 3

Income from jobs, private pensions and interest from savings

Question 4

Define gross income

Answer 4

Original income + cash benefits (Lazy mans income from the hardworking taxpayer)

Question 5

Define disposable income

Answer 5

Gross income minus direct taxes

Question 6

Define post-tax income

Answer 6

Disposable income minus indirect taxes

Question 7

Give 3 differences between money and real income

Answer 7

.Income is money received for work
.Money income measures income at current prices also known as nominal income
.Real means adjusted for inflation, real income measures the true purchasing power of someones income
.Real income is measured at constant prices