Lesson 20 - Income + Wealth

Question 1

What is income?

Answer 1

Defined as a flow of money earned by people

Question 2

What does income consist of?

Answer 2

Wages + Salaries
Profits flowing into business
Rental Income
Interest earned on savings
Welfare benefits

Question 3

What is wealth?

Answer 3

Defined as measure of assets owned by someone

Question 4

What can wealth consist of?

Answer 4

Savings held in bank deposit accounts
Ownership of shares
Property (Land, houses etc.)
Wealth held in bonds
Pension + life assurance schemes

Question 5

Why is wealth important?

Answer 5

Generates income for land, share + asset owners in form of rent, profits, dividends etc.
Increasing proportion of GDP being earned through wealth rather than income
Generational - Future

Question 6

What % of UK wealth is held by the richest 20%?

Answer 6

61.9%

Question 7

What % of UK wealth is held by the poorest 20%?

Answer 7

0.7%

Question 8

What are the causes of inequality?

Answer 8

Changes to rates of income tax
Globalisation - Income falls for low skilled work
Multinational firms minimising tax through tax havens
Low IR + quantitative easing have increased house + share asset prices

Question 9

What are the benefits of inequality?

Answer 9

Incentive Effect
Rewards Entrepreneurs
Trickle-Down Effect
Skill Gap Arguements

Question 10

What are the problems associated with inequality?

Answer 10

Stifles Growth
Decreases Education
Decreases Health

Question 11

What are the means of reducing inequality?

Answer 11

Increase progressive taxes E.g., Higher income tax for rich
Increase national minimum wage
Introduce Universal Basic Income/Weekly Basic Living Standard
Reduce Unemployment