Macro 2.7 Income distribution and welfare

Question 1

Income

Answer 1

flow of money over a period of time

Question 2

Wealth

Answer 2

Stock, as measureable at a date in time

Question 3

Lorenz curve

Answer 3

Illustrates income and wealth distribution, making it an effective way of showing inequality of income within and between countries

Question 4

Gini coefficient (index)

Answer 4

Ratio of the area between the Lorenz curve and the line of equality, and the area underneath the line of equality

Question 5

Absolute poverty

Answer 5

Situation in which individuals have insufficient income to purchase the basic necessities for survival

Question 6

Relative poverty

Answer 6

situation in which individual have insufficient income to participate in the normal social life of a country, defined as having an income level below 60% of median ajdusted household disposable income

Question 7

Income inequality

Answer 7

unequal distribution of income