poverty and inequality

Question 1

What is the distinction between income and wealth

Answer 1

income is a flow concept measured over a period of time and the flow of income is derived from the stock of assets that form wealth
Whereas wealth are assets with a marketable value that are capable of generating income. Houses, pension rights, savings, shares and human capital are a distribution of wealth however wealth tends to be skewed towards older ager groups, white adults and men. however proportion of wealth in property is liable to fluctuate over time

Question 2

what are the causes of wealth inequality

Answer 2

inheritance
Asset prices increase on average faster than incomes
Income inequality
Higher earners are better able to save and/or invest
Wealth is less easy to redistribute than income
Chance(the lottery)

Question 3

describe the distribution of income
eg distribution,analysed

Answer 3

income is unevenly distributed in the UK, but more equally distributued than wealth and can be analysed between households and regions

Question 4

how do households become more unequal

Answer 4

households become more unequal due to the rate of income tax,real value of benefits
rise in single parent families
and large scale privitisations

Question 4

how do households become more unequal

Answer 4

households become more unequal due to the rate of income tax,real value of benefits
rise in single parent families
and large scale privatisations
regions of where some may live
unemployment rates linked to proportion claiming benefits

Question 5

What are the causes of income inequality

Answer 5

Unemployment and retirement(inequalities currently widening)
Differences in productivity (MRP) linked to wage differentials(wage differentials due to skills and qualifications, male/female, full/part time and changing patterns of labour demand
Wealth inequality(wealth creates an income)
Regional reasons(declining industries in North)
Government policy(the extent of intervention through taxes/benefits)
Degree of competition in product markets (supernormal profit is also redistributed income from consumer to producer

Question 6

is there a difference between absolute and relative poverty

Answer 6

yes, defiantly

Question 7

what is absolute poverty

Answer 7

absolute poverty is when a household does not have sufficient income to sustain even a basic acceptable standard of living/meet basic needs

Question 8

what will absolute poverty thresholds vary between

Answer 8

absolute poverty thresholds will vary between developed and developing countries

Question 9

what is the extreme poverty measure

Answer 9

the most common measure of extreme global poverty is the World Bank’s figure of daily income of $1.90.

Question 10

what does the world bank do in terms of absolute poverty

Answer 10

World bank tried to assist developing countries along with the international monetary fund (IMF)

Question 11

what is relative poverty

Answer 11

a level of household income that is considerably lower than the median level of income within a country

Question 12

what is the focus of policy to reduce extreme poverty

Answer 12

Poor Government, Poor Health and Nutrition, Lack of education, Depletated Environment, Corrupt and Conflict,

Question 13

What Are Main Causes of Absolute Poverty

Answer 13

Population growing faster than GDP in low income countries
Severe savings gap-families unable to save and living on less than $1.90 per day
Absence of basic government/public services
Effects of endemic corruption in government and business
High levels of debt and high interest rates
Damaging effects of civil wars and natural disasters
Low employment rates vulnerable jobs and poverty wages
Absolute or extreme poverty is an inability to meet basics needs
In many countries,significant progress has been made in reducing absolute poverty but each year the human Development report makes clear how much progress remains to be made

Question 14

Consequences of Extreme poverty for development

Answer 14

Low life expectancy and fewer years of healthy life expectancy
Low school enrolment rates as families cannot afford education-widens the gender opportunity gap
Low access to basic health care
Vulnerability to loan sharks for families mired in debt
Limited access to technology
Threats to democracy and stable institutions
Low real spending power limits the size of domestic markets for consumer goods and services

Question 15

what is Gini coefficient?

Answer 15

The Gini coefficient is a commonly-used measure of income inequality that condenses the entire income distribution for a country into a single number between 0 and 1: the higher the number, the greater the degree of income inequality.

Question 16

what is the personal allowance for income tax:

Answer 16

personal allowance is £12,570 (this is frozen until 2028)

Question 17

what is income beyond 12,570 taxed at ?

Answer 17

20%

Question 18

what is taxable income beyond £37,700 taxed at

Answer 18

40%

Question 19

what is taxable income beyond £125,000 taxed at

Answer 19

45%

Question 20

what is national insurance paid at?

Answer 20

13.25%

Question 21

what is the standard VAT rate?

Answer 21

20%

Question 22

what do goods and services such as children’s car seats and home energy have vat applied at ?

Answer 22

5%

Question 23

what rate is the VAT on most food and children’s clothes

Answer 23

Zero rated VAT

Question 24

what is living wage

Answer 24

A voluntary minimum pay rate that employers can choose to offer to their employees

Question 25

name three arguments in favour of a higher minimum wage

Answer 25

.Improves work incentives and can also increase labour productivity
Lifts people out of working poverty which then cuts means-tested welfare spending
Consumer spending-rising disposable income + high propensity to spending.

Question 26

3 arguments against raising the minimum wage

Answer 26

Potential job losses in labour-intensive industries-outsourcing and automation
Risk of cost-push inflation as businesses pass on higher cost to consumers
Reduced price competitiveness for some UK esport businesses such as

Question 27

in terms of graphs; explain minimum wage

Answer 27

to be effective a minimum wage must be set above the normal free market wage this means that due to cetereis paribus demand for labour will contract to E2 instead of E1 this then meaning there’s less job opportunities

Question 28

what is gig economy

Answer 28

The Gig Economy is a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs where many workers do not have the employment protection, pension support and other benefits associated with permanent contracted work.Well-known Gig Economy businesses include Uber, Amazon, Hermes and Deliveroo.

Question 29

what do free market economists believe about government policies

Answer 29

free market economists believe that things should be left to supply and demand

Question 30

what do free market economists believe about policies reducing income inequality in the UK

Answer 30

Free market economies might argue that policies such as lower taxes to drive faster growth can help to reduce income inequality because of the trickle down effect where growth creates extra jobs and lifts per capita incomes

Question 31

what do Keynesians think about government policies and free market policies

Answer 31

Keynesians believe that free market policies lead to market failure due to inefficiencies and agree with government policies and interferences such as the CMA

Question 32

describe a contrasting viewpoint for the trickle down effect in terms of government interference with income inequality?

Answer 32

the view from Keynesians where they argue that the evidence for trickle-down effects is weak and that proactive pro-poor difference to inequality