Th4.2: Significance of Capitalism Flashcards
1
Q
Why does a capitalist economy lead to income inequality?
A
because of wage differentials
2
Q
Why can wages vary?
A
as they are based on demand and supply, and demand and supply vary for different jobs
3
Q
Wealth can be passed on or gained through…
A
saving of incomes
4
Q
Why is inequality essential for capitalism to work?
A
without the incentive to gain more, people will not try hard to take risks since they have no reason to and this means the economy won’t grow
5
Q
A degree of inequality is necessary and desirable, but…
A
excessive inequality causes problems with efficiency and social justice
