The distribution of income and wealth

Question 1

wealth d

Answer 1

a stock of valuable assets

Question 2

marketable wealth d

Answer 2

wealth that can be transferred to others

Question 3

non-marketable wealth d

Answer 3

wealth specific to a person, which cannot be transferred

Question 4

distribution of wealth d

Answer 4

how wealth is shared out between the population

Question 5

income d

Answer 5

a flow of money to a factor of production. An individual’s income may include wages and state benefits

Question 6

distribution of income d

Answer 6

how income is shared out between the factors of production

Question 7

examples of marketable wealth

Answer 7

property, cash, shares, art

Question 8

examples of non-marketable wealth

Answer 8

life assurance and pension fund holdings

Question 9

who does wealth tend to be skewed towards

Answer 9

older age groups

Question 10

what are the four main sources of wealth

Answer 10

inheritance
saving
entrepreneurship
chance

Question 11

what are the causes of wealth inequality

Answer 11

inheritance
marriage
income inequality
chance

Question 12

what is more equally distributed, income or wealth

Answer 12

income

Question 13

the greater the degree of inequality, the _____ the curve will be below the ____ ____ line

Answer 13

further

45 degree

Question 14

what are the axes on the Lorenz curve

Answer 14

x : % population

y : % of income

Question 15

Lorenz curve d

Answer 15

a diagrammatic representation of income and wealth

Question 16

Gini coefficient d

Answer 16

a statistical measure of the degree of inequality of income or wealth

Question 17

what would the Gini coefficient be under perfect equality

Answer 17

0

Question 18

what would the Gini coefficient be under perfect inequality

Answer 18

1

Question 19

why has distribution of income become more unequal in recent decades

Answer 19

reduction in top-rate income tax
large-scale privatisation leads to rise in executive pay
real value of jobseeker’s allowance fell

Question 20

what are the causes of income inequality between households

Answer 20

impact of the state
wealth inequality
household composition
level of skills and qualification
differences in earnings

Question 21

absolute poverty d

Answer 21

when an individual or household’s income is insufficient for them to afford basic shelter, food and clothing

Question 22

relative poverty d

Answer 22

when people are poor in comparison to others

Question 23

what are the methods a government can use to influence income and wealth distribution

Answer 23

taxation
monetary benefits
direct provision of goods and services
legislation and labour market policy

Question 24

poverty audit d

Answer 24

assessment of the government’s performance in eradicating poverty

Question 25

what are the two types of monetary benefit (income and wealth)

Answer 25

means-tested (working families tax credit WFTC)

universal (child benefit)

Question 26

what is an example of legislation and labour market policy (income and wealth)

Answer 26

national minimum wage 1999

Question 27

in the last three decades, the number of households with incomes below ____ % of the average level has grown to almost _____ million

Answer 27

40 %

10

Question 28

what are some of the government’s targets when it comes to eradicating poverty

Answer 28

increase the proportion of working-age people with a qualification
improving literacy and numeracy at age 11
reducing homelessness

Question 29

what are the causes of poverty

Answer 29

unemployment
low wages
sickness and disability
old age
poverty trap
imperfect information

Question 30

poverty trap d

Answer 30

when individuals or households are no better off following a pay increase because tax paid increases and benefits are withdrawn

Question 31

what are some measures used by the government to reduce poverty

Answer 31

minimum wage
cutting bottom rates of income tax
tackling unemployment
training and education
increasing benefits
tax credits

Question 32

voluntary unemployment d

Answer 32

when a worker chooses not to accept a job at the going wage rate

Question 33

national minimum wage d

Answer 33

a statutory minimum wage introduced to boost the earning of the low paid

Question 34

what must the minimum wage be set above in order for it to have an impact

Answer 34

the market equilibrium wage rate

Question 35

what do free-market economists argue about national minimum wage

Answer 35

firm’s costs of production rise leading to higher unemployment

Question 36

how can you show national minimum wage on a graph

Answer 36

MRP (D) against S diagram, wage rate set above the equilibrium