The Distribution of Income and Wealth Flashcards
What is the definition of income?
Flow of money going to factors of production
What is the definition of wealth?
current value of a stock of assets owned by someone or society as a whole
What does social mobility mean?
How easy it is for households to move between different social categories
What does GDP measure?
The measure of the market value of all final goods and services produced in a period of time
What does per capita mean?
Per person
What is the Gini coefficient
A measure of income inequality
Give a real-world example of income.
Wages and salaries from jobs
Rental income from property
Interest from savings
Profits flowing to shareholders
Give a real-world example of wealth
Savings in bank accounts
Ownership of property
Shares / stocks in businesses
Wealth held in pension schemes
What is the definition of equity?
fairness and equality in outcomes, not just in supports and opportunity.
What is the definition of equality?
the effect of treating each as without difference; each individual is considered without the counting of their measurable attributes; treated as the same of those with differing attributes
What is a Lorenz curved designed to show?
the distribution of income (or wealth) within an economy
What is the Gini Coefficient and what is it used for?
used as a measure of income inequality where the distribution of income for an economy is condensed into a single number to represent how wide the distribution is
What does a Gini Coefficient of 0 represent?
no inequality, where every household earns the same level of income.
What does a Gini Coefficient of 1 represent?
total inequality, where one household has all the income in the economy.
What is the equation used to calculate the Gini Coefficient?
A/A+B
