Topic 11: Income Distribution Flashcards
What is Income
The flow of funds
What is wealth
The current value of the assets a household has accumulated over time through savings, financial investments, business stocks, and inheritance. (stock of assets)
What makes up private income?
- Wages
- Salaries
- Income from investments
- Income from superannuation
What is the calculation for Gross Income?
Private income + Governmnet Benefits
How to calculate Disposable income?
Gross income - Direct/ Indirect taxes
What are indirect benefits?
Social transfers: Assistance in school fees or healthcare
What is relative poverty?
People who don’t achieve what society defines as minimum standard of living
What is the Lorenze Curve
The lorenze Curve is a graph that maps the cumulative porportion of the population, ranked by income, against their cumulative share of income
What does the horizontal line show in a lorenze curve?
The cumulative percentage of population
What does the vertical axis show in a lorenze curve?
The cumulative percentage of income
What dose the diagonal line represent in a lorenze curve?
Representes perfect equality,. further the line lies from the digonal the greather the inequality in the distribution of inocme
What is the Gini Coefficient?
It measures the degree of income inequality in a country
