Unit 3 Eco Chapter 09 Glossary

Question 1

Equity in the Distribution of Income

Answer 1

Sufficient revenue for Australians to access goods & services to live a dignified standard of living, avoid poverty and huge wage inequalities.

Question 2

Earned Income

Answer 2

Money rewarded to individuals for their physical contribution to the production process such as wages.

Question 3

Unearned Income

Answer 3

Money rewarded for providing resources other than labour such as dividends and interest.

Question 4

Factor Income

Answer 4

Money received from participation in the production process.

Question 5

Transfer Income

Answer 5

Money from one group to another, usually via the government. (e.g pensions & unemployment benefits)

Question 6

Private or Market Income

Answer 6

Money received in the exchange place primarily used as a result of individuals supplying their labour to the business sector.

Question 7

Gross Income

Answer 7

Private/market revenue + direct cash benefits received from the Government.

Question 8

Disposable Income

Answer 8

Money available to households after taxes have been deducted.

Question 9

Social Wage Income

Answer 9

Disposable revenue + indirect Government benefits provided in forms of g&s
(e.g public housing, education, health and welfare.)

Question 10

Final Income

Answer 10

Disposable revenue + indirect Government benefits plus production taxes.

Question 11

Equivalised Household Income

Answer 11

Disposable revenue adjusted for the size and composition of a family/home.

Question 12

Lorenz Curve

Answer 12

A diagram that represents degree of equity in income distribution.

Question 13

Gini Coefficient

Answer 13

From the Lorenz curve, a number between 0 and 1 that indicates degree of inequality in income distribution.

Question 14

Poverty

Answer 14

Situation where people have insufficient access to adequately provide for themselves.

Question 15

Absolute Poverty

Answer 15

When person/household has insufficient income to access basic necessities

Question 16

Relative Poverty

Answer 16

When person/household has a low level of income compared to other individuals/households in difficulty.

Question 17

Henderson Poverty Line

Answer 17

A benchmark level of income for various household sizes where below, a household is considered to be in relative difficulty.

Question 18

Optimal Level of Inequality

Answer 18

When total social and economic benefits of income inequality outweigh total costs.

-> Deterioration of national living standards.

Question 19

Optimal Level of Equality

Answer 19

When total social and economic benefits of income equality outweigh total costs.