Ch39 Equity and redistribution of income and wealth

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What is equity in a society?

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Equity is where a society distributes its resources fairly among its people.

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What is equality in a society?

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Equality is where everyone gets the same share of resources.

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How does the World Bank define extreme poverty?

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Extreme poverty is defined as an income below $1.90 per day.

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What is absolute poverty?

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Absolute poverty is where a household’s income is below the level required to meet basic needs.

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What is relative poverty?

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Relative poverty is where a household’s income is 50% or less below the average income.

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What is the poverty trap?

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The poverty trap describes a situation where a person or household is worse off financially when in work compared to living off benefits available from the government.

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What are means-tested benefits?

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Means-tested benefits are paid out based on income.

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What are universal benefits?

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Universal benefits are paid to everyone who is eligible to receive them, irrespective of income.

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What is universal basic income?

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Universal basic income is where a regular payment is made by the government regardless of a person’s or household’s income.

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What is a negative income tax system?

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Under a negative income tax system, each person or household receives a fixed annual income benefit. There is a standard flat rate of income tax. If the tax paid on earnings is less than the annual income benefit, the difference is paid to the individual or household by the government.