4.1.7.1 The distribution of income and wealth NOTES

What does income refer to in economic terms?

• A graphical representation of the distribution of wealth

• The accumulation of assets owned minus any liabilities

• The flow of money received through work, pensions, investments, or social welfare

• The total value of assets like houses and cars

Which of the following best describes wealth?

• Money spent on social welfare

• Assets owned minus any liabilities

• Regular payments received from a job

• Income received from competitive markets

What is the primary difference between income and wealth?

• Income and wealth both refer to regular earnings

• Wealth is a stock measure, while income is a flow measure

• Wealth refers to regular earnings, while income refers to assets

• Income is a stock measure, while wealth is a flow measure

Which factor does NOT influence the distribution of income and wealth?

• Education and skills

• Economic policies

• Personal preferences

• Market structures

What does the Lorenz Curve graphically represent?

• Government spending patterns

• The total value of assets in an economy

• The distribution of income or wealth within an economy

• The flow of income over time

What does a Gini Coefficient of 0 indicate?

• High levels of income disparity

• Perfect inequality

• Perfect equality

• Maximum economic efficiency

Which is a benefit of a more equal distribution of income and wealth?

• More social cohesion

• Greater capital accumulation

• Increased incentives for innovation

• Higher economic efficiency

What is a potential cost of a more unequal distribution of income and wealth?

• Higher levels of social welfare

• Increased opportunity for all

• Reduced economic growth

• More economic stability

What does equity in the distribution of income and wealth aim to consider?

• The total assets owned by individuals

• Equal share for everyone regardless of needs

• The flow of income through competitive markets

• The fairness of the distribution considering individual circumstances

Which of the following is NOT a feature of the Lorenz Curve?

• It bows below the line of equality

• It represents the total economic output of a country

• It ends at the top right corner (100,100)

• It starts at the origin (0,0)