Ch14 Income inequality

Front

What is income?

Back

Income is the reward for the services of a factor of production, such as wages for labour.

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What is wealth?

Back

Wealth is a stock of assets that has been built up over time.

Front

What is a Gini coefficient?

Back

A Gini coefficient is a numerical measure of the extent of income inequality in an economy.

Front

What does a Gini coefficient of 0 mean?

Back

A Gini coefficient of 0 means that the income distribution is equal.

Front

What does a Gini coefficient of 1 mean?

Back

A Gini coefficient of 1 means that all of the income goes to just one person.

Front

What is the formal part of an economy?

Back

The formal part of an economy is regulated by the government.

Front

What is the informal part of an economy?

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The informal part, also known as the hidden economy, is unregulated.

Front

What is a minimum wage rate?

Back

A minimum wage rate is a legal minimum that employers must pay their workers to reduce poverty among poorly paid workers.

Front

What is a transfer payment?

Back

A transfer payment is a direct payment from the government out of tax revenue, such as unemployment benefit.

Front

What is a progressive tax system?

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A progressive tax system is one where the rate of taxation rises more than proportionately to the rise in income.